Trade Compliance

GHY discusses changes to international trade regulations and explores cutting-edge compliance strategies.

A Peek Around the Curtain: A False Claims Act Settlement for Avoiding Customs Charges

Posted January 10, 2014

On November 14, 2013, the U.S. Department of Justice announced a False Claims Act settlement with Basco Manufacturing Company, a maker of shower enclosures, for $1.1 million related to misstatements on U.S. Customs and Border Protection (CBP) entry forms. The alleged misstatements were intended to allow the company to avoid antidumping duties (ADD) and countervailing duties (CVD) on aluminum extrusions used in its products that were actually from China, but transshipped through Malaysia in an attempt to avoid the duties. The settlement against Basco does not resolve the entire matter, as Basco was one company of many involved in an alleged conspiracy to conceal the Chinese origin of the aluminum extrusions at issue.

Aspects of the settlement highlight certain risks posed by the False Claims Act that compound general U.S. enforcement of trade laws, and a reminder that diversion for inbound products to the United States may be a significant compliance issue for companies to be aware of. [...]

Although this case involved an alleged conspiracy to willfully avoid customs duties, it also highlights potential risk areas for companies that do not have targeted import compliance programs.  As has been the case in the FCPA, U.S. companies may receive government inquiries for being involved with third parties conducting illicit activities.  For those companies, proving the absence of intent can be a challenge.

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Source: Mark Jensen and Ryan Roberts | Sheppard, Mullin, Richter & Hampton LLP