Import Fraud and Customs Duty Fraud – False Claims Act and Qui Tam Lawsuit Attorney

Individuals and companies that import products into the United States are required to follow customs laws and pay duties (also known as tariffs) on certain goods.  When companies fail to pay adequate import and export duties (including antidumping and countervailing duties) or misrepresent the classification, nature, or valuation of goods, they violate the False Claims Act.  As such, an employee or other individual privy to the misconduct can file a Qui Tam case and potentially collect a significant reward.

How the False Claims Act Applies to Imported Products and Customs Duties

The federal False Claims Act[1] allows individuals to file a whistleblower lawsuit (also known as a Qui Tam suit) against a person or company that has committed fraud against the United States government.  To incentivize the reporting of wrongdoing, the government offers whistleblowers a portion of the compensation recovered, which, in some cases, equates to millions of dollars.

Qui Tam cases involving customs fraud can be exceedingly complicated, as costly verdicts often hang in the balance, and companies will usually do everything in their power to mount a strong defense.  Sometimes, companies accused of fraud will take retaliatory action (often employment termination) against an individual who reports wrongdoing.  When retaliatory action occurs, informants may be entitled to additional compensation.

As a Seattle customs duty fraud lawyer and import fraud attorney, firm founder Steve Teller has a deep understanding of the regulations and strategies involved in Qui Tam/False Claims Act lawsuits, including the complex regulations and requirements that apply in this highly complex area.

What Should You Do if You Suspect Customs and Import Fraud? Act Quickly in Order to Preserve Your Rights to Potential Compensation

If you witnessed a company or person violating customs laws and are interested in reporting such fraud, or if you reported misconduct and an individual or company took retaliatory measures against you, contact our office to schedule a free consultation.  It’s important to note that potential compensation to whistleblowers in Qui Tam cases is generally only available to the first person to report wrongdoing; thus it is important to take prompt action. 

We proudly represent residents of Seattle and the surrounding communities, including Harbor Island, Portage Bay, Fremont, High Point, Boulevard Park, Shorewood, Renton, Mercer Island, Norwood Village, as well as Throughout Washington and the United States.

What is Customs Fraud?

When bringing goods into the United States, importers must declare the country of origin of the goods, the goods’ value, whether the goods are covered by antidumping or countervailing duties regulations, the duties owed, and other matters.  It is an importer’s duty to ensure that this information is accurate so that proper tariffs can be assessed by U.S. Customs and Border Protection.  Generally, two primary types of payments are required for imported goods: antidumping duties and countervailing duties.

Antidumping Duties

To protect a country’s economy, many countries impose duties on products they believe are being “dumped” into their market at a low price, as this is seen as a means for undercutting domestic businesses and the local economy.  The U.S. government assesses antidumping duties (a protectionist tariff) against products it believes are being sold below fair market value in order to save domestic jobs and reduce unfair international competition.

Countervailing Duties

Countervailing duties are tariffs levied against imports to offset subsidies given to manufacturers in exporting countries.  These duties are designed to provide domestic suppliers with an equal footing with foreign producers who can afford to sell products at a lower cost due to subsidies they receive from their governments.

Understanding the Incentives of Importers to Falsify Customs Documentation

Importers have strong incentives to avoid or minimize costs for customs duties.  For example, if certain goods are manufactured and imported from China, there may be a high associated tariff (as production of the goods may be subsidized by China).  If the exact same goods are manufactured and imported from another country, there may not be any tariff, but the cost of the goods for the importer may be substantially higher (as the cost to produce the goods will be higher since there won’t be a government subsidy for the manufacturer).  If an importer declares that the goods came from the non-tariff country, when in fact they were purchased from China at a lower price, they benefit from both the low price and tariff avoidance.

Thus when importers illegally avoid or minimize duties, they can dramatically increase profits.  Additionally, when companies fail to follow the law by making false declarations to avoid import and export duties (including antidumping and countervailing duties) or by misrepresenting the amount, type, or value of goods, as well as the country of origin, criminal and civil penalties may be assessed.

How Does a Qui Tam Lawsuit for Import and Export Duty Fraud Work?

Qui tam laws allow people to file lawsuits against individuals or companies who have defrauded the U.S. government, including committing import or export duty fraud.  The laws regarding these actions are often referred to as the False Claims Act, as matters often involve false filings with (or fraud against) the federal government.

