DOJ Announces Settlements in Pair of False Claims Act Lawsuits on Undervaluation
Two importers each will pay seven-figure sums to settle False Claims Act lawsuits related to the undervaluation of their customs entries and underpayment of duties, DOJ said Aug. 11. Apparel importer Luchiano Visconti and its manager, Sasha Hourizadeh, will together pay $3.64 million to settle allegations they sent fraudulent invoices to their customs broker that understated the actual price paid. In a separate settlement, Eos Energy Storage will pay $1.02 million to resolve allegations that it failed to declare assists and other additions to transaction value.
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Both cases were brought by whistleblowers and subsequently joined by the U.S. government. Mehmet Mustafa Karadag, general manager of a Turkish apparel manufacturer that was one of Luchiano Visconti’s suppliers, filed the lawsuit against that importer. Vincent Icolari filed the lawsuit against Eos Energy Storage, and will receive over $200,000 of the settlement.
According to DOJ, Luchiano Visconti failed to pay over $1.8 million it owed in customs duties by providing false invoices to customs brokers to ensure the amount declared on entry documentation was underreported. Hourizadeh was the Luchiano Visconti employee responsible for placing orders, making payments, communicating with overseas suppliers on needed documentation and managing customs entry issues, DOJ said in its complaint.
According to the settlement agreement, in some cases, Hourizadeh would take the Excel spreadsheet provided as an invoice from suppliers and change the total amount of the invoice, lowering it before transmitting the otherwise identical invoice to Luchiano Visconti’s customs brokers. In other cases, Luchiano Visconti would split the cost of the apparel it bought over two invoices, one that purported to be the price paid for the goods, which would be sent to the customs broker, and the other for “pre-production” services, “patent” services and “designer” services that were actually part of the price paid for the apparel, DOJ said.
Though the settlement dismisses Luchiano Visconti’s customs brokers, Barsan Global Logistics and Triways Logistics, from the case, it “does not release” them “from any claims that may be asserted by the U.S. related to covered conduct.”
Eos Energy Storage, on the other hand, failed to declare as assists the value of components that it purchased and provided to a Chinese manufacturer responsible for assembling the “dry” batteries it imported. A publicly traded company, “Eos admitted that as the importer of record, it was obligated to declare the value of the components, as well as the transportation and packing costs, but failed to do so on more than 60 occasions,” DOJ said.