Anti-Fraud Coalition Tells 9th Circuit Tariff Act Not Only Way to Recover Evaded AD Duties
The Tariff Act of 1930 does not provide the exclusive means for recovering evaded antidumping duties, the Anti-Fraud Coalition said in a June 26 amicus brief at the U.S. Court of Appeals for the 9th Circuit. The False Claims Act stands as a "complementary enforcement mechanism" used when an importer defrauds the U.S. by filing false customs forms to evade duties, the brief said. The coalition filed its brief in an FCA suit on whether Sigma Corp., along with other companies, evaded antidumping duties on welded couplets from China by submitting false customs information (Island Industries v. Sigma Corp., 9th Cir. # 22-55063).
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The coalition claimed Congress amended the FCA in 2009 to expand liability under "reverse false claims," doing so with the intent of assuring the statute covered customs evasion and clearly showing the law was meant to coexist with the Tariff Act. "The Senate Report demonstrates the amendment to the FCA was meant to reject jurisprudence that made it more difficult for relators or the Government to use the FCA to recover evaded customs duties," the brief said.
The FCA "serves an important function to thwart customs fraud and fills a critical gap in anti-fraud enforcement efforts by incentivizing whistleblowers to come forward with information about fraud," the coalition argued. "The country will lose significant revenue if the FCA is no longer an available customs enforcement mechanism, and for the Ninth Circuit to eliminate this mechanism would be particularly harmful given how much of the country’s importing activity takes place through ports located within this Circuit."
The coalition is a nonprofit organization established to combat fraud against the U.S. and champions the qui tam elements of the FCA, it said. As a result, it sought to make its voice heard in the present case in which Sigma was found guilty by a California trial court of violating the FCA by failing to pay antidumping duties (see 2202090071). Sigma was found liable for over $24.2 million in damages and $1.8 million in civil monetary penalties. On appeal, the court raised the question of whether the FCA or the Tariff Act was the proper jurisdiction under which to recover AD avoided via false statements. Sigma says the Tariff Act reigns over the FCA, while the coalition takes the opposite stance.
The amicus brief emphasized the importance the 9th Circuit's interpretation of the FCA has on anti-customs fraud enforcement, given the amount of trade that occurs through ports within the circuit's jurisdiction. "Accordingly, this Court should be particularly reticent about adopting a novel and unprecedented reading of the FCA that will adversely impact the Government’s enforcement efforts," the brief said.