4 More Jewelry Importers to Pay $866,000 in Earring Misclassification Whistleblower Case

Four additional jewelry importers will pay more than $860,000 to settle a whistleblower lawsuit over allegations of misclassification and underpayment of duties, the Department of Justice said in a Dec. 10 news release. Roman & Sunstone, iStar Jewelry, Ansun and Starkes Gems, four related companies based in New Jersey, classified earrings based on the value of pairs or larger groups, instead of the value of single earrings, claiming a lower duty rate than they should have paid had they been correctly classifying the imports, DOJ said.

The $866,068 settlement, which covers the period 2015 through 2018, comes on the heels of DOJ’s announcement of a similar $400,000 settlement with TSI Accessories Group (see 2012090048). TSI owned Roman & Sunstone’s predecessor until 2015, and its settlement covers the period from 2012 until the sale. The whistleblower, Alan Robins, who was hired by Roman & Sunstone in 2016, received $70,000 of the TSI settlement, and will receive an additional $152,000 of the settlement with Roman & Sunstone, iStar, Ansun and Starkes Gems.

Robins, subsequently joined by the U.S. government in the False Claims Act suit, said Roman & Sunstone disregarded prior CBP rulings that say the term “piece” in provisions on earrings in the tariff schedule refers to a single earring, rather than a pair or multiple pairs packaged together on a card. As tariffs on earrings differ based on value, Roman & Sunstone was able to inflate the value of its earrings to qualify for a 5% duty rate under subheading 7113.11.50, which covers earrings worth more than $1.50 per piece, rather than a 13.5% duty rate under subheading 7113.11.20, which covers earrings worth less.