January 21, 2021

Volume XI, Number 21

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January 19, 2021

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Chinese Earrings at Center of $400,000 False Claims Act Settlement for Unpaid Customs Duties by Former Jewelry Importer

TSI Accessories Group, Inc., a former jewelry importer, agreed to pay $402,637 to settle allegations that it violated the False Claims Act by failing to pay customs duties on sterling silver earring imports from China. The amount of customs duties owed depends on the item’s value—the more expensive the item is, the lower the duty rate.

Between 2012 and 2015, TSI Accessories imported display cards with multiple pairs of earrings for resale at department stores. TSI allegedly improperly reported the quantity 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 pairs of earrings on each card. By increasing the declared value of these imports, TSI paid a lower duty than they should have based on each earring’s value.

“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.”

This settlement resolves allegations brought forward by a whistleblower under the qui tam provisions of the False Claims Act. This Act allows private parties to sue on behalf of the government for false claims and receive a share of any recovery. The whistleblower in this settlement will receive approximately $70,000 of the recovery in this case.

“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.”

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© 2020 by Tycko & Zavareei LLPNational Law Review, Volume XI, Number 11
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About this Author

Jonathan K. Tycko,Civil Litigation Attorney, Tycko Zavareei Law firm Washington DC
Partner

Mr. Tycko has represented clients in numerous qui tam whistleblowing cases, in areas including Medicare fraud, government contracts fraud, and tax fraud. In addition, with the 2010 passage of the Dodd-Frank Act, Mr. Tycko’s practice has expanded into representation of whistleblowers in the areas of securities and commodities, and violations of the Foreign Corrupt Practices Act.

Mr. Tycko focuses his practice on civil litigation, with special concentrations in whistleblower cases, consumer class actions, unfair competition litigation, employment litigation and housing litigation. He...

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