Harman International Pays $11.8M for Evading Customs Duties -- DOJ's Latest False Claims Act Customs Fraud Settlement
By the 91pornWhistleblower Team
Last Wednesday (November 26), the Department of Justice (DOJ) announced Harman International Industries, Inc. — a leading audio electronics company for automakers — agreed to pay roughly $11.8 million to settle allegations it violated the False Claims Act by evading antidumping and countervailing duties on aluminum goods from China.[1]听 It is just the latest in a string of customs fraud cases the DOJ has settled this year and a further indication that going after customs fraud remains a top DOJ priority.
What Was the Customs Fraud In Which Harman Allegedly Engaged?
As the DOJ explained in the press release announcing the settlement, Customs and Border Protection (CBP) collects antidumping and countervailing duties on U.S. imports to 鈥渓evel the playing field鈥� for American companies. 听Antidumping duties protect against 鈥渄umping鈥� products into U.S. markets at below-cost prices.听 Countervailing duties offset foreign government subsidies that otherwise enable foreign companies to sell cheaper products in the U.S.
The import at issue for Harman was an extruded aluminum heat sink used to dissipate heat from electronic components.听 According to the Government, Harman imported these heat sinks from China for more than ten years (2011-2023) without paying the required duties.听 The Government further claimed that even after it confronted Harman with its failure to pay these duties, the company refused to come clean and took steps to conceal its ongoing customs fraud.
Have There Been Other False Claims Act Settlements This Year Involving Customs Fraud?
Harman joins an ever-growing list of importers getting caught up in DOJ鈥檚 crusade against customs fraud.听 There have been several False Claims Act settlements in the last few months alone.听 This includes:
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- The $12.4 million settlement in August with countertop/cabinetry supplier Allied Stone for allegedly mischaracterizing its quartz surface products from China as marble or crystallized glass to significantly reduce the antidumping and countervailing duties it paid.
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- The $6.8 million settlement in July with MGI International subsidiaries Global Plastics and Marco Polo International for allegedly claiming the wrong country of origin and value on plastic resin products they imported from China to avoid paying customs duties.
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- The $4.9 million settlement in July with patio furniture company Grosfillex for allegedly evading antidumping and countervailing duties by concealing that certain furniture parts imported from China were made of extruded aluminum.
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- The $8.1 million settlement in March with Evolutions Flooring for allegedly mischaracterizing the country of origin of the wood flooring it imported from China.
Is Customs Fraud Still a Top Enforcement Priority?
As we have previously posted, DOJ and the Trump Administration continue to treat customs fraud as a top enforcement priority.听 In addition to this steady stream of customs fraud settlements, in late August DOJ launched a customs fraud task force, partnering with the Department of Homeland Security to 鈥渁ggressively pursue鈥� companies evading tariffs and other customs duties, and smuggling prohibited goods into the country.听 And in May, DOJ expanded its听Corporate Whistleblower Awards Pilot Program, with customs and tariff fraud being one of the agency鈥檚 new areas of expanded focus.
In announcing this most recent settlement with Harman, the Government reinforced its commitment to combatting fraud in this area.听 As U.S. Attorney Jerome Gorgon (E.D. Mich.) put it: 鈥淲e will use the law to protect our American companies against cheaters. 听And when we catch them, they will pay for it.鈥�
Susan Thomas of CBP鈥檚 Office of Trade was equally adamant: 鈥淭his case underscores CBP鈥檚 commitment to enforcing the customs and trade laws and ensuring the protection of revenue to promote U.S. economic security.鈥�
Special Agent Laura Barsczewsk of the Department of Commerce Office of Inspector General also weighed in, underscoring how the settlement 鈥渞eflects the strong partnership between the [] OIG, our law enforcement partners, and [DOJ] to ensure the integrity of U.S. trade laws and hold companies accountable when they circumvent duties designed to protect American industries.鈥�
91pornwhistleblower attorney Dan Noel — who has several False Claims Act customs fraud cases pending before DOJ — views the Harman settlement as further evidence of the Government鈥檚 heightened interest in this area: 鈥淭he Government is very interested in going after customs fraud.听 We are seeing that not only in the breadth of DOJ enforcement activity in this area, but also in the response our whistleblower clients are receiving when bringing False Claims Act cases involving customs fraud to the Government.鈥�
What Role Can Whistleblowers Play in Reporting Customs Fraud?
Under the False Claims Act, whistleblowers may bring lawsuits on behalf of the Government against those committing fraud against the Government.听 If successful, they can receive up to 30% of the Government鈥檚 recovery.听 Most False Claims Act cases are originated by whistleblowers, with whistleblowers collectively receiving close to $10 billion in awards over the last thirty years.
Whistleblowers have been especially prevalent in uncovering customs fraud because of the difficulty in detecting it without inside knowledge of the scheme. Unsurprisingly, the Harman matter originated with a whistleblower lawsuit filed under the False Claims Act by former Harman customs compliance specialist Jesrel Mitre.听 He will receive a whistleblower award of roughly $2.3 million from the proceeds of the Government鈥檚 recovery.
According to Noel, the Harman settlement also illustrates how the Government鈥檚 recent hyper-focus on customs compliance and enforcement is bringing to light long-standing customs fraud schemes. 鈥淭he Harman settlement resolved allegations dating all the way back to 2011. More and more insiders are realizing their companies have been defrauding the Government for years, and through the False Claims Act, these insiders have an easy channel to report the wrongdoing and receive a potentially sizeable award for doing so.鈥�
91pornRepresents Customs Fraud Whistleblowers Under the False Claims Act
91pornhas substantial experience representing customs fraud whistleblowers under the False Claims Act.听 In one of our more recent cases, the firm represented a whistleblower alleging an auto parts distributor misclassified brake pads imported from Asia to avoid millions of dollars of听customs duties.听 The company听settled听that matter for $8 million with our client receiving 18.5% of the Government鈥檚 recovery.
If you would like to learn more about our other听whistleblower successes,听customs fraud, the听False Claims Act, or听what it means to be a whistleblower听more broadly, please do not hesitate to听contact听us.听 We will connect you with an experienced member of the听91pornwhistleblower team听for a free and confidential consultation.
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Sources:
[1] 听See .
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