Chinese Company's US Importer to Pay Nearly $800K Settlement for FCA Violation of Underreporting

Furniture company Homestar North America will pay $798,334 to settle charges that it violated the False Claims Act by underreporting the value of its Chinese imports to avoid customs duties, the U.S. Attorney's Office for the Eastern District of Texas announced. Of the total penalty, $151,683 will go to the whistleblower in the action: Larry Edwards, a logistics and warehouse manager who worked for Homestar for a short stint in 2020.

In his complaint, Edwards said he worked as a distribution center manager for a company called "Legacy Home Furnishing and Decor," which allegedly was doing business as Homestar North America. Edwards said Homestar North America is one of a group of companies owned by Chinese citizen Steve Lu. Laid off two months later due to "manpower issues," Edwards noted Homestar's illicit trading practices.

From 2018 to 2022, the company allegedly benefited from falsified invoices, which showed lowered values for the goods Homestar North America received from its Chinese parent company, Homestar Corp., to avoid duty payments. A second set of invoices was created that reflected the true value of the goods.

U.S. Attorney Damien Diggs said that "companies that wish to gain access to the United States' markets must comply with all laws regarding the import of their goods, including the obligation to disclose the actual value of imported goods and to pay the duties owed as a result of importation. Instead of complying with those obligations, Homestar chose to disregard its obligations and improve its bottom line. Our office will aggressively pursue any company that similarly chooses its bottom line over compliance with the law.”