U.S. Intervenes in False Claims Lawsuit Alleging Knowing Failure to Pay Import Duties by Japanese and U.S. Companies

The United States has intervened in a lawsuit against Japanese company, Toyo Ink Manufacturing Co. Ltd. and its U.S. subsidiaries: Toyo Ink International Corp., located in New York; Toyo Ink America LLC, located in Illinois; and Toyo Ink Manufacturing America LLC, located in New Jersey, the Justice Department announced today. Toyo Ink, which has operations worldwide, is a leading provider of printing inks.

The suit alleges that the Toyo Ink companies knowingly misrepresented the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying antidumping and countervailing duties on imports of the colorant carbazole violet pigment number 23 (CVP-23). The Department of Commerce assesses antidumping and countervailing duties, which are collected by U.S. Customs, to protect U.S. businesses by offsetting unfair foreign pricing and government subsidies. Imports of CVP-23 from China and India have been subject to these duties since 2004.

The suit alleges that Toyo misrepresented Japan and Mexico as the countries of origin for its CVP-23 imports to avoid these duties. Although Toyo’s CVP-23 imports from China and India underwent a finishing process in Japan and Mexico, the complaint alleges that this process was insufficient to change the country of origin.

“Companies taking advantage of United States markets must comply with the law, including the payment of import duties levied to protect domestic manufacturers and producers from unfair competition abroad,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. “As we have done today, the Department of Justice will take action against those we believe have inappropriately avoided paying money owed to the United States.”

The lawsuit was filed in the U.S. District Court for the Western District of North Carolina by whistle blower John Dickson under the qui tam, or whistleblower, provisions of the False Claims Act. The act permits private parties to sue companies and individuals on behalf of the United States that they believe have falsely claimed federal funds or, as in this case, made misrepresentations to avoid paying funds owed to the government. The government may intervene and take over the action, as it has done here. The act allows the government to recover three times its damages plus civil penalties to ensure that the public treasury is made whole for the loss and for the costs of investigating and prosecuting false claims. The whistle blower is entitled to a share of any funds recovered through the lawsuit.

The claims asserted in the complaint against Toyo are allegations only, and there has been no determination of liability.