Dorm Furniture Importer to Pay $1.5 Million to Settle Allegations of Evasion of Wooden Bedroom Furniture Duties
An importer of college dormitory furniture, a sourcing firm, and the owner of both companies will pay a total of $1,525,000 to settle charges that they falsely claimed on customs documentation that they were importing office furniture in an effort to evade antidumping duties on wooden bedroom furniture from China, the Department of Justice said Sept 30 (here). In a whistleblower case brought by a former Omni employee, the government claimed Ecologic Industries, Omni Supply Chain Management and Daniel Scott Goldman “conspired with others” to make false statements and misclassified the furniture on entry documentation to avoid paying antidumping duties, DOJ said.
The original complaint filed in 2014 by the whistleblower, Michael Bissanti, also claimed Omni's customs broker, R.L. Swearer, was a participant in the scheme. The government declined to join the suit against Swearer, joining only in the allegations against Goldman, Ecologic and Omni. As a result of the settlement, the Western Texas U.S. District Court dismissed charges against all other defendants named in Bissanti’s complaint, including Swearer. The settlement agreement and other documents associated with the case remain sealed.
Swearer denied the allegations. “We categorically deny any involvement in this duty evasion scheme, said Chas Watson, president of Swearer. Customs brokers must rely "on the documents and product descriptions provided by the importer in order to properly classify goods," said Watson. "Any misclassification was the result of the importer choosing to falsify documentation and give incorrect product descriptions. The only parties that would benefit from this type of scheme would be manufacturers, and the importer themselves.”
According to the complaint, Goldman and Bissanti visited potential Chinese suppliers in 2011 and observed workers mislabeling bedroom furniture to avoid payment of duties. Upon their return, they discussed the possibility with Swearer of importing wooden bedroom furniture as office furniture, the complaint said. A Swearer employee allegedly told them that misdescribing the furniture wouldn’t be an issue as long as “it was not solely used for deception,” and the chances of CBP finding out would be low if the furniture were classified under tariff subheadings for office furniture. Bissanti claimed he advised Goldman against the practice, but did not know that it would be illegal, having observed during the trip to China that other U.S. furniture importers apparently engaged in similar activities, the complaint said.
Ecologic soon began purchasing furniture from the Chinese suppliers under a parallel invoicing scheme, the complaint said. Ecologic would issue a purchase order that accurately described the wooden bedroom furniture, which Bissanti would forward to the supplier, the complaint said. The factory would then create a pro forma invoice listing Ecologic with the buyer, with identical images, quantities and values, but a different item description, it said. A commercial invoice that included the incorrect descriptions would then be transmitted by the supplier to Swearer, allegedly listing Omni as the importer of record and buyer to avoid any connection to Ecologic. The furniture would then allegedly be misclassified on entry documentation, including importer security filings, entries and entry summaries, and Omni would be identifed as the importer of record even though it had no right to make entry, the complaint said. Goldman will pay $850,000 to settle the case, with Omni and Ecologic paying the remaining $675,000. Bissanti, who worked as a consultant to Omni before briefly heading the company as its president in 2014, will receive $228,750.00 as his share of the settlement.
Email ITTNews@warren-news.com for a copy of the complaint.