DOJ Settles With Wholesaler Over Undervalued Garment Imports; Lawsuit Against Importer Filed

Byer California, a women's apparel wholesaler, reached a settlement agreement with the Justice Department over the company's alleged involvement in an undervaluation scheme, the U.S. Attorney’s Office for the Southern District of New York (USAO) said in a March 27 news release. Byer is said to have allowed one of its importers, Queen Apparel NY, to continue to use falsified customs forms despite being aware of the discrepancies, the Department of Justice said. The USAO said it also filed a civil fraud suit last month against Queen. Both cases stem from a whistleblower complaint that previously resulted in a major settlement (see 1607140056).

Byer will pay $325,000 under the settlement and admitted that it "understood that Queen falsely represented the value of garments in copies of documents that it was presenting to CBP, and that as a result of that undervaluation, Queen paid less than the required amount of import duties," the USAO said. Despite knowing about the false valuations, Byer "made no attempt to alert CBP or stop supplying Queen with additional work orders," it said. Byer even continued to work with Queen after turning down a cash bribe offer from Queen's compliance manager, it said.

Byer "defrauded the U.S. government for years, turning a blind eye to the fact that its supplier was undervaluing goods to avoid paying proper duties," said Homeland Security Investigations Special Agent in Charge Angel Melendez. "Because Byer did not take responsibility, U.S. Customs was denied more than a quarter of a million dollars of underpaid duties."

Meanwhile, the USAO filed to intervene in the False Claims Act suit against Queen on Feb. 20. According to the complaint, which names Queen and its owner Hank Choi, in 2009 when asked by a wholesaler about a stated value, Choi explained in an email that the company hadn't had a "problem w. US customs w/lower value yet." "Queen's repeated misstatements and undervaluations on customs documents were material," the DOJ said. "Had CBP known that Defendants were misstating garments' values, CBP would have assessed additional duty based on the true, complete value of each garment. As a result of these misstatements and omissions, the United States lost substantial lawful customs duties." Choi and Queen denied the allegations in a March 13 filing.

Email ITTNews@warren-news.com for a copy of the complaint against Queen and Choi.