Blaine, Washington, auto broker settles allegations it undervalued light trucks from Canada to avoid higher import duties

Seattle – A Blaine, Washington, auto broker and the U.S. Department of Justice have settled litigation alleging the auto broker lied about the value of vehicles it imported, in order to pay significantly less import duties, announced U.S. Attorney Nick Brown. By reporting a lower value for the trucks than what it paid at auction, BidBuy avoided paying significantly higher import duties. BidBuy Auctions, LLC, owned by Whitney McElroy, agrees to pay $430,000 to settle allegations it undervalued light trucks purchased in Canada when importing them into the U.S. for sale.

“This conduct doesn’t just cheat the government out of revenue, it gives the business an advantage not enjoyed by other auto brokers who report their vehicle values honestly,” said U.S. Attorney Nick Brown. “This is an expensive lesson for BidBuy – one that could have been avoided if it followed the rules.”

 “U.S. Customs and Border Protection trade specialists at the Automotive and Aerospace Center of Excellence and Expertise worked diligently with CBP’s Office of Chief Counsel and the U.S. Attorney’s Office for the Western District of Washington to identify the loss of revenue to the United States Government associated with the undervaluation of these imported light trucks,” said Director of Field Operations Christopher Perry, who oversees CBP’s Automotive and Aerospace Center, headquartered in Detroit. “The men and women of CBP are committed to facilitating legitimate trade by enforcing the law, which levels the playing field for American businesses and protects our economy,” Director Perry added.

According to the settlement agreement, the discrepancy between what BidBuy paid for vehicles at auction in Canada, and what it reported to U.S. tax authorities, was first brought to the government’s attention by a qui tam lawsuit filed by a former employee.

Under the qui tam statute, the person who brings the fraud to the attention of the government collects a portion of the settlement, in this case 23% of the $430,000.

According to the qui tam litigation, the duties on imported foreign-made light trucks jumped substantially in 2020, when the U.S. exited the North American Free Trade Agreement (NAFTA) and entered into the United States Mexico Canada Agreement (USMCA). Effective July 1, 2020, the duty on such vehicles jumped to 25% of their value at the time of import. In one example cited in the litigation, BidBuy purchased a 2011 Dodge Ram truck at auction in Canada for the equivalent of $22,494 in U.S. dollars but told U.S. Customs and Border Protection (CBP) that the value of the truck was only $9,638. By underreporting the value of the truck, BidBuy saved approximately $3,214 in owed duties. The former employee claimed that more than 80 vehicles were similarly undervalued.

Under the terms of the settlement BidBuy does not admit any wrongdoing. The settlement allows the company to make the payments over a five-year period. The amount of the settlement was determined after an analysis of the company’s ability to pay.

The U.S. Attorney’s Office and the U.S. Customs and Border Protection Automotive and Aerospace Center of Excellence and Expertise jointly investigated the matter. The settlement was negotiated by Assistant United States Attorney Nickolas Bohl.