United States Settles False Claims Act Allegations Against Importer

SAN FRANCISCO –  Green Bag Co., Inc., an importer of reusable shopping bags located in San Francisco has agreed to pay $500,000 to settle allegations that it violated the civil False Claims Act by underpaying customs duties it owed, announced United States Attorney Melinda Haag and Brian J. Humphrey, U.S. Customs and Border Protection Director of Field Operations, San Francisco.

The United States alleges that, from July 2007 through October 2009, Green Bag underpaid customs duties on goods imported into the United States from China.  Green Bag allegedly used two sets of invoices for each shipment: one true invoice that Green Bag paid, and a second invoice falsely stating a lower cost. The false invoices were allegedly used to calculate the customs duties that Green Bag paid on the imported goods, resulting in substantial underpayments.

“Companies that import goods into the United States must disclose the true costs of imports and pay all customs duties owed,” said U.S. Attorney Haag. “This office has a responsibility to make sure the system is fair to those companies that play by the rules and we will not hesitate to take action against those who so brazenly cheat. I commend the work of the Department of Homeland Security Office of Inspector General and the U.S. Customs and Border Protection.”

“U.S. Customs and Border Protection has direct responsibility for enhancing U.S. economic competitiveness by enforcing U.S trade laws on foreign manufactured goods entering our country. The men and women of CBP have an essential role in protecting American economic security while fostering legitimate trade and travel. Attempting to avoid Customs Duty brings serious consequences,” said Director of Field Operations Humphrey.

The settlement resolves a whistleblower lawsuit filed in the United States District Court for the Northern District of California. An executive who formerly worked at Green Bag filed the case pursuant to the qui tam provisions of the False Claims Act.  Under those provisions, private citizens, known as “relators,” may file lawsuits on behalf of the United States and receive a portion of the proceeds of a settlement or judgment.  The relator will receive $100,000 as his share of the government’s recovery.

Assistant U.S. Attorney Sara Winslow handled the matter on behalf of the U.S. Attorney’s Office for the Northern District of California, with assistance from Financial Fraud Investigator Michael Zehr and Legal Assistant Kathy Terry. The matter was investigated by the DHS Office of Inspector General.