Defendants in Import Fraud Case Ask Court to Consider Statute of Limitations in Appeal to CAFC

The five-year statute of limitations for fraudulent civil penalty enforcement action in the Court of International Trade might begin to run from the date the government is sufficiently on notice rather than on the date of documented confirmation, Greenlight Organic, Inc. and Parambir Singh Aulakh argued in an Aug. 12 motion for an interlocutory appeal to the U.S. Court of Appeals for the Federal Circuit to decide the statute of limitations issue (U.S. v. Greenlight Organic and Parambir Singh Aulakh, CIT #17-00031).

The motion is part of an ongoing CIT case brought by the government seeking to recover unpaid duties and alleging that Greenlight and Aulakh imported wearing apparel into the U.S. fraudulently. Judge Jennifer Choe-Groves on Aug. 4 denied a defense motion to dismiss the case on the grounds that it was time-barred by the statute of limitations.

The statute of limitations states that an action must be commenced “within 5 years after the date of the alleged violation, or, if such violation arises out of fraud, within 5 years after the date of discovery of fraud,” Greenlight argued. The government said it first obtained evidence of double invoicing by Greenlight in February of 2012, but Greenlight argued that the court already has recognized that the government first learned of the alleged fraud a year earlier, in May 2011, when a competitor of Greenlight sent a fraud allegation to Immigration and Customs Enforcement. That letter, argued the defendants, prompted a civil investigation by CBP and a criminal probe by ICE in 2011, so the government cannot argue it was unaware of the fraud almost a year later.

The date on which fraud is discovered under the discovery rule is an underlying question of law, Greenlight argued. "There is no controlling precedent from CAFC on this issue in the context of a customs penalty case," the defense motion argued. In the Aug. 4 ruling, the court recognized that there is "substantial ground for difference of opinion on when the five-year statute of limitations ... begins to run." Whether the case is time-barred is a controlling question that may make the rest of the proceedings moot, "thus wasting judicial and party resources on an action that should have been dismissed," Greenlight said.