Importer Must Pay Over $1.3M for Avoiding Apparel Customs Duties, Court Orders
The U.S. District Court for the Southern District of New York last week ordered importer Delta Uniforms and its owner, George Iloulian, to pay over $1.3 million for avoiding customs duties on medical uniforms, footwear and other apparel. Judge Paul Gardephe said they violated the False Claims Act and must pay triple the amount of the evaded duties and a $557,880 civil penalty.
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Delta Uniforms imported clothing and footwear from China, Pakistan and Bangladesh, and used a "double-invoicing scheme" to avoid customs duties. The company and its owner, via their customs broker, submitted an invoice to CBP that undervalued the goods and falsely listed the fabric content of the apparel. The company said its goods were entirely made of cotton, as opposed to being made of a mix of cotton and man-made fibers, to get a lower duty rate.
Iloulian admitted that he "caused false documents to be submitted to" CBP that reflected a lower price than he had paid, and that he knew this was illegal and would lead to underpaid customs duties. The court said these "admissions provide a sufficient basis for this Court to grant" judgment against the man.
The court said the company can't escape duty liability because the record shows that Iloulian "continued in his role as Delta Uniform's owner and operator during the pendency of the criminal case."
The court accepted the government's claims for "treble" damages regarding the avoided customs duties, though the judge imposed a slightly higher civil penalty than the mark the government sought. The court said the $557,880 penalty was justified due to the "long-running nature of the fraud scheme," Iloulian's high degree of knowledge that the scheme was illegal and the "fact that the twenty examples cited by the Government constitute only a small fraction of the 'countless' fraudulent invoices prepared during the course of the fraud scheme."
The qui tam FCA suit was brought by whistleblower Hamid Lahijani, a former Delta Uniforms operations manager, who will get a portion of the penalty.