This week, the Baron & Budd Whistleblower Practice announced a $2.5 million settlement on behalf of the United States government with a raft of defendants who were accused of committing False Claims Act violations when they knowingly and fraudulently evaded customs duties owed on goods imported from China. As part of their scheme, the defendants employed various fraudulent invoicing methods to deliberately understate the value of their imports to U.S. Customs and Border Protection (CBP). By understating the value of their imported products in falsified invoices, the defendants allegedly defrauded the United States out of more than one million dollars in customs duties.

Central to the scheme being uncovered was the participation of two whistleblowers who were employees of ADCO, one of the companies accused of skirting tariffs. The whistleblowers’ direct knowledge and independent investigation of the fraud was crucial in securing a settlement. The ensuing settlement reached by Baron & Budd represents the largest FCA customs fraud settlement involving the Trump tariffs in which the government has intervened. Such a settlement represents a changing tide as the nation claws back the money foreign exporters and U.S. importers have fraudulently avoided paying.

The Background on the Tariffs Defendants Skirted

Foreign products that enter the United States are often subjected to import duties and tariffs to support the domestic market. The revenue collected from duties and tariffs goes directly to the federal Treasury, supporting important programs such as healthcare, veterans’ benefits, and education. With the federal budget deficit at record levels, customs enforcement helps maintain the nation’s fiscal health.

In recent years, duties and tariffs have increased. During the Trump administration, the U.S. government imposed punitive trade measures that have required importers to pay billions of dollars in duties and tariffs to import thousands of types of goods, largely from China. These trade measures, well known by companies who do business in China, are often known as the “Trump tariffs.” When President Biden was elected, many companies hoped that these tariffs would cease. However, the Biden administration has defended the actions of its predecessor and has signaled that it “plans to broadly maintain Trump’s tariffs on U.S. imports of Chinese goods.”

For the most part, companies have adjusted to the new trade environment, either paying the increased costs associated with importing their goods or shifting their operations away from China and other countries targeted by the duties and tariffs. Others, however, have resorted to fraud to avoid paying their fair share. The defendants in this case allegedly avoided paying more than one million dollars in customs duties to give themselves an illegal advantage in the market and to cheat taxpayers out of much-needed revenue. By intervening in the whistleblower lawsuit brought by Baron & Budd, the U.S. government has signaled that enforcing our customs laws is a priority for the Department of Justice and that wrongdoers will be punished.

The Role of Whistleblowers

As millions of containers enter the country every day, the government simply does not have the resources to monitor every shipment. The importing process works on an honor system in which importers are responsible for making sure the information they declare is accurate. With such latitude, foreign exporters and U.S. importers can cheat the system by lying about the nature, value, or country of origin of their goods. Thus, the government needs whistleblowers to be its eyes and ears to help deter and detect customs fraud.

Employees of a company committing customs fraud, competitors of a company committing fraud, or other individuals working closely with the importation of goods may have information about customs fraud schemes. These individuals can report customs fraud by filing a case under the False Claims Act (FCA). The FCA allows a private citizen or company to file a case on behalf of the government. Whistleblowers who file a lawsuit under the FCA can receive 15% to 30% of the money recovered in the case. They are also protected from retaliation by their employers. In Baron & Budd’s recent settlement, the whistleblowers received 20% of the amount recovered, or $500,000.

The most important step in filing a whistleblower lawsuit is to seek the assistance of an experienced whistleblower attorney. The attorneys at Baron & Budd can guide you through every step of the process and help you maximize your chances of sharing in a successful recovery by the government.

Contact Baron & Budd

With more than 30 years of experience, the attorneys on Baron & Budd’s whistleblower representation team have represented dozens of clients in government fraud cases returning over $6 billion to federal and state agencies, with whistleblower recovery shares as high as 50%. They are ready to help if you have evidence of customs fraud.

Please call (866) 845-2164 or complete our contact form if you would like more information. For more information, see What You Need to Know About Becoming a Whistleblower.  Please understand that contacting us does not mean that you have established an attorney-client relationship with Baron & Budd, P.C.