On July 26, 2023, the Department of Justice announced that it had reached a settlement for $217,832 with bean bag furniture maker Yogibo, LLC, in a customs fraud False Claims Act qui tam action that we initiated last year on behalf of our client, the former Warehouse Manager at a Yogibo facility in Nashua, New Hampshire.
He alleged that Yogibo engaged in a simple tariff evasion scheme. For each purchase that Yogibo made from its Chinese vendor, the vendor allegedly provided Yogibo with two commercial invoices, one with a real price and another with a false lower price. Yogibo paid the vendor the full amount set forth on the invoice with the real price but allegedly provided its customs broker only with the fake invoice that had the lower price. Consequently, Yogibo allegedly paid customs duties only on the amounts set forth on the fake invoices with the lower prices.
In the settlement agreement, the United States noted that, under the customs laws, the dutiable amount of merchandise imported into the United States must be calculated on the “price actually paid or payable for the merchandise when sold for exportation to the United States, plus . . . the value . . . of any assist.” 19 U.S.C. § 1401a(b)(1)(C). The term “assist” includes “[e]ngineering, development, artwork, design work, and plans and sketches that are undertaken elsewhere than in the United States and are necessary for the production of the imported merchandise.” 19 U.S.C. § 1401a(h)(1)(A)(iv).
Yogibo admitted in the settlement agreement that the difference between the price it reported to Customs and the price it actually paid was a reflection of “charges for inland freight from [the Chinese vendor] to a Chinese port, design services, and quality control testing.” In other words, these charges were an “assist” performed in China, and thus Yogibo should have included the cost of that overseas “assist” in the price it reported to Customs.
As the whistleblower who brought Yogibo’s customs fraud to the attention of the government, our client will receive 20 percent of the settlement amount.
Brian LaMacchia, an Assistant United States Attorney and Deputy Chief of the Affirmative Civil Enforcement Unit in the United States Attorney’s Office in Massachusetts, handled this matter for the Department of Justice. Gregg Shapiro, of Gregg Shapiro Law, LLC, represented the whistleblower. Mr. Shapiro filed this case during his prior association with Newman & Shapiro.
In 2022, Mr. Shapiro successfully resolved a similar qui tam case against another company that allegedly used two sets of invoices to dupe Customs and underpay duties on goods imported from China. See Settlement Agreement with RGE Motor Direct.