U.S. Attorney Announces Settlement Of Civil Fraud Lawsuit Against Garment Manfacturer And Its Owner For Fraudulently Underreporting Value Of Imported Goods To Evade Customs Duties

 

Garment Manufacturer and Its Owner Admit to Repeatedly Underreporting the Value of Garments They Imported into the United States

 Damian Williams, the United States Attorney for the Southern District of New York, Peter C. Fitzhugh, the Special Agent-in-Charge of the New York Field Office of Homeland Security Investigations (“HSI”), and Frank Russo, Director, Field Operations, New York, U.S. Customs and Border Protection (“CBP”), announced today that the United States settled a civil fraud lawsuit against QUEEN APPAREL NY, INC. (“QUEEN”), a defunct manufacturer and importer of apparel, and HANK HYUNHO CHOI (“CHOI”), the sole owner of QUEEN, for defrauding the United States by knowingly evading customs duties owed on imported goods.  Specifically, the Government alleges that for years QUEEN, with CHOI’s knowledge, repeatedly falsified customs forms by undervaluing the garments it manufactured overseas and then imported into the United States.  As part of the settlement, approved today in Manhattan federal court by U.S. District Judge George B. Daniels, QUEEN and CHOI made admissions regarding their conduct, agreed to pay $50,000 to the United States, and agreed, among other things, to refrain from acting as the importer of record for the purpose of entering merchandise into the United States.

U.S. Attorney Damian Williams said: “Queen and its owner engaged in a fraudulent scheme to cheat the Government of customs duties owed on imported garments.  This Office remains committed to combatting customs fraud.  Manufacturers, importers, and their owners will be held responsible when they evade customs duties by lying about the value of the goods they bring into the United States.”

HSI Special Agent in Charge Peter C. Fitzhugh said: “Queen Apparel NY underreported the value of garments imported in the United States for the sole purpose of evading customs duties, resulting in a significant financial loss to the US government.  Import fraud affects the integrity of our economy and trade, so HSI makes a priority to investigate any organization who chooses profits over honesty.  Working closely with our partners at U.S. Customs and Border Protection, together we ensure anything that comes through our borders is in compliance with U.S. law.”

CBP Director of New York Field Operations Frank Russo said: “As global supply chains grow more complex, it is important for American businesses to know their suppliers and be confident of their integrity. The outcome of this case is a testament to the dedication of our partners in the United States Attorney’s Office, Homeland Security Investigations, and the men and women of CBP in enforcing our nation’s trade laws and holding accountable those perpetrating this type of fraud.”                    

QUEEN is a defunct New York-based manufacturer and importer of garments.  While in business, QUEEN manufactured and imported garments for third parties who would then sell those garments through department stores and national retail chains in the United States.  CHOI was the sole owner of QUEEN and was involved in the management and operations of the business.

The Complaint previously filed in Manhattan federal court alleges that from 2009 to 2013, QUEEN and CHOI manufactured garments overseas, imported those garments into the United States, and then repeatedly and falsely undervalued those garments on customs forms in order to evade the payment of lawful duties to the United States.

As part of the settlement, QUEEN and CHOI admit, acknowledge, and accept responsibility for the following conduct:

• QUEEN manufactured garments and imported them into the United States for various wholesalers.  CHOI was the sole owner of QUEEN and was involved in the management and operations of QUEEN, including the importing of goods.

• QUEEN was responsible for paying any import duties owed to the United States for garments manufactured abroad and imported into the United States by QUEEN. 

• During the relevant time period, and at CHOI’s direction, QUEEN repeatedly undervalued the garments it imported into the United States by making false statements in entry documents and commercial invoices that it presented to CBP.  As a result of these false valuations, QUEEN underpaid customs duties that were due and owing to the United States.  

On March 26, 2019, the United States settled a related civil fraud lawsuit against Byer California, Inc., a wholesaler that used QUEEN to manufacture and import garments from Vietnam.  The conduct in this matter was first brought to the attention of federal law enforcement by a whistleblower who filed a lawsuit under the False Claims Act. 

Mr. Williams praised the investigative work of HSI on this case.  He also thanked CBP for its assistance.