The U.S. Attorney for the Southern District of New York, the New York Field Office of Homeland Security Investigations (HIS) and U.S. Customs and Border Protection (CBP) have settled a civil fraud lawsuit under the False Claims Act against Byer California, Inc., a wholesaler of women’s and girls’ apparel.
The suit had charged Byer with evading customs duties and repeatedly ignored warning signs that the company’s importer, Queen Apparel NY Inc., was falsely underreporting the value of garments imported into the U.S.
The government’s complaint alleged that for years, Queen’s Apparel NY had falsified customs forms by undervaluing the garments it manufactured in Vietnam and imported into the U.S. for Byer. This fraudulent practice substantially reduced the amount of import duties.
The suit charged that the company “was well aware that Queen was grossly undervaluing Byer’s garments in customs forms submitted to CBP. Yet, Byer chose to continue sending work orders to Queen for garments that it understood would be imported into the country with false customs forms resulting in fraudulent underpayment of customs duties.”
The suit noted that in September 2012, Queen’s owner tried to bribe Byer’s compliance manager “with an envelope full of cash,” which was rejected. However, Byer, based in San Francisco, continued to provide Queen with more work orders until April 2013, despite multiple warning signs that Queen was filing documents containing false valuations to CBP.
As part of the settlement, Byer admitted to and accepted responsibility for certain conduct alleged in the government’s complaint and agreed to pay $325,000 in fines.
Manhattan U.S. Attorney Geoffrey S. Berman said, “This office is committed to combating customs fraud. Importers and the merchants who retain them will be held accountable when they evade customs duties by lying about the value of the goods they bring into the United States.”
HSI special agent in charge Angel M. Melendez said U.S. Customs was denied more than $250,000 of underpaid duties.
The U.S. filed a civil fraud lawsuit against Queen and its owner, Hank Choi, on Feb. 20, which is pending. The conduct in this matter was first brought to the attention of federal law enforcement by a whistleblower who filed a lawsuit under the False Claims Act.
This case is being handled by the Office’s Civil Frauds Unit. Assistant U.S. Attorney Kirti Vaidya Reddy is in charge of the case.