| Importer Opportunity Alert: It is still possible to file a refund claim for the Section 301 customs duties on imported merchandise from China Late last year, our law firm sued the federal government in the US Court of International Trade on behalf of many of our importer clients to force the government to refund the Section 301 customs duties (List 3 and 4A) that our clients paid on imported merchandise from China. Progress on the litigation was slow for the first several months because of the large number of similar lawsuits that were filed. However, the Court and the parties have finally begun to coordinate their efforts, the lawsuits have been consolidated, and procedures are being hammered out. There are still a great number of both procedural and legal aspects that must be resolved, including the timing of the statute of limitations. While there are no guarantees, the good news is that it may still be possible for importers to join the litigation and, given the groundwork that has already been laid down, this may be an affordable option. However, we encourage importers who have not filed to do so as quickly as possible to preserve all rights to a refund. We will provide an update on the Section 301 customs duties refund litigation during our free International Trade Law Update/Webinar on April 8. See calendar, below, for details. Please contact us if you are interested in discussing the possibility of your company filing a refund claim. How to Whistleblow on Importers (and possibly get rich along the way) There are various justifications for turning an importer in to enforcement authorities for not paying customs duties owed. Perhaps a sense of integrity is the whistleblower’s motivation, of wanting to do the right thing. Or maybe the whistleblower’s motivation is mere pettiness, either vengeance or schadenfreude. The lesson here is to treat your employees well if you don’t want them to tattle on you. Of course, the deeper lesson is to pay the customs duties that you owe. But often the whistleblower’s incentive is neither lofty nor petty, but practical. Companies blow the whistle on other companies to advance their own economic interests. By narking on others, whistleblowers may be trying to even the playing field. After all, a company that successfully evades customs duties gains a substantial competitive edge over competitors who are constrained by scruples. Whatever the motivations, the law offers several ways to inform on an importer for illegally evading customs duties. Here are some of those ways: e - Allegations This is CBP’s online portal for informing the agency of customs law violations. Violators include not only importers, but also customs brokers. While an informant can request anonymity, CBP warns that any such request “may hamper CBP’s enforcement efforts when further contact with the informant may be helpful to obtain more detailed information.” An informant is provided no financial award for its effort. Enforce and Protect Act (EAPA) This law is specifically designed to out antidumping duty and countervailing duty violators. If the violator is not evading antidumping or countervailing duties, the EAPA is not the right program. However, if you are informing on a company for not paying antidumping or countervailing duties, the EAPA provides a formal administrative procedure for investigating and resolving complaints. This is very different from filing a complaint with e-Allegations which feels like dropping your complaint into a black hole. One fascinating aspect of EAPA is that CBP does not require the informer to possess firsthand knowledge of the violations. CBP explains: “Examples of some sources of data relevant data cited in previous allegations include, Panjiva; Import Genius; Datamyne; PIERS; first-hand accounts of evasion presented in signed affidavits, photographs, or videos; third party market research; email message between people; foreign customs data; or any other data that suggests evasion. CBP does not endorse any data providers, and this list does not include all potential sources of data.” EAPA complaints may be filed only by an interested party, narrowly defined, an interested parties cannot remain anonymous. As with EAPA, the whistleblower does not get to share in any duties that CBP collects. False Claims Act or Qui Tam False Claims Act (FCA) or Qui Tam whistleblowers may be eligible for a reward of 15 percent to 30 percent, plus attorneys fees, of what the government recovers. While the FCA is not limited to customs duties (FCA whistleblowing awards are possible wherever the federal government collects money owed from a violator), there has been a significant uptick in awards for informing on antidumping and countervailing duty violators. [rewards and awards are often used interchangeably in whistleblower cases]. Misclassification and misreporting value or the country of origin of imported merchandise can also serve as grounds for an FCA lawsuit. The stunning thing about the FCA is that a company’s own compliance officers can qualify for huge whistleblower rewards, although just about anyone can be an FCA whistleblower. A person who designed and even oversaw a company’s trade compliance program can become rich by informing on that very same company, and the company is not allowed to retaliate. An FCA whistleblower is called a relator. In most cases, a relator will sue a defendant in federal district court with the hope that the US Department of Justice