False Claims Act Whistleblower Receives $280K for Alleging Customs Fraud

Customs whistleblower

On November 29, the U.S. Attorney’s Office for the Northern District of Georgia announced that a German company, KingKong-Tools GmbH & Co KG, and its American subsidiary, King Kong Tools, LLC, will pay $1.9 million to settle allegations of customs fraud under the False Claims Act.

The government alleges that King Kong avoided paying higher tariffs on tools made in China by falsely labeling them as “made in Germany.” According to the government, King Kong would manufacturer tools in China before sending them to Germany where some additional processing was performed on some of the tools. When these tools were then shipped to the U.S., the government alleges that King Kong falsely claimed they were German products to avoid paying a 25% tariff on Chinese goods.

The case stemmed from a qui tam whistleblower lawsuit filed by a competitor of King Kong. Qui tam enables private citizens to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. When qui tam suits result in a successful action against a fraudulent company or individual, qui tam whistleblowers are eligible to receive between 15 and 30% of the government’s recovery.

In this case, the qui tam whistleblower is set to receive $286,861.

“Companies cannot avoid paying tariffs by misrepresenting product manufacturing information,” said U.S. Attorney Ryan K. Buchanan. “The Department of Justice will work diligently to uncover these schemes, and those companies involved in such misconduct will be compelled to pay tariffs owed, as well as penalties.”

“Stopping businesses from cheating the customs system not only prevents them from defrauding our government, but also prevents unfair competitive advantages that harm the labor market,” said Acting Special Agent in charge Travis Pickard who oversees Homeland Security Investigations (HSI) operations in Georgia and Alabama. “Hopefully, the result of this case sends a clear message that HSI and its partners are watching and will hold you accountable for your actions.”

On July 25, a bipartisan group of senators introduced the False Claims Amendments Act of 2023, which address a few technical loopholes undermining the success of the FCA. The bill is widely supported by whistleblower advocates.

“The False Claims Act is America’s number one fraud-fighting law,” said whistleblower attorney Stephen M. Kohn. “These amendments are urgently needed to ensure that whistleblowers can continue to play their key role in protecting taxpayers from corporate criminals.”

Further Reading:

King Kong tools settles claims of customs fraud for $1.9 million

Bipartisan Legislation Unveiled to Strengthen False Claims Act

More False Claims Act Whistleblower News

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