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The False Claims Act: Get Paid to Expose Fraud & Unfair Competition, Protect Yourself from an Investigation

The False Claims Act (FCA) is a powerful federal anti-fraud law that incentivizes average people to expose fraud. The law attempts to reward whistleblowers and disincentivize committing fraud and can be used to expose customs fraud.

What is the False Claims Act?

The FCA, 31 U.S.C. §§ 3729 – 3733, is a federal statute enacted in 1863 in response to defense contractor fraud during the Civil War.

The FCA provides that any person who knowingly submits, or causes to submit, false claims to the government is liable for three times the government’s damages plus a penalty. Conspiring to commit these acts also is a violation of the FCA.

The FCA allows the U.S. government to investigate perpetrators of fraud directly, but it also provides an avenue for private citizens to become whistleblowers and expose fraud.

The Department of Justice (DOJ) obtained more than $2.68 billion in settlements and judgments involving fraud and false claims in the fiscal year ending Sept. 30, 2023.

The FCA and International Trade

The FCA is commonly used to prosecute financial crime such as misuse of federal grants and healthcare related claims. However, in recent years the FCA has been increasingly used to allege customs duty fraud and other trade violations. In fact, in a 2020 report, the Department of Justice (DOJ) highlighted the use of the FCA to “safeguard American businesses and workers by promoting compliance with customs laws [and] trade agreements.”

The FCA can apply any time an individual or entity commits customs fraud – for example importers may […]

Customs and Trade News Weekly Snapshot

Here is a recap of the latest customs and international trade law news:      

Customs and Border Protection (CBP)  

By |2024-04-12T15:07:20-04:00April 12, 2024|Snapshot|0 Comments

The Arena of EAPA: Transshipping, Pencils, and Evading Duties

Customs and Border Protection (CBP) investigates allegations of dumping or unfair foreign subsidies, but they also have the authority to investigate potential violations of any imposed Anti-Dumping or Countervailing Duties (AD/CVD) under the Enforce and Protect Act (EAPA) of 2015.

Customs describes EAPA as a “multi-party, transparent, administrative proceeding where parties can both participate in and learn the outcome of the investigation. It also maintains due process for parties to the investigation by providing an option for them to request administrative and judicial reviews of CBP’s determination as to evasion.” Self-assertions of transparency and due process aside, many have found EAPA cases to be highly secretive and not always fair.

Frequently, an EAPA case involves an allegation that Chinese goods are allegedly transshipped through another country (or only subject to minor processing) to avoid paying AD/CVD duties. Since AD/CVD duties are applicable based upon the commodities country of origin, nefarious companies can ship goods from China to for example, Vietnam, India, Mexico, Taiwan, Malaysia, or some other country, and claim that these goods do not originate from China after all. Importers, in good faith, will declare that their imports are not subject to AD/CVD duties because they are not aware of the true origin of the goods. Such importers might not be liable for penalties if their belief was in good faith and based on facts, but such importers would still be subject to massive duties. Thus, contrary to popular option, good/honest importers may also find themselves the recipient of […]

Customs and Trade News Weekly Snapshot

Here is a recap of the latest customs and international trade news:       

Customs and Border Protection (CBP)  

  • Operational update for Port of Baltimore: CBP said ocean carriers originally planning to unload at the Port of Baltimore must proceed to another U.S. port in the aftermath of the Francis Scott Key Bridge collapse on March 26. 
  • CBP published a federal register notice that makes changes to the Global Entry and SENTRI programs. Highlights: 
    • The Global Entry fee will be increased from $100 to $120 
    • The total SENTRI fee will be decreased from $122.25 to $120. 
    • Fee exemption for certain minors 
  • At the Trade Facilitation and Cargo Security Summit, CBP provided attendees with a handout which asks importers and customs brokers: “Do You know Your Supply Chain?” 
  • CBP published an updated version of the ACE Entry Summary Business Rules and Process Document, Version 12.0. The publication includes updates on: 
    • Entry summary 
    • Blanket declarations 
By |2024-04-05T11:26:02-04:00April 5, 2024|Snapshot|0 Comments

FDA Unveils Searchable Tobacco Products Database to Bolster Compliance and Transparency

Last week, FDA’s Center for Tobacco Products (CTP) announced the release of its Searchable Tobacco Products Database. This tool provides easy access to a list of legally marketable tobacco products within the United States, integrating a user-friendly design with sophisticated search functionalities, making navigation and information retrieval very easy. The FDA has committed to monthly updates, ensuring the availability of current and accurate product information.

FDA categorizes listed tobacco products into three groups:

  1. New Tobacco Products: products that have successfully navigated through one of the FDA’s pathways for new tobacco product market authorization.
  2. Pre-existing Tobacco Products: Identified through a voluntary determination program, these products were commercially available as of February 15, 2007.
  3. Provisional Tobacco Products: that have been withdrawn from the FDA review process.

The database fosters enhanced transparency that aligns with the needs particularly of retailers, to empower stakeholders to better meet regulatory requirements. It encompasses nearly 17,000 tobacco products, including more than 12,000 Pre-existing Tobacco Products category. The database provides detailed information for each listed product, including the product name, manufacturer, categorization, the statutory or regulatory basis for its marketability in the U.S., and the specific date of the FDA’s decision. It also provides access to an array of regulatory and scientific documents associated with the tobacco product application, including Order Letters, Decision Summaries, Environmental Assessments (EAs), and their related documentation.

FDA has also introduced a supplementary resource, the Searchable Tobacco Products Database – Additional Information, designed to demystify the terminology and contextual background of the database […]

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