will intervene and take over the lawsuit. Moiety US Customs and Border Protection (CBP) offers its own whistleblower incentives under 19 USC § 1619 and 19 CFR § 161.12. The program is called Moiety, but unlike the FCA, there is a $250,000 cap on whistleblower rewards. CBP recommends that the informant file its original information through its e-Allegations website and promises that the information, “including informant’s personal information, will be kept strictly confidential and only be used for investigation.” The Vital Role of an Experienced Attorney While the potential rewards are astronomical, whistleblowing is not for the timid or the unprepared. Sharing information outside of certain channels may compromise the investigation and the chances of getting a whistleblower reward. Timing is also vital. Providing the government with information it already possesses is likely to end in tragedy for the whistleblower. In light of the various reporting options, whistleblowing requires careful planning. On the other end, importers should be ever vigilant to avoid potential whistleblower problems and defending against whistleblower actions. In either case, our law firm is ready to assist your company. How big is the cargo ship that was stuck in the Suez Canal? by Oscar Gonzalez, Attorney A gigantic (is there any other kind?) cargo ship ran aground in the Suez Canal triggering a bottleneck and disrupting global trade as dredging experts seek to free the boat and avert economic catastrophe. The problem is that modern cargo ships are being built ever larger to carry ever heavier loads, which makes these mini-islands barely able to scrape by existing channels. How large is this boat? It is 400 meters long, a fairly nebulous measure that is hard for most people to relate to. Thus, I created the following chart to provide a more relatable sense of its length. If the length amazes and possibly annoys you, wait until I tell you how much the ship weighs. 200,000 tons. Yes, 200,000 tons. If that just sounds like another disembodied and unimpressive number, allow me to impress you. Here are other things that weigh 200,000 tons. Now that we have a better sense of the immensity of the ship (its size is not atypical) and the monumental effort it will take to dislodge it, perhaps we should all reconsider the economic viability of “larger is always better” shipping. If not, we lawyers will, of course, represent aggrieved parties seeking redress from the resulting chaos, but we will probably be the only ones smiling. Ohio Company Pays $216,464 Penalty For Iranian Shipments The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with UniControl, Inc., a Cleveland, Ohio-based company that manufactures process controls, airflow pressure switches, boiler controls, and other instrumentation. UniControl agreed to remit $216,464 to settle its potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR). As a result of its failure to act on multiple apparent warning signals, UniControl exported 21 shipments of its goods from the United States to two European companies with knowledge or reason to know that the goods were intended specifically for supply, transshipment, or re-exportation to Iran by the two European companies. BitPay Pays $507 OFAC Penalty The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with BitPay, Inc., a private company based in Atlanta, Georgia, that offers a payment processing solution for merchants to accept digital currency as payment for goods and services. BitPay agreed to remit $507,375 to settle its potential civil liability for 2,102 apparent violations of multiple sanctions programs. BitPay allowed persons who appear to have been located in the Crimea region of Ukraine, Cuba, North Korea, Iran, Sudan, and Syria to transact with merchants in the United States and elsewhere using digital currency on BitPay’s platform even though BitPay had location information, including Internet Protocol (IP) addresses and other location data, about those persons prior to effecting the transactions. Comtech Xicom Technology pays $122,000 Export Penalty Settlement Comtech Xicom Technology of Santa Clara, CA agreed to pay a $122,000 civil penalty to the US Department of Commerce for three violations of the Export Administrative Regulations. Comtech |
Importer Opportunity Alert: It is still possible to file a refund claim for the Section 301 customs duties on imported merchandise from China
Late last year, our law firm sued the federal government in the US Court of International Trade on behalf of many of our importer clients to force the government to refund the Section 301 customs duties (List 3 and 4A) that our clients paid on imported merchandise from China. Progress on the litigation was slow for the first several months because of the large number of similar lawsuits that were filed. However, the Court and the parties have finally begun to coordinate their efforts, the lawsuits have been consolidated, and procedures are being hammered out. There are still a great number of both procedural and legal aspects that must be resolved, including the timing of the statute of limitations. While there are no guarantees, the good news is that it may still be possible for importers to join the litigation and, given the groundwork that has already been laid down, this may be an affordable option. However, we encourage importers who have not filed to do so as quickly as possible to preserve all rights to a refund.
