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United State settles false claims act allegations against otterbox for $4,300,000

FOR IMMEDIATE RELEASE
April 21, 2014

 

DENVER – The United States Attorney’s Office for the District of Colorado and the Department of Homeland Security, U.S. Customs and Border Protection, announce that OtterBox, a Colorado corporation headquartered in Fort Collins, has paid $4,300,000 to the United States to resolve allegations that OtterBox violated the False Claims Act and the Tariff Act of 1930, as amended, by knowingly underpaying customs duties owed to the United States. 

OtterBox sells protective cases for smartphones and tablets.  Between 2006 and 2011, OtterBox manufactured many of its products overseas, and then imported those products into the United States for distribution and retail sale.  OtterBox was responsible for the submission of entry documents to Customs and for the payment of any customs duties owed on those imported products. 

The United States alleged that from January 1, 2006 through December 31, 2011, OtterBox knowingly omitted the value of “assists” from the dutiable value OtterBox declared to Customs on entry documents for imported products.  The United States further alleged that OtterBox knowingly made or caused to be made false statements in other documents submitted to Customs concerning the value of assists, and the customs duties OtterBox owed on the value of those assists, for products that OtterBox imported between January 1, 2006 through December 31, 2011.  According to the United States, as a result of OtterBox’s omissions and false statements concerning the value of assists for its imported products, OtterBox knowingly underpaid customs duties it owed to the United States.  

The settlement stems from a lawsuit filed by a former OtterBox employee in 2011 under seal pursuant to the qui tam provisions of the False Claims Act.  The False Claims Act empowers private citizens with knowledge of fraud against the United States to present those allegations to the government by bringing a lawsuit on behalf of the United States under seal.  If the investigation substantiates those allegations, the private citizen is entitled to share in any recovery.  Of the $4,300,000 OtterBox paid to the United States, the United States paid $830,000 to the former employee who filed the qui tam lawsuit. 

“America’s economic security and prosperity are at the heart of U.S. trade law,” said United States Attorney John Walsh.  “Customs duties are a significant source of revenue for the United States, and this settlement demonstrates that the Department of Justice will zealously enforce their lawful collection.”

“Trade enforcement is a priority for U.S. Customs and Border Protection due to the significant role that it plays in the economic security of the United States,” said Richard Di Nucci, Acting Assistant Commissioner for the Office of International Trade. “CBP is responsible for facilitating the legitimate flow of trade, while enforcing the laws against the evasion of duties that protect against unfair trade practices.”

The claims settled by this agreement are allegations only.  There has been no determination of liability.

The agreement was negotiated by Assistant U.S. Attorney Amanda Rocque.

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