Impact of Reverse False Claims on Customs

Billions of dollars of goods pour through the border through numerous ports all across the United States, which accept goods on a regular basis. This is a huge issue with respect to the government being able to obtain funds that it deserves, and Congress has voted that it deserves.

Customs duties are the second largest source of income to the United States (the Internal Revenue Service being first), and therefore enforcement of Customs duties is a serious matter for the United States Treasury on an economic basis.

The impact of the Reverse False Claims provision is that it gives relators the opportunity to come forward and expose those who are trying to defraud the government and cheat payment of customs. If you want to come forward in order to expose fraudulent customs statements, or you want to know more about Reverse False Claims, consult an experienced attorney that can help.

Customs Explained

When foreign goods, subject to duty, come into the United States at the border, then that duty is already established. It is generally an obligation that is not contingent on any other government action. It can be an obligation, regardless of the amount involved, which is clear and which exists to the person who is importing anything.

As a result, the billions and billions of dollars of goods shipped across the United States border can potentially subject to the False Claims Act. When goods that are imported, which are subject to customs duties, if the duties are avoided by an importer, either by improperly marking goods or listing goods to avoid paying that obligation that could be the appropriate subject for a False Claims Act case.

Under this provision creating liability for a Reverse False Claim, the same damages and recovery theories as under any False Claims Act case arise. That is to say, the person or company who is in violation of this section of the False Claims Act would be subject to treble damages for any customs duties they illegally avoided.

Relators Rewards For Reverse False Claims

The relator who brings the case under this section of the False Claims Act, would be entitled to a recovery of between 15% and 25% of whatever the government obtains if the government intervenes in the case, or between 25% and 30% if the government does not intervene in the case and the relator is nonetheless successful in obtaining a judgment or settlement. It is just as powerful as any other provision creating liability under the False Claims Act if and when it can be applied to an appropriate set of circumstances that create liability under the False Claims Act.

The Government is owed money in an obligation to pay it for all manner of reasons. Customs duties appear to be the new frontier of False Claims Act litigation. It appears that the lawyers and the Justice Department, and even U.S. Customs officials, have caught up to the fact that duties can be enforced in this way.

Importance of Reporting Fraudulent Customs Duties

There are public policy reasons for why duties are imposed on imports in the first place. If Congress is going to impose duties on any type of provision or any type of import then U.S. Customs has to enforce that duty and citizens have every right to expect that the funds will be collected and used by the government..

It simply is not fair to American businesses and manufacturers, nor is it fair to importers who want to abide by the law, to allow those who import their goods and services illegally, to get away with it. False Claims Act practitioners and the Justice Department are prepared to go forward and use this relatively obscure part of the law to enforce a major area of potential fraud against the United States Government.

Unlike healthcare, pharmaceuticals, or the defense contracting world, Customs enforcement is a relatively new area for False Claims Act whistleblowers to approach. It is not yet known what the extent of fraud in this area may be nor how big these cases may be. The False Claims Act can empower individuals to help the government fight fraud in avoiding Customs duties and so we may learn the extent of the fraud the old fashioned way, by whistleblowers reporting fraud and winning cases on behalf of the government.

Reason to Come Forward

Any person with real inside information with respect to fraud committed in the importation of duties, now has a powerful tool that they may not have known existed or knew could be used to their benefit. It is worth understanding for people in this area of business who can be a relator because they may not be as aware of the False Claims Act as those in the medical profession or those in defense contracting who have more reason of successful litigation to inform their professions. Anyone with knowledge of illegal importation of goods that the government may be a legitimate relator under the False Claims Act.

As with any False Claims Case the more inside information that the relator may possess and the more valuable that information is, the more likely that case is to succeed. It is more than worth the trouble if a person is aware of the attempt to avoid paying duties and avoid paying Customs at the border, to learn about this area of law and learn what rights a person may have under it. If an individual wants to come forward with a claim or wants to know more about the impact of Reverse False Claims on Customs, they should consult a skilled False Claims Act attorney that could answer their questions.