Attorneys Black and McInnis Announce Department of Justice Joins Customs Duties False Claims Act Case

NEW YORK, Sept. 26, 2016 /PRNewswire-USNewswire/ -- The U.S. Department of Justice ("DOJ") filed a complaint in intervention on September 22, 2016, in a Customs False Claims Act case brought by Joseph Black, of The Cullen Law Firm, PLLC, Washington, D.C. and Timothy McInnis of McInnis Law New York, N.Y. in the U.S. District Court for the Southern District of New York. The original action was filed on January 3, 2013 as United States ex rel. Xing Wei v. Yingshun Garments, Inc., et al., 13 CIV 55-LAK.

Ms. Wei's complaint alleges that the defendants engaged in a scheme to undervalue textiles imported into the United States for the purposes of avoiding Customs duties.  The textiles in question were subject to relatively high duty rates of up to 32 percent.  Ms. Wei's son, James Zhu, discovered this practice while working at Yingshun Garments in 2009.  Mr. Zhu gave that information to his mother, who sought out Mr. Black to file a False Claims Act action.

The government's complaint enlarged Ms. Wei's action by alleging fraud against Marie Rodgers, an employee of Yingshun Garments, and Notations, Inc, one of Yingshun's customers. The significance of this intervention is that it shows that DOJ is willing to charge an employee of the importer and the downstream buyer of the undervalued merchandise with Customs fraud.

DOJ's investigation was headed by Cristine Philips, Ass't U.S. Attorney, Southern District of New York, with the assistance of investigators from U.S. Immigration and Customs Enforcement and U.S. Customs and Border Protection.

The False Claims Act allows a private party, a "whistleblower," with knowledge of fraud against the federal government, to sue in federal court on behalf of his or herself and the United States to recover significant civil penalties and treble damages.  The whistleblower is usually given between 15 and 30 percent of the amount recovered by the government as an incentive to expose fraud against the United States.

Employees of importers and retailers committing Customs fraud who wish to bring a whistleblower case should now have confidence that their allegations will be taken seriously by the government.  DOJ's intervention in this case shows continuing interest in the use of the False Claims Act to prosecute Customs fraud.

For further information, contact Joe Black at 202 441-9031 ([email protected]) or Tim McInnis at 212-292-4573 ([email protected]).

SOURCE McInnis Law