We will provide an update on the Section 301 customs duties refund litigation during our free International Trade Law Update/Webinar on April 8. See calendar, below, for details.
Please contact us if you are interested in discussing the possibility of your company filing a refund claim.
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How to Whistleblow on Importers (and possibly get rich along the way)
There are various justifications for turning an importer in to enforcement authorities for not paying customs duties owed. Perhaps a sense of integrity is the whistleblower’s motivation, of wanting to do the right thing. Or maybe the whistleblower’s motivation is mere pettiness, either vengeance or schadenfreude. The lesson here is to treat your employees well if you don’t want them to tattle on you. Of course, the deeper lesson is to pay the customs duties that you owe. But often the whistleblower’s incentive is neither lofty nor petty, but practical. Companies blow the whistle on other companies to advance their own economic interests. By narking on others, whistleblowers may be trying to even the playing field. After all, a company that successfully evades customs duties gains a substantial competitive edge over competitors who are constrained by scruples.
Whatever the motivations, the law offers several ways to inform on an importer for illegally evading customs duties. Here are some of those ways:
e-Allegations
This is CBP’s online portal for informing the agency of customs law violations. Violators include not only importers, but also customs brokers. While an informant can request anonymity, CBP warns that any such request “may hamper CBP’s enforcement efforts when further contact with the informant may be helpful to obtain more detailed information.” An informant is provided no financial award for its effort.
Enforce and Protect Act (EAPA)
This law is specifically designed to out antidumping duty and countervailing duty violators. If the violator is not evading antidumping or countervailing duties, the EAPA is not the right program. However, if you are informing on a company for not paying antidumping or countervailing duties, the EAPA provides a formal administrative procedure for investigating and resolving complaints. This is very different from filing a complaint with e-Allegations which feels like dropping your complaint into a black hole. One fascinating aspect of EAPA is that CBP does not require the informer to possess firsthand knowledge of the violations. CBP explains:
“Examples of some sources of data relevant data cited in previous allegations include, Panjiva; Import Genius; Datamyne; PIERS; first-hand accounts of evasion presented in signed affidavits, photographs, or videos; third party market research; email message between people; foreign customs data; or any other data that suggests evasion. CBP does not endorse any data providers, and this list does not include all potential sources of data.”
EAPA complaints may be filed only by an interested party, narrowly defined, an interested parties cannot remain anonymous. As with EAPA, the whistleblower does not get to share in any duties that CBP collects.
False Claims Act or Qui Tam
False Claims Act (FCA) or Qui Tam whistleblowers may be eligible for a reward of 15 percent to 30 percent, plus attorneys fees, of what the government recovers. While the FCA is not limited to customs duties (FCA whistleblowing awards are possible wherever the federal government collects money owed from a violator), there has been a significant uptick in awards for informing on antidumping and countervailing duty violators. [rewards and awards are often used interchangeably in whistleblower cases]. Misclassification and misreporting value or the country of origin of imported merchandise can also serve as grounds for an FCA lawsuit. The stunning thing about the FCA is that a company’s own compliance officers can qualify for huge whistleblower rewards, although just about anyone can be an FCA whistleblower. A person who designed and even oversaw a company’s trade compliance program can become rich by informing on that very same company, and the company is not allowed to retaliate. An FCA whistleblower is called a relator. In most cases, a relator will sue a defendant in federal district court with the hope that the US Department of Justice will intervene and take over the lawsuit.
