The
United States has intervened in a False Claims Act suit filed in the United States District Court for the Western District
of North Carolina. John Dickson initially filed the whistleblower lawsuit,
alleging that a Japanese company, Toyo Ink Manufacturing Co. Ltd., and
its United States subsidiaries had fraudulently failed to pay duties on
printing ink products Toyo Ink was importing into the United States. Dickson
brought the qui tam lawsuit under the False Claims Act, suing on behalf
of the United States and demanding that Toyo Ink pay the duties it had
avoided paying.
In general terms, customs duties are usually calculated as a percentage
of the value of the goods. Different percentage rates apply depending
on the type of goods being brought into our country. For example, the
duty on brass lamps is 3.7%, while the duty on Christmas lights is 8%.
The duty also can vary depending on how far along the item is in the manufacturing
process. Uncut granite, for example, comes in duty-free; granite that
has been cut into blocks or slabs comes in at 2.8%; and granite cut into
building stone comes in at 3.7%.
Sometimes, for a variety of policy reasons, the United States charges different
duties depending not just on the type of good, but also depending on where
the goods are coming from. Dickson’s case related to fraud under
antidumping and countervailing duties regulations that have been issued
by the Department of Commerce. Under these regulations, the Department
of Commerce has set antidumping and countervailing duties in order to
discourage other countries from dumping their goods into the United States
market or assessing unreasonably high duties on American products. Companies
importing goods from these countries into the U.S. have to pay these extra
duties to United States Customs when the goods arrive in the United States.
Dickson claimed that the Department of Commerce had assessed these
additional duties on colorant carbazole violet pigment number 23 imported from India and China. According to his lawsuit, Toyo Ink’s
products came from India and China. Toyo Ink then sent the products through
Japan and Mexico, where some finishing was done on the products.
In the documents filed with Customs, the company or its customs broker
must specify the “country of origin” (of the goods) and the
“exporting country.” 19 C.F.R. § 10.172. Dickson alleged
that Toyo Ink committed customs fraud under the False Claims Act when
it filled out these documents, because it was claiming that the “country
of origin” was Japan or Mexico, even though the products really
were coming from India and China.
The United States now has intervened in the lawsuit, meaning that from
this point on “the action shall be conducted by the Government”
(31 U.S.C. § 3730(b)(4)), which will “have the primary responsibility
for prosecuting the action. 31 U.S.C. § 3730 (c)(1). Because he filed
the qui tam lawsuit, Dickson will be entitled to receive a percentage
of what the United States Government recovers in the case, as well as
his attorneys’ fees and costs.