Importer agrees to pay $798,334 to resolve allegations of underpayment of customs duties

SHERMAN, Texas – U.S. Attorney Damien M. Diggs of the Eastern District of Texas announced today that Homestar North America, LLC has agreed to pay $798,334 to resolve allegations that it violated the False Claims Act by failing to pay customs duties owed for furniture imports from China.

Customs laws require importers to pay duties determined by the actual value of the goods imported. Liability to pay duties arises immediately and automatically upon the importation of goods into the United States. This settlement resolves allegations that Homestar North America, LLC and its parent company Homestar Corporation, conspired to underreport the value of imported goods delivered to Homestar North America, LLC in the United States following the two increases on Section 301 tariffs for certain products manufactured in China under the Harmonized Tariff Schedule of the United States. The two increases respectively took effect September 24, 2018 and June 15, 2019.

Specifically, the government alleged that from September 2018 through December 2022, falsified invoices were created and submitted to the United States Customs and Border Protection (CBP) containing false, lower values for the goods Homestar North America, LLC received from Homestar Corporation, its Chinese parent company, to avoid payment of the increased duties owed. The government contended that a second set of invoices containing the true, actual value of the goods imported were withheld from CBP but were then used to ensure that Homestar North America, LLC paid its parent company and supplier the actual value of the imported goods. The government alleged that this false invoicing practice resulted in undervaluation of goods imported into the United States, which resulted in a loss of revenue to the United States.

“Imported goods are necessary for the consumer-economy in the United States. However, companies that wish to gain access to the United States' markets must comply with all laws regarding the import of their goods, including the obligation to disclose the actual value of imported goods and to pay the duties owed as a result of importation,” said U.S. Attorney Damien M. Diggs. “Instead of complying with those obligations, Homestar chose to disregard its obligations and improve its bottom line. Our office will aggressively pursue any company that similarly chooses its bottom line over compliance with the law.”

“CBP’s Consumer Products and Mass Merchandising Center of Excellence and Expertise worked in collaboration with the U.S. Attorney’s Office to review thousands of documents, hundreds of entry summaries, and analyzed financial reports provided by Homestar, as relevant to the undervaluation and payment allegations,” said Director Gregory Alvarez of the CBP Atlanta Field Office.  “CBP is proud of the investigative work and analysis done by its employees on this case and will continue to work collaboratively with inter-agency stakeholders to safeguard our nation’s economic security.”

The civil settlement resolves claims brought by a relator under the qui tam or whistleblower provisions of the False Claims Act. These provisions allow a private party, known as a relator, to file an action on behalf of the United States and receive a portion of any recovery. The qui tam action is captioned U.S. ex rel. Larry J. Edwards, Jr. v. Homestar North America, LLC, Cause No. 4:21-cv-00148 (E.D. Tex.). As part of today’s resolution, the whistleblower will receive approximately $151,683.

The resolution obtained was the result of a coordinated effort between the U.S. Attorney’s Office, Eastern District of Texas with assistance from CBP and the U.S. Immigration and Customs Enforcement Homeland Security Investigations.

The matter was handled by Assistant U.S. Attorney Betty Young for the Eastern District of Texas.  

The claims resolved by this settlement are allegations only, and there has been no determination of liability.

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