Dorm Room Furniture Importer to Pay $500,000 to Settle False Claims Act Suit on AD/CVD Evasion

Another dorm room furniture importer will pay $500,000 to settle a whistleblower lawsuit that alleges it misclassified bedroom furniture from China in order to evade antidumping and countervailing duties. Home Furnishings Resource Group purportedly entered its dressers and chests of drawers as non-bedroom furniture to save on the 216% AD duty in effect at the time. The False Claims Act suit was filed by University Loft, the plaintiff in several other whistleblower suits claiming dorm furniture misclassification.

According to University Loft’s complaint, filed in 2015 and recently made public, Home Furnishings Resource Group, operating as Function First Furniture (F3), entered shipments of its Montego dressers and chests of drawers as “stackable files,” and represented that some of its bedroom furniture was made of bamboo or metal exempt from the AD duty order on wooden bedroom furniture from China. The company evaded more than $5 million in duties between 2012 and 2015, the complaint said. Home Furnishings Resource Group did not comment.

University Loft purportedly uncovered the alleged scheme by comparing its own pricing models to those of Home Furnishings Resource Group. “Wooden chests of drawers typically make up about 37% of the cost of equipping a student housing bedroom,” the complaint said. “A variation on the import duty paid on wooden chests of drawers significantly impacts the estimated cost and pricing calculations involved in a bid proposal,” University Loft said. Records related to Home Furnishing Resource Group’s imports and information from University Loft’s contacts in China purportedly demonstrated that the company’s “costs for purchasing and importing the bedroom furniture from China were substantially below the costs predicted by University Loft's internal pricing models, because [Home Furnishings Resource Group] has been illegally evading customs duties,” the complaint said.

The Justice Department subsequently joined the lawsuit on University Loft’s behalf, though it declined to join in related allegations against a second dorm room furniture importer, Martin Home Furnishings. University Loft will receive $75,000 for its role as whistleblower in the suit. It received $2.25 million from a separate whistleblower suit in 2015 (see 1512220062), and stands to gain from another ongoing False Claims Act suit in federal court against Blue Furniture. The government joined that suit on University Loft’s side in August 2017 (see 1708150066).

Email ITTNews@warren-news.com for a copy of the complaint or notice of intervention.