Case Type: Whistleblower/Qui Tam
Company: Temple St. Clair
Sanford Heisler Sharp, LLP today announced that luxury jeweler Temple St. Clair has agreed to pay the United States Government $796,000 to settle claims brought by a whistleblower under the False Claims Act. The suit was filed in the United States District Court for the Southern District of New York in 2015. The case is thought to be the first in New York to recover money for the United States government based on the defendant’s failure to properly mark its products with their country of origin.
The whistleblower, a former inventory manager for the jeweler, leveled three principal allegations. First, she alleged that Temple St. Clair founder Temple St. Clair Carr personally carried jewelry into the United States without declaring the jewelry to U.S. Customs and Border Protection in order to avoid paying customs import duties. Second, the whistleblower claimed that Temple St. Clair failed to mark jewelry with its country of origin before selling it in the United States, thus invoking a 10% mismarking duty. Finally, the whistleblower asserted that Temple St. Clair intentionally undervalued merchandise entering the country to avoid paying the full amounts of customs duties owed and falsely claimed that certain products were exempt from customs duties entirely.
The whistleblower was represented by a Sanford Heisler Sharp team led by firm founder and Chairman David Sanford, False Claims Act Practice Co-Chair Ross Brooks, and New York Managing Partner Russell L. Kornblith.
“Customs fraud is a serious offense,” said Russell Kornblith. “We congratulate the whistleblower on her courage in speaking up and bringing her customs-fraud knowledge to the government’s attention. Absent her bravery, this conduct may have gone undetected to the detriment of the general public.”
The False Claims Act is one of the federal government’s most important anti-fraud tools. Under the Act, whistleblowers (called relators), may bring a lawsuit on behalf of the government to recover money that a person or corporation has avoided paying to the United States government. If the government is successful in recovering money, the whistleblower shares in the government’s recovery, receiving a whistleblower award. Intentionally avoiding customs duties is fraud within the meaning of the False Claims Act.
“Smuggling, undervaluation, and mismarking subvert our customs laws and harm U.S. businesses,” added David Sanford. “Here, the whistleblower noticed several patterns of conduct: jewelry arriving without proper customs documentation, jewelry that was unmarked with its true country of origin, and the undervaluation of merchandise for customs purposes. We were proud to stand with the whistleblower and recoup the duties owed to the government along with penalties. Skirting customs duties does not and should not pay.”