US Opens Customs Penalty Suit Against Wire Hanger Importer, Seeks Over $5M
The U.S. opened a customs penalty suit last week against wire garment hanger importer LGA Trading and its director, Galo Goya, at the Court of International Trade, seeking over $3.1 million as a penalty for negligence and over $1.9 million in unpaid duties (United States v. LGA Trading, CIT # 25-00214).
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The complaint alleged that from October 2018 to September 2020, LGA entered 32 entries of wire hangers. While the company "falsely" said the hangers' country of origin was Laos, the goods were actually from Vietnam, the U.S. said. Upon entry, LGA said its goods weren't subject to antidumping or countervailing duties when, in fact, they were.
The government alleged that the importer negligently made false statements when entering the hangers by falsely declaring their country of origin to be Laos and declaring that the goods weren't subject to AD/CVD. The complaint said LGA and Goya didn't use "reasonable care in collecting accurate information about LGA’s suppliers to ensure that its entry documentation was accurate before filing with CBP." LGA and Goya acknowledged to CBP that the company "lacked the necessary controls and procedures within its business to ensure compliance with accurate entry requirements."
In 2020, CBP concluded an Enforce and Protect Act investigation finding that 10 importers, including LGA, evaded the AD/CVD orders on wire garment hangers from Vietnam by transshipping the hangers through Laos. The trade court affirmed this evasion finding in a 2023 decision.
After the evasion determination, CBP issued pre-penalty notices to LGA and Goya, which included an actual loss of revenue via unpaid duties amounting to $1,903,973.72 and a potential loss of $127,966.80, of which LGA's surety paid $50,000. The U.S. also sought a penalty for negligence, which, after mitigation, amounted to $3,047,910.78.
LGA's and Goya's failure to pay the unpaid duties and the negligence penalty prompted the present action. In all, the government is seeking $5,008,627.87 from the defendants.