If an individual knows customs or duty fraud has occurred, they can confidentially report an incident to the federal government to initiate an investigation.  Often this is done through contacting an attorney, who can then represent the individual.  Initially the representation is often focused on assembling the basic facts behind the wrongdoing, so that a filing can be made “under seal” in U.S. federal district court.

After the filing is made, the government can then determine whether it wants to join the court action.  While the decision is pending, the “target” of the lawsuit – the individual or company purportedly engaged in fraud – will be unaware of the litigation, since it will not be public.

What Should You Do if You are Aware of Customs Fraud?

First, if you are potentially interested in compensation, do not mention the fraud or that you are considering a Qui Tam lawsuit to anyone other than your attorney. 

Federal Qui Tam law provides that only one person is entitled to compensation; namely, the first person to bring a lawsuit.  Thus if you mention the circumstances giving rise to fraud to another person (other than your lawyer) and they choose to bring a qui tam action and file suit before you do, they will likely be entitled to any compensation that may be obtained, even if you were the one that discovered the fraud.

If you have knowledge about import or export duty fraud, the best way to increase your chances of obtaining a reward is to retain an experienced customs fraud attorney. 

At Teller Law, firm founder Steve Teller can use his extensive experience in U.S. False Claims Act cases to represent you in presenting a fraud case against an individual or company if fraud has occurred.

It is important to note that a person is only entitled to a recovery if a lawsuit is filed in their name; simply notifying the government of fraud does not entitle a person to a recovery. 

How Much Does It Cost to Hire an Experienced Seattle Customs Duty Fraud Lawyer?

At Teller Law, we handle Qui Tam and customs duty fraud cases on a contingency fee basis, meaning that we are only entitled to a fee if compensation is recovered.  This means you will not have to come out-of-pocket for any retainer or legal fees while your case is progressing.  Our firm will also advance all legal costs required in connection Qui Tam litigation.  If litigation is successful, our fees are governed in accordance with Qui Tam statutes and paid out of the recoveries obtained for the government.

How Much Money Can I Receive for Exposing Customs Fraud Against the Federal Government?

Whistleblower laws provide that a relator (the person reporting fraudulent conduct) will be compensated with a monetary reward if compensation is recovered.  Since the enactment of these provisions, billions of dollars have been recovered from corporations and individuals who defrauded the government, and relators have received over one billion dollars in rewards for exposing misconduct.

If a case is successful, relators are typically eligible to recover 15% to 20% if the government intervenes, or 25% to 30% if the government chooses not to intervene.[2]  As Qui Tam cases often involve millions (or even tens of millions) of dollars, such a recovery can be significant.  In 2019 alone, whistleblowers received an astounding $271,941,791 in compensation.

If you have a valid claim, we urge you to call our office today to learn about your legal options for helping the government hold fraudulent parties responsible for their misconduct.  At Teller Law, we can listen to the facts and circumstances of your case, explain your legal options, and help in seeking justice and the maximum compensation possible for your diligence.

What Kinds of Customs Fraud do Whistleblower and Qui Tam Cases Involve?

Common types of customs fraud against the federal government involve:

  • Import duty fraud
  • Export duty fraud
  • Antidumping duty fraud
  • Fraud against customs
  • Countervailing duty fraud
  • Misrepresenting a country of origin
  • Failure to identify a country of origin
  • Misclassification of goods
  • Undervaluation of Goods
  • Whistleblower customs duty underreport fraud

These are only a few examples of actions for which Qui Tam claims may be brought; many other types of actions and conduct can also be the subject of customs fraud claims.

Call Our Office Today to Schedule a Complimentary Consultation with Experienced Qui Tam Lawyer Steve Teller.

Customs fraud deprives the government of revenue, undermines trade policy, harms domestic business owners and workers, and adversely affects consumers.  If you are aware of a company or individual that has made false claims to the U.S. Customs and Border Patrol to undercut the United States’ economy, contact our office today at 206-324-8969 to find out how you could help our government seek justice and potentially be rewarded significant compensation for your efforts.

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[1] The False Claims Act, The United States Department of Justice, https://www.justice.gov/civil/false-claims-act.

[2] Fraud Statistics, The United States Department of Justice, https://www.justice.gov/opa/press-release/file/1233201/download.