Clothing Importer, Manufacturer to pay $13 Million Fine for Evading Customs Duties
U.S. Immigration and Customs Enforcement (ICE)
NEW YORK — A China-based clothing manufacturer agreed Wednesday to pay more than $13 million for engaging in a double invoicing scheme to defraud the United States out of millions of dollars in customs duties. The civil settlement is the result of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigation (HSI) and U.S. Customs and Border Protection (CBP).
Motives Far East and Motives China Limited admitted to and accepted responsibility for under-reporting the value of its imported merchandise and agreed to pay nearly $13.4 million to the United States under the False Claims Act.
ICE HSI Special Agent-in-Charge Angel M. Melendez said: “Motives disguised the true value of goods imported into the United States to cheat the government out of millions of dollars in customs duties. This scheme backfired, now Motives will pay millions for trying to skirt America’s customs laws. Trade fraud threatens the U.S. economy and restricts competitiveness of U.S. industry in the world markets. HSI and CBP maintain a zero-tolerance policy when it comes to these types of predatory and unfair trade practices.”
Manhattan U.S. Attorney Preet Bharara said: “Motives evaded millions in customs duties by presenting false invoices to U.S. Customs and Border Protection. With this lawsuit and the accompanying resolution, which involves admissions and the payment of over $13 million, Motives is being held to account for its unlawful evasion of customs duties.”
CBP Director of New York Field Operations Robert E. Perez said: “CBP takes trade fraud, such as undervaluation, very seriously. We are proud to partner with HSI and the Southern District to level the playing field for legitimate traders by steadfastly enforcing U.S. trade laws.”
The government’s complaint, filed in Manhattan federal court, alleges that from approximately 2009 through 2013, Motives, which regularly manufactured and/or imported apparel into the United States, conspired with clothing wholesalers fraudulently to underpay customs duties owed to the government by making false representations in entry documents filed with CBP about the value of the imported merchandise.
Pursuant to the scheme, Motives created and/or used two sets of invoices: one that undervalued the garments and was presented to the government for calculation of the appropriate duty, and the second that reflected the actual value of the garments. Motives presented to the government invoices with the lower value on the entry forms, thereby defrauding the government of millions of dollars in customs duties.
As part of the settlement, Motives admitted, acknowledged, and accepted responsibility for engaging in the following conduct from 2009-2013:
- repeatedly preparing and presenting to the government commercial invoices for apparel being imported into the United States that reported less than the total value of the goods imported;
- repeatedly representing to the government that its documentation contained, to the best of MOTIVES’ knowledge, correct and true information such as prices, values, and quantities;
- repeatedly receiving from apparel wholesalers an amount in excess of that recorded on the commercial invoices; and
- repeatedly failing to disclose to the government the separate invoices reflecting the true value of the apparel, and instead reporting only the lesser amounts listed in the commercial invoices, which the government then used to assess customs duties.
The allegations of fraud stated in the complaint were first brought to the attention of federal law enforcement by a whistle-blower who filed a lawsuit under the False Claims Act.
Marine Terminal Operators at Ports of Los Angeles and Long Beach to Adjust TMF on August 8 - PierPass
LONG BEACH, Calif., July 8, 2016 – The West Coast MTO Agreement (WCMTOA) today announced a 1.9 percent increase in the Traffic Mitigation Fee (TMF) at the Ports of Los Angeles and Long Beach, scheduled to take effect on August 8, 2016. The increase will sustain continued operation of PierPass OffPeak gates amid labor cost increases.
Beginning August 8, the TMF will be increased to $70.49 per TEU (twenty-foot equivalent unit) or $140.98 per forty-foot container.
The adjustment falls under Rule 7 of WCMTOA’s Marine Terminal Schedule No. 1, which states, “Beginning in mid-2012, the Fee shall be adjusted annually to reflect increases in labor costs based on Pacific Maritime Association maritime labor cost figures.” The PMA negotiates and administers maritime labor agreements with the International Longshore and Warehouse Union (ILWU).
PierPass launched the OffPeak program in 2005 to reduce severe cargo-related congestion on local streets and highways around the Los Angeles and Long Beach ports. OffPeak established regular night and Saturday work shifts to handle trucks delivering and picking up containers at the 13 container terminals in the two adjacent ports.
Using a congestion pricing model, PierPass charges a TMF on weekday daytime cargo moves to incentivize cargo owners to use the OffPeak shifts. The TMF also helps pay for the labor and other costs of operating the OffPeak shifts.
