US Says Office Chair Importer Underpaid Customs Duties, Joins FCA Case
The U.S. filed a complaint on July 15 in a case against importer Global Office Furniture and its owner Malcom Smith for allegedly violating the False Claims Act by knowingly underpaying duties on imported office chairs, the U.S. Attorney's Office for the District of South Carolina announced. The case was originally filed in March 2020 by Sharon Joyce, former office manager for Global Office Furniture (United States v. Global Office Furniture, D.S.C. # 2:20-01223).
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The government's complaint alleges that from 2019 to 2023, Global Office Furniture and Smith coordinated with a Chinese manufacturer to fraudulently "avoid or decrease" payments of customs duties. The importer supposedly used a double invoicing scheme through which the company submitted false entry summaries and invoices to CBP that undervalued the office chairs, which reduced the duties paid on the goods.
The complaint said that before he incorporated Global Office Furniture, Smith worked for Chinese manufacturer Global Furniture (Zhejiang) as a sales representative based in the U.S. Smith then incorporated Global Office Furniture in South Carolina in 2013 and imported chairs made by Global Furniture.
The Chinese manufacturer and the U.S. importer agreed that the office chairs would be imported "Free on Board," making the manufacturer responsible for clearing the merchandise through export customs and delivering it to the importing vessel, the complaint said. Global Furniture created commercial invoices reflecting the final purchase agreement, which made the importer responsible for properly valuing the duties and paying the appropriate duty rates, the complaint said.
The U.S. also alleged that Global Office Furniture and Smith took steps to hide the fraudulent double invoicing scheme and "evade detection." While under civil investigation, Smith told his employees to "delete emails and documents related to pricing" and the importer's business with Amazon, through which it sold its goods, the U.S. alleged. The complaint added that Smith checked employees' desks to ensure they didn't keep any pricing information, and, on at least one occasion, logged onto an employee's computer to "gather and delete" information related to the company's business.
The government's decision to join the case comes amid a widely shared expectation that U.S. FCA enforcement will ramp up in light of both the Trump administration's increased focus on trade enforcement and a marquee decision from the U.S. Court of Appeals for the 9th Circuit in an FCA case (see 2507020069).