The United States has filed a complaint against Barco Uniforms Inc. (Barco), Kenny Chan, David Chan, and companies operated and controlled by the Chans, alleging that they violated the False Claims Act by knowingly and improperly underpaying customs duties owed on imported apparel.
Barco sells apparel, including uniforms, to restaurants and health care providers, among others. Kenny and David Chan operate various companies that supply Barco with apparel manufactured overseas, including in China.
“Those who import and sell foreign-made goods in the United States must comply with all trade laws,” said Acting Assistant Attorney General Yaakov M. Roth of the Justice Department’s Civil Division. “The Department will hold accountable parties who evade or underpay duties owed on imported merchandise.”
To import merchandise into the United States, the party making the entry must declare, among other things, the value of the goods, whether the goods are subject to duties, the applicable duty rate, and the amount of duties owed.
CBP relies on these representations to levy and collect duties on imported merchandise. A commercial invoice reflecting the value of the goods is required to support the declarations submitted to CBP.
The United States’ complaint alleges that the defendants conspired to knowingly and improperly avoid or decrease the payment of customs duties by undervaluing imported garments that Barco purchased from foreign suppliers.
Among other things, the government’s complaint alleges that the defendants used a double-invoicing scheme featuring false entry summaries presented to CBP that undervalued imported goods purchased by Barco, thereby reducing the duties paid on the merchandise.
The government further contends that the defendants continued to underpay customs duties even after a third-party auditor advised Barco of risks associated with the underpayment of duties and recommended that Barco “double-check” duty calculations underlying prices that Barco agreed to with its foreign suppliers.
In addition to Barco, Kenny Chan, and David Chan, the government’s complaint asserts claims against the following entities operated and controlled by the Chans: Able Allied Limited, Nathan Global Direct Inc., J&K Garment Inc., Mega Goodwill Ltd., JS Garment Co., and Superway Import & Export Inc.