According to an analysis by maritime industry consultants SC Analytics, the costs incurred by the terminals to operate the OffPeak shifts in 2015 totaled $236.2 million. During the year, the terminals received $168.9 million from the Traffic Mitigation Fee, offsetting only part of the OffPeak program’s costs.
Since 2005, OffPeak has taken more than 35 million truck trips out of daytime Southern California traffic and diverted them to less congested nights and weekends. About half of all port truck trips now take place during the OffPeak shifts.
USITC Makes Determination in Five-Year (Sunset) Reviews Concerning Stainless Steel Wire Rod from Italy, Japan, Korea, Spain, and Taiwan - United States International Trade Commission
The U.S. International Trade Commission (USITC) today determined that revoking the existing antidumping duty orders on stainless steel wire rod from Japan, Korea, and Taiwan would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.
As a result of the Commission’s affirmative determinations, the existing antidumping duty orders on imports of this product from Japan, Korea, and Taiwan will remain in place.
All six Commissioners voted in the affirmative with respect to imports from Japan, Korea, and Taiwan.
The Commission further determined that the existing antidumping duty orders on stainless steel wire rod from Italy and Spain would not be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.
As a result of the Commission’s negative determinations, the existing antidumping duty orders on imports of this product from Italy and Spain will be revoked.
All Commissioners voted in the negative with respect to imports from Spain. Chairman Williamson and Commissioners Johanson, Broadbent, and Kieff voted in the negative with respect to imports from Italy; Commissioners Pinkert and Schmidtlein voted in the affirmative with respect to imports from Italy.
Today’s action comes under the five-year (sunset) review process required by the Uruguay Round Agreements Act. See the attached page for background on these five-year (sunset) reviews.
The Commission’s public report Stainless Steel Wire Rod from Italy, Japan, Korea, Spain, and Taiwan (Inv. Nos. 731-TA-770-773 and 775 (Third Review), USITC Publication 4623, July 2016) will contain the views of the Commission and information developed during the reviews.
The report will be available by August 15, 2016; when available, it may be accessed on the USITC website at: http://pubapps.usitc.gov/applications/publogs/qry_publication_loglist.asp.-------------------------------------------------------------------------------------------------------------------------------------------------------------------
BACKGROUND: The Uruguay Round Agreements Act requires the Department of Commerce to revoke an antidumping or countervailing duty order, or terminate a suspension agreement, after five years unless the Department of Commerce and the USITC determine that revoking the order or terminating the suspension agreement would be likely to lead to continuation or recurrence of dumping or subsidies (Commerce) and of material injury (USITC) within a reasonably foreseeable time.
The Commission’s institution notice in five-year reviews requests that interested parties file responses with the Commission concerning the likely effects of revoking the order under review as well as other information. Generally within 95 days from institution, the Commission will determine whether the responses it has received reflect an adequate or inadequate level of interest in a full review. If responses to the USITC’s notice of institution are adequate, or if other circumstances warrant a full review, the Commission conducts a full review, which includes a public hearing and issuance of questionnaires.
The Commission generally does not hold a hearing or conduct further investigative activities in expedited reviews. Commissioners base their injury determination in expedited reviews on the facts available, including the Commission’s prior injury and review determinations, responses received to its notice of institution, data collected by staff in connection with the review, and information provided by the Department of Commerce.
The five-year (sunset) reviews concerning Stainless Steel Wire Rod from Italy, Japan, Korea, Spain, and Taiwan were instituted on May 1, 2015.
On August 4, 2015, the Commission voted to conduct full reviews. All six Commissioners concluded that the domestic group response for these reviews was adequate, the respondent group responses from Italy, Korea, and Spain were adequate, and the respondent group responses from Japan and Taiwan were inadequate. The Commission determined to conduct full reviews of the orders on imports from Italy, Korea, and Spain based on an adequate level of respondent participation, and to conduct full reviews on imports from Japan and Taiwan in order to promote administrative efficiency.
A record of the Commission’s vote to conduct full reviews is available from the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Requests may be made by telephone by calling 202-205-1802.
FTC Approves Four Final Orders Barring Companies from Making False All-Natural Claims - Federal Trade Commission
Following a public comment period, the Federal Trade Commission has approved four final consent orders against companies that allegedly misrepresented their personal care products as “All-Natural” or “100% Natural,” despite the fact that they contain man-made ingredients.
According to the FTC’s complaints, announced in April 2016, the companies, Trans-India Products, Inc., doing business as ShiKai, Erickson Marketing Group, doing business as Rocky Mountain Sunscreen, ABS Consumer Products, LLC, doing business as EDEN BodyWorks, and Beyond Coastal made deceptive all-natural claims in online ads for a variety of products, ranging from sunscreen to shampoo.
Under the final settlements, each of the companies is barred from making similar misrepresentations in the future and must have competent and reliable evidence to substantiate any ingredient-related, environmental, or health claims it makes.
The Commission vote approving the final orders and responses to the public commenters was 3-0. (The staff contact is Robert Frisby, Bureau of Consumer Protection, 202-326-2098.)
FSMA Final Rule: Amendments to Registration of Food Facilities
U.S. Food & Drug Administration
The Amendments to Registration of Food Facilities final rule updates FDA’s food facility registration requirements to better protect public health by requiring additional registration information that will improve the accuracy of the food facility registration database for facilities both in the United States and abroad. This final rule will support the FDA’s efforts to act quickly in response to food-related emergencies and will help the FDA to use its inspectional resources more efficiently.
Food facilities that manufacture/process, pack or hold food for consumption in the United States are required to register with the FDA, and this final rule adds new provisions to the current regulations to codify certain provisions of FSMA that were self-implementing and effective upon enactment of FSMA. Those provisions include the requirement of an email address for registration, required renewal of registration every two years, and that all food facility registrations must contain an assurance that the FDA will be permitted to inspect the facility at the times and in the manner permitted by the Federal Food, Drug and Cosmetic Act.
In addition, the final rule adds certain new requirements that will improve the food facility registration system. All food facility registrations are required to be submitted to the FDA electronically, although this requirement does not take effect until January 4, 2020.
Registrations are now required to contain the type of activity conducted at the facility for each food product category. This will be required when the final rule becomes effective on July 14, 2016. The final rule also amends the definition of a retail food establishment in a way that expands the number of establishments that are considered retail food establishments, and that are therefore not required to register with the FDA as food facilities. However, all food establishments, including retail food establishments, continue to have a responsibility to ensure their food is safe.
Imports Climb at Port of Long Beach - Port of Long Beach
Inbound containers push June cargo volumes up
Rising imports fueled higher container traffic at the Port of Long Beach in June, leading to a 3.4 percent overall volume increase over the same month last year.
The Port handled 603,339 TEUs (twenty-foot-equivalent units) during the month. Of those, 313,526 were inbound containers, a gain of 5.5 percent year-over-year. Exports were flat for the month at 128,099 TEUs, 0.1 percent lower than June 2015. Empties edged up to 161,714 TEUs, a 2.2 percent increase. Year-to-date total volume is down 0.6 percent compared to the first six months of 2015.
U.S. warehouse inventories have been lingering at high levels since 2014, contributing to a sluggish ocean trade environment. West Coast ports have been experiencing import gains in recent months, however.
“Our improving cargo volumes reflect the confidence that customers continue to have in the Port of Long Beach,” said CEO Jon Slangerup. “This is an encouraging sign despite soft consumer demand, high inventory levels and an evolving maritime industry as shipping lines continue to consolidate vessel services.”
U.S. GDP growth in the first quarter has been revised up to 1.1 percent from a previously estimated 0.8 percent. In the past two years, a slow first quarter has been followed by a rebounding second quarter. Economic experts have suggested growth could top 2 percent in the second quarter.
“As the July-to-October peak shipping season arrives, we’re going to continue providing world-class service to our stakeholders,” said Harbor Commission President Lori Ann Guzmán. “These results are a reminder that Long Beach is the fastest gateway to American consumer markets for trade from Asia.”
With an ongoing $4 billion program to modernize its facilities this decade, the Port of Long Beach is building the Port of the Future by investing in capital and service improvements that will bring long-term, environmentally sustainable growth.
FAA Proposes Rulemaking to Further Enhance Airport Safety
Federal Aviation Administration
July 12 - Today, the FAA published a Supplemental Notice of Proposed Rulemaking (SNPRM) for safety management systems (SMS) in the airport area. SMS is a formal approach to managing an organization's safety through four key components – safety policy, safety risk management, safety assurance, and safety promotion. Through the SNPRM, the FAA proposes to integrate proactive hazard identification and risk-management based principles into the day-to-day operations at airports.
The supplemental proposal amends the number of airