Texas furniture companies pay $15 million for False Claims Act violations relating to customs duties

by Ben Vernia | January 5th, 2016

On December 21, the Department of Justice announced that two Texas-based companies had agreed to pay a combined $15 million to settle civil allegations that they violated the False Claims Act in connection with customs duties on furniture imported from China. According to DOJ’s press release:

The Department of Justice announced today that University Furnishings LP and its general partner, Freedom Furniture Group Inc. (collectively University Furnishings) agreed to pay $15 million to resolve a lawsuit brought under the False Claims Act alleging that the companies made or conspired with others to make false statements to avoid paying duties on wooden bedroom furniture imported from the People’s Republic of China.  Texas-based University Furnishings sells furniture for student housing.

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The government alleged that between 2009 and mid-2012, University Furnishings knowingly misclassified or conspired with others to misclassify wooden bedroom furniture on documents presented to U.S. Customs and Border Protection (CBP) to avoid paying antidumping duties on imports of wooden bedroom furniture manufactured in the People’s Republic of China.  Specifically, University Furnishings allegedly classified the furniture as office and other types of furniture not subject to duties while selling the furniture in the student housing market for use in dormitory bedrooms.  The Department of Commerce assesses and CBP collects antidumping duties to protect U.S. businesses by offsetting unfair foreign pricing and foreign government subsidies.

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The government announced that the case had been brought by a company whistleblower – apparently a competitor – who will receive $2.25 million of the settlement (a 15% relator’s share).

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