Moiety
US Customs and Border Protection (CBP) offers its own whistleblower incentives under 19 USC § 1619 and 19 CFR § 161.12. The program is called Moiety, but unlike the FCA, there is a $250,000 cap on whistleblower rewards. CBP recommends that the informant file its original information through its e-Allegations website and promises that the information, “including informant’s personal information, will be kept strictly confidential and only be used for investigation.”
The Vital Role of an Experienced Attorney
While the potential rewards are astronomical, whistleblowing is not for the timid or the unprepared. Sharing information outside of certain channels may compromise the investigation and the chances of getting a whistleblower reward. Timing is also vital. Providing the government with information it already possesses is likely to end in tragedy for the whistleblower. In light of the various reporting options, whistleblowing requires careful planning. On the other end, importers should be ever vigilant to avoid potential whistleblower problems and defending against whistleblower actions. In either case, our law firm is ready to assist your company.
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How big is the cargo ship that was stuck in the Suez Canal?
by Oscar Gonzalez, Attorney
A gigantic (is there any other kind?) cargo ship ran aground in the Suez Canal triggering a bottleneck and disrupting global trade as dredging experts seek to free the boat and avert economic catastrophe. The problem is that modern cargo ships are being built ever larger to carry ever heavier loads, which makes these mini-islands barely able to scrape by existing channels.
How large is this boat?
It is 400 meters long, a fairly nebulous measure that is hard for most people to relate to. Thus, I created the following chart to provide a more relatable sense of its length.
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If the length amazes and possibly annoys you, wait until I tell you how much the ship weighs. 200,000 tons. Yes, 200,000 tons. If that just sounds like another disembodied and unimpressive number, allow me to impress you. Here are other things that weigh 200,000 tons.
| |
Now that we have a better sense of the immensity of the ship (its size is not atypical) and the monumental effort it will take to dislodge it, perhaps we should all reconsider the economic viability of “larger is always better” shipping. If not, we lawyers will, of course, represent aggrieved parties seeking redress from the resulting chaos, but we will probably be the only ones smiling.
| |
Ohio Company Pays $216,464 Penalty For Iranian Shipments
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with UniControl, Inc., a Cleveland, Ohio-based company that manufactures process controls, airflow pressure switches, boiler controls, and other instrumentation. UniControl agreed to remit $216,464 to settle its potential civil liability for apparent violations of the Iranian Transactions and Sanctions Regulations (ITSR). As a result of its failure to act on multiple apparent warning signals, UniControl exported 21 shipments of its goods from the United States to two European companies with knowledge or reason to know that the goods were intended specifically for supply, transshipment, or re-exportation to Iran by the two European companies.
BitPay Pays $507 OFAC Penalty
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced a settlement with BitPay, Inc., a private company based in Atlanta, Georgia, that offers a payment processing solution for merchants to accept digital currency as payment for goods and services. BitPay agreed to remit $507,375 to settle its potential civil liability for 2,102 apparent violations of multiple sanctions programs. BitPay allowed persons who appear to have been located in the Crimea region of Ukraine, Cuba, North Korea, Iran, Sudan, and Syria to transact with merchants in the United States and elsewhere using digital currency on BitPay’s platform even though BitPay had location information, including Internet Protocol (IP) addresses and other location data, about those persons prior to effecting the transactions.
Comtech Xicom Technology pays $122,000 Export Penalty Settlement
Comtech Xicom Technology of Santa Clara, CA agreed to pay a $122,000 civil penalty to the US Department of Commerce for three violations of the Export Administrative Regulations. Comtech Xicom Technology exported to Russia, the UAE, and Brazil, without first securing the requisite export license of US-origin items that controlled for national security reasons.
MSI Aircraft Maintenance Services International pays a $51,921 penalty for unauthorized export of aircraft parts to Iran
MSI Aircraft Maintenance Services International, a German company, agreed to pay a $51,921 penalty and to not to export to the USA for a period of three years. MSI transshipped through Germany US-origin reservoir and valve assemblies destined for Iran.
Texas Man Sentenced for Trafficking in Wildlife
A Texas man was sentenced to 20 months in prison for trafficking protected species and ordered to pay a $2,000 fine and be placed on supervised release for a period of two years after completing his prison term.
Indian Cancer Drug Manufacturer to Pay $50 Million for Concealing and Destroying Records in Advance of FDA Inspection
Indian drug manufacturer Fresenius Kabi Oncology Limited (FKOL) was sentenced to pay $50 million in fines and forfeiture after pleading guilty to concealing and destroying records prior to a 2013 U.S. Food and Drug Administration (FDA) plant inspection.
Former Venezuelan Official Pleads Guilty in Connection with International Bribery and Money Laundering Scheme
A dual U.S.-Venezuelan citizen and former official at Citgo Petroleum Corporation, a Houston-based subsidiary of Venezuela’s state-owned and state-controlled energy company Petróleos de Venezuela S.A. (PDVSA), pleaded guilty Monday in connection with his role in laundering millions of dollars in bribes and corruptly providing business advantages to multiple individuals who obtained contracts with Citgo and PDVSA.
Doctor Selling COVID-19 “Cure” Charged With Lying to U.S. Customs, Stealing Employee’s Identity
Dr. Jennings Ryan Staley, previously charged with one count of mail fraud, was indicted by a federal grand jury yesterday for additional crimes arising from his business venture selling COVID-19 “treatment kits,” which he advertised to one potential customer as a “miracle cure.” Staley is a licensed physician and the former operator of Skinny Beach Med Spas in and around San Diego.
Jewelry Importer to Pay $400,000 to Resolve False Claims Act Allegations Concerning Unpaid Customs Duties on Chinese Earrings
A former jewelry importer, TSI Accessories Group, Inc. (TSI), will pay $402,637 to resolve allegations that it violated the False Claims Act by failing to pay customs duties on sterling silver earring imports from China.
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Katherine C. Tai Sworn in as US Trade Representative
03/18/2021
WASHINGTON – Vice President Kamala Harris administered the oath of office to Katherine C. Tai and swore her in as the 19th United States Trade Representative. Ambassador Tai is the first Asian American, and first woman of color confirmed to serve in the role. Tai previously served at USTR from 2007-2014, most recently as Chief Counsel for China Trade Enforcement.
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Free Webinars
International Trade Law Update
April 8, 2021, 11 - 11:20 am Central (20 minutes)
Informative and entertaining survey of this month’s hottest international trade law news presented to you in bite-sized format. Topics include Section 301 customs duties refund litigation update, Forced Labor/China/Xinjiang Uighur Autonomous Region, antidumping update, whistleblower update, and new OFAC sanctions.
Importer Customs Audit Survival Guide
April 15, 2021, 11 am - 12 noon Central (1 hour)
This one-hour instruction on how best to handle and even thrive during an audit conducted by US Customs and Border Protections.
International Trade and Intellectual Property Rights: Know and Protect
April 22, 2021, 11 am - 12 noon Central (1 hour)
Patents, trade secrets, copyrights, and trademarks will be reviewed.
Importer Prior Disclosures and Exporter Voluntary Self-Disclosures Explained
April 29, 2021, 11 - 11:20 am Central (20 minutes)
Whether you are an importer or an exporter, prior disclosures and voluntary self-disclosures provide an opportunity for companies to preempt federal enforcement investigations and penalties. This webinar will review each program and the benefits and risks.
Importer Fines, Penalties, & Forfeitures
May 6, 2021, 11 am - 12 noon Central (1 hour)
Importer best practices on handling fines, penalties, forfeitures, & liquidated damages will be reviewed.
Foreign Trade Zones: What They Do, How You Can Benefit, and How To Apply
May 13, 2021, 11 am - 12 noon Central (1 hour)
FTZs are a power means for customs duty savings, but they have their own unique regulations and terminology. This webinar will explain it all.
Registration: Free. Register at internationaltrade.law.
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