Children's Apparel Company CEO Charged in Customs Fraud Suit
Joseph Bailey, CEO of children's clothing companies Stargate Apparel and Rivstar Apparel, is facing criminal charges over allegedly falsifying documents that were given to CBP upon import, the U.S. Attorney’s Office of the Southern District of New York said in a June 6 news release. Bailey is said to have submitted "invoices to CBP that falsely understated the true value of the goods his company imported," the Justice Department said. In addition to the criminal charges, Bailey and the companies face a civil lawsuit, DOJ said.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Bailey and the companies are alleged to have used multiple schemes to avoid the full amounts of customs duties owed, DOJ said. One such scheme involved the use of multiple invoices, one invoice for the actual price paid and another lower-priced invoice that was given to CBP, the U.S. Attorney's Office said in the indictment. Another scheme used invoices for "sample" goods that weren't actually samples, DOJ said. "Sample goods, which are not permitted to be sold, are not subject to customs duties," it said. The “samples” invoice was not actually for samples and was used to make an additional payment to the manufacturer without disclosing that payment to CBP, the U.S. Attorney said.
Bailey is charged "with one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, one count of wire fraud, which carries a maximum sentence of 20 years in prison, and one count of falsely effecting the entry of goods into the United States, which carries a maximum sentence of two years," the U.S. Attorney said. The indictment and civil complaint were previously filed but were unsealed on June 6. The U.S. Attorney said the schemes resulted "in the loss of over $1 million in duty revenue" to the U.S. The lawsuits are a result of a whistleblower lawsuit filed under the False Claims Act, DOJ said.