German Tool Company to Pay $1.9 Million to Settle Customs Fraud Claims

German company KingKong-Tools GmbH & Co KG, along with its American subsidiary King Kong Tools, will pay $1.9 million to resolve allegations of customs fraud, the U.S. Attorney's Office for the Northern District of Georgia announced. The office alleged that King Kong falsely said its tool imports were made in Germany when they were made in China, misrepresenting their country of origin in violation of the False Claims Act.

The FCA action kicked off with a whistleblower complaint from one of King Kong's competitors, China Pacificarbide, alleging that the German firm was making cutting tools in a Chinese factory, then shipping them to Germany, where additional processing was performed on only some of the tools. These tools were imported to the U.S. and declared as "German" products to avoid the 25% Section 301 duty levied against Chinese imports, the U.S. Attorney's Office said.

Under the FCA, China Pacificarbide will receive $286,861 from the settlement along with attorney's fees. Companies "cannot avoid paying tariffs by misrepresenting product manufacturing information," U.S. Attorney Ryan Buchanan said. DOJ "will work diligently to uncover these schemes, and those companies involved in such misconduct will be compelled to pay tariffs owed, as well as penalties.”