On September 30, 2016, the Department of Justice announced an importer of Chinese bedroom furniture and his affiliated companies will pay $1,525,000 in a civil settlement to resolve claims that the importer fraudulently evaded antidumping duties on the Chinese furniture. Daniel Scott Goldman will personally pay $850,000 and his companies Ecologic Industries LLC and OMNI SCM LLC will collectively pay $675,000.
The case was originally brought under the qui tam provisions of the False Claims Act by a former sourcing and supply chain management contractor that worked with the companies. Under the qui tam provisions, whistleblowers with information about fraud against the government may bring a civil case on behalf of the United States. If successful, the government can recover three times the amount of the duties that the defendants evaded. The whistleblower, known as a Relator, is entitled to 15-30% of the government’s recovery as well as their attorney’s fees. The Relator in this case will receive $228,750 as his share of the settlement.
The Relator’s complaint alleged the defendants instructed the Chinese manufacturer to create false invoices to mislabel shipments of wooden bedroom furniture as “office furniture.” Then, the defendants would falsely claim on U.S. Customs forms that the merchandise was office furniture and thus not subject to the 216.02 percent antidumping duties on Chinese wooden bedroom furniture.
The Relator’s Complaint also details the discussion that precipitated the defendants’ decision to engage in the antidumping duty fraud. Specifically, the conspirators thought the probability that Customs and Border Protection would “flag” their merchandise if it was labeled as office furniture was “relatively low.” Unfortunately, the sheer volume of merchandise entering the United States makes it unlikely that Customs will flag any particular set of entries. This fact illuminates that whistleblowers with inside knowledge of such schemes are necessary to expose antidumping fraud and protect the American economy. Although, with a new administrative authorization from the Trade Enforcement and Trade Facilitation Act of 2015, CBP is now focusing on antidumping and countervailing duty evasion as a Priority Trade Issue. Therefore, such settlements are becoming much more common as CBP’s focuses on antidumping and countervailing duty evasion and whistleblowers continue to come forward to expose this fraud.