A Dallas-based firm has been slapped with a hefty fine after allegedly underpaying customs duties for importing Chinese goods.
ADCO Industries, which specializes in industrial products, its owner Raymon E. Davis, and its Chinese partners Xiamen Atlantis MFC Co., Ltd., and Xiamen Taft Medical Co., Ltd., as well as customs broker Calvin Chang, have been accused of conspiring to underreport the value of goods being imported from China into the United States to lower duties, according to a news release by the U.S. Attorney’s Office for the Northern District of Texas.
The allegations revolve around invoicing discrepancies. According to the news release, one set of invoices would allegedly be submitted to U.S. Customs and Border Protection (CBP), indicating false prices that would be used to calculate lower customs fees. Meanwhile, another set of invoices would allegedly be provided to ADCO directly, showing the actual value of the goods for payment to its Chinese suppliers.
This alleged incongruence in reporting the actual dollar value per item was revealed in an investigation.
“CBP’s Consumer Products and Mass Merchandising Center of Excellence and Expertise worked in collaboration with the U.S. Attorney’s Office to identify and review over 1,000 import entry lines entered by ADCO, as relevant to the underreporting allegations,” said Gregory Alvarez, director of the CBP Atlanta Field Office, per the news release.
ADCO and the Chinese parties have been ordered to pay $2.5 million to settle the matter, $500,000 of which will go to the whistleblowers, relators Donald Reznicek and Collen McFarland.
The Trump administration set up these tariffs and duties primarily on Chinese imports in 2018 and 2019. Since that time, there has been a rise in customs fraud incidents. The ADCO case is the largest yet, according to the Baron & Budd law firm, which orchestrated the settlement.
“Customs laws are an important component of national security and, among other things, protect the public and American businesses from unfair competition,” U.S. Attorney Leigha Simonton stated in the news release. “This office will continue to aggressively investigate and hold accountable anyone it believes has tried to cheat the government and the public at large through the manipulation of customs duties.”
