Jewelry Importer to Pay $400,000 to Resolve False Claims Act Allegations Concerning Unpaid Customs Duties on Chinese Earrings
BOSTON – A former jewelry importer, TSI Accessories Group, Inc. (TSI), will pay $402,637 to resolve allegations that it violated the False Claims Act by failing to pay customs duties on sterling silver earring imports from China.
Under customs laws, duties on sterling silver earrings imported from China vary based on the value of the jewelry—the more expensive the earrings, the lower the duty rate. An earring’s value is calculated per earring (rather than each pair of earrings or collection of earrings).
Between 2012 and 2015, TSI imported display cards of sterling silver earrings from China for resale at department stores. The display cards often included multiple pairs of earrings. The government contends that TSI improperly concealed the number and value of these imports from U.S. Customs and Border Protection by describing on import records the number of display cards imported, rather than the number of individual earrings. TSI’s misstatements increased the declared value of the imports, allowing TSI to pay a lower duty than it should have based on the value of each earring.
“Companies taking advantage of U.S. markets must comply with the law, including paying import duties levied to protect domestic companies from unfair competition,” said United States Attorney Andrew E. Lelling. “This settlement underscores our efforts to ensure that importers uphold their responsibilities in American markets. We credit TSI’s cooperation in this investigation and agreement to make the government whole.”
“In addition to securing our borders from terrorists, terrorist weapons and dangerous goods, CBP is charged with enforcing U.S. trade laws to protect the American economy,” said Michael S. Denning, Director, Boston Field Office, U.S. Customs and Border Protection (CBP). “We will continue to use the authorities and tools at our disposal to combat trade fraud to ensure a fair and competitive marketplace for all traders.”
“Homeland Security Investigations takes custom fraud cases very seriously. Mislabeling import documentation in order to pay lower duties improperly inflates costs to everyday consumers,” said David Magdycz, Acting Special Agent in Charge, HSI Boston. “HSI applauds the work of U.S. Customs and Border Protection for their significant assistance in the investigation, as well as the U.S. Attorney’s office for aggressively prosecuting this fraud.”
This civil settlement arose from a lawsuit filed by a whistleblower under the qui tam provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery. In connection with this settlement, the whistleblower will receive approximately $70,000 of the recovery.
U.S. Attorney Lelling, CBP Director Denning and HSI Boston Acting SAC Magdycz made the announcement today. Assistant U.S. Attorney Brian M. LaMacchia of Lelling’s Affirmative Civil Enforcement Unit handled this matter.