US Asks for Continued Stay in Customs Fraud Suit Due to Parallel Criminal Investigation
The U.S. asked for an extended stay in a customs penalty suit against Greenlight Organic and its owner Parambir Singh "Sonny" Aulakh given that the U.S. Attorney for the Southern District of New York opened a criminal investigation on the evidence recovered during a search of Aulakh's residence. Filing a status report in the Court of International Trade, the government said the case should be stayed until Jan. 2, after which the U.S. will file another status report "updating the Court on whether a continued stay is needed" (United States v. Greenlight Organic, CIT # 17-00031).
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The U.S. filed the customs fraud suit in 2017 to address a misclassification scheme led by Greenlight. The government alleged that the company committed fraud when it claimed its Vietnam-origin knit garments were misclassified as woven garments, which undervalued the goods. Greenlight originally said the suit was beyond the statute of limitations. Fraud cases must be brought within five years after the government discovers the fraud. In 2018, the trade court questioned when the government actually knew about the fraud.
A dispute between the parties about when the U.S. discovered the fraud commenced. The trade court said there was little agreement on the facts, moving the case to a trial (see 2302160067). The case was then stayed after federal agencies searched Aulakh's California residence, seizing "documents, records, and communications related to Greenlight." These documents had not previously been disclosed in this, or any other, case. This led the Southern District of New York to open a criminal investigation, which is still ongoing.