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Press Release

Pharmaceutical Distributer Agrees to Pay $765,000 to Resolve False Claims Act Allegations Relating to Failure to Pay Customs Duties

For Immediate Release
Office of Public Affairs

The Justice Department announced today that Danco Laboratories, LLC (Danco), located in New York, has agreed to pay $765,000 to resolve allegations that it violated the False Claims Act by failing to pay certain customs duties, known as marking duties, on imported pharmaceutical products that lacked markings to identify their country of origin.

The Tariff Act of 1930 requires companies that import foreign products into the United States to mark the country of origin on those products. Importers that fail to mark their products are subject to a 10% ad valorem duty. The settlement resolves allegations that, during the period 2011 through 2019, Danco failed to mark imported pharmaceutical products with the appropriate country of origin, and thereafter violated the False Claims Act by knowingly avoiding the marking duties owed to the United States for those imports.   

“The False Claims Act protects the public fisc by imposing liability not only on those who knowingly submit false claims to the United States, but also on those who knowingly avoid obligations owed to the United States,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This settlement demonstrates the department’s commitment to ensure that importers properly pay all amounts due under our customs laws.”

“Our office is committed to ensuring that importers are transparent with consumers and comply with customs laws and the False Claims Act,” said U.S. Attorney Brit Featherston. “We will continue to pursue aggressively those who seek to avoid their duties and obligations under the law.”   

“The United States has required imported goods to be marked with their country of origin for generations, so American consumers can use that information in their purchasing decisions,” said Director Frank Russo of the U.S. Customs and Broder Protection (CPB) New York Field Office. “CBP takes the marking laws very seriously, and is pleased to work with our partners to ensure importers adhere to all customs laws.”

The civil settlement includes the resolution of claims brought by the Life Legal Defense Foundation under the qui tam or whistleblower provisions of the False Claims. These provisions allow a private party, known as a relator, to file an action on behalf of the United States and receive a portion of any recovery. The qui tam action is captioned U.S. ex rel. Life Legal Defense Foundation v. ASD Specialty Healthcare, LLC, et al., No. 21-cv-0088 (E.D. Tex.). As part of today’s resolution, the whistleblowers will receive approximately $115,000. 

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Eastern District of Texas with assistance from CPB.

The matter was handled by Trial Attorney Daniel W. Kastner of the Justice Department’s Civil Division and Assistant U.S. Attorneys James Gillingham and Adrian Garcia for the Eastern District of Texas.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Updated April 12, 2023

False Claims Act
Press Release Number: 23-401