August 15, 2022. The law firm of Tycko & Zavareei LLP is pleased to announce the settlement of a False Claim Act qui tam lawsuit brought by the firm, on behalf of one of the firm’s clients, against Eos Energy Storage, LLC (Eos Energy), a wholly-owned subsidiary of Eos Energy Enterprises, Inc. The lawsuit alleged that Eos Energy committed customs fraud by falsifying the value of “dry batteries” produced in China that Eos imported into the United States, and that by doing so Eos Energy underpaid duties owned on those imported batteries.
When a company knowingly underpays customs duties, it violates the False Claims Act (FCA). The FCA imposes liability on a company that “knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the Government, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government.” 31 U.S.C. § 3729(a)(1)(G).
Under the so-called “qui tam” provision of the FCA, a private individual or company may bring a lawsuit in the name of the government, seeking to force the payment of unlawfully avoided customs duties. If successful, the party bringing the lawsuit—often referred to as a whistleblower or, more technically, a relator—may receive an award of between 15% and 30% of the amount recovered for the government.
The whistleblower in this case alleged that Eos Energy knowingly failed to report the value of the components it provided to a manufacturer in China that assembled those components into “dry” batteries, which are batteries that have not yet been loaded with chemicals. When a U.S.-based company provides components to a foreign manufacturer, the value of such components are referred to as “assists,” and generally must be included in the declared value of the completed product when it is brought into the United States.
Qui tam cases are initially filed under seal, and provided to the U.S. Department of Justice, and to the U.S. Attorney’s Office in the district in which the case is filed. Government attorneys and investigators then investigate the allegations of the case, and the government can “intervene” in the case, meaning that the government formally joins as the plaintiff. If the government declines to intervene, the whistleblowing individual or company may still pursue the case on its own.
In the Eos Energy matter, the case was investigated by attorneys at the U.S. Attorney’s Office for the District of New Jersey, working with agents from the Department of Homeland Security. The government settled the case with Eos Energy for $1,107,761, and the whistleblower was awarded a 20% share.
Jonathan Tycko, a partner of the firm who led the matter, said, “We are gratified that our client’s allegations were pursued diligently by the government’s attorneys and investigators, and are grateful for their work. Cases like these, brought by whistleblowers, are key to enforcement of the country’s trade laws, including the obligation to pay duties. The joint efforts of whistleblowers, the Department of Justice, and the affected government agencies—working together towards common goals—is the key to success in enforcing the law and protecting taxpayer dollars, which is what the False Claims Act is all about.”
Tycko & Zavareei LLP is one of the nation’s leading law firms in the area of whistleblower representation in qui tam cases under the False Claims Act and other similar whistleblower reward laws. The firm has been an innovator in customs fraud cases, representing both individuals and domestic manufacturers in cases involving evasions of duties, Anti-Dumping/Countervailing Duty orders, Section 301 tariffs, failure to properly mark country-of-origin on imported goods, and other trade law violations. Mr. Tycko is a frequent writer and speaker on the use of the False Claims Act to combat customs fraud.
The relator in the Eos Energy case was also represented by Paul Vandevert of Vandevert Trade Law, and David Wacksman of David M. Wacksman, Esq., LLC.
The case is No. 2:19-cv-22129 in the District of New Jersey.