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Contact: Paul Cullen, Sr.,
Joseph A. Black, (202) 944-8600
March 13, 2008
The U.S. Department of Justice ("DOJ") announced on May 12, 2008,
that it had intervened in a Customs False Claims Act case brought by
The Cullen Law Firm, PLLC, of Washington , D.C. in the U.S. District
Court for the Southern District of New York. At the same time the DOJ
settled the case for $2.8 million. The settlement involved three importers:
Intertex International Inc., J.J. Basics, Inc. and Red Zone, Inc. -
all located in New York City . The defendants allegedly imported the
goods for U.S. retailers, including Wal-Mart Stores, Inc., J.C. Penney
Co., Kohls Corp. and Marshalls, a division of TJX Companies, Inc.
The False Claims Act allows a private party, a "whistleblower," with
knowledge of fraud against the federal government, to sue in federal
court on behalf of himself and the United States to recover significant
civil penalties and treble damages. The whistleblower is usually given
between 15 and 30 percent of the amount recovered by the government
as an incentive to expose fraud against the United States.
"Employees of importers and retailers committing Customs fraud should
now have confidence that their allegations will be taken seriously
by the government. DOJ's intervention in this case represents a major
breakthrough in the use of the False Claims Act to prosecute Customs
fraud," said Joe Black of The Cullen Law Firm.
A former employee of Intertex became aware that Intertex was importing
Chinese made apparel through Korea and labeling the apparel "Made in
Korea ." At the same time Intertex undervalued the textiles on documentation
presented to U.S. Customs and Border Protection. After reviewing documents
provided by the employee that demonstrated the fraud, The Cullen Law
Firm drafted a complaint and statement of material evidence which was
given to the Department of Justice. The complaint was filed under seal
on June 6, 2005. The complaint alleged Intertex falsely declared the
country of origin of the apparel to avoid existing quotas on Chinese
made garments. The complaint also alleged that Intertex became liable
for a 10 percent marking duty on mis-labeled goods and liquidated damages
under a Customs bond for violating Customs laws.
DOJ, with the assistance of investigators from U.S. Immigration and
Customs Enforcement and U.S. Customs and Border Protection, conducted
an over two-year investigation of allegations lodged by the former
employee of Intertex International, Inc. The former employee will receive
a share of the government's settlement.
It is difficult for the U.S. government to detect Customs fraud. Whistleblowers,
however, who have knowledge of the fraud because of their association
with companies committing the fraud, can report the fraud and bring
a suit to recover the loss suffered by the government. The whistleblower
with knowledge of the fraud could be a citizen of any country. The
Cullen Law Firm has represented numerous whistleblowers in False Claims
Acts cases, including other cases involving Customs fraud. "Goods transhipped
from abroad through Mexico or Canada are often declared falsely to
be exempt from duties under the North American Free Trade Agreement.
Whistleblowers are uniquely positioned to expose this fraud, saving
millions in lost revenue for the taxpayers and protecting U.S. jobs
at the same time," said Paul Cullen Sr. of The Cullen Law Firm.
For further information, please contact Paul Cullen, Sr. or Joseph
Black at 202 944-8600 or customsfraud@cullenlaw.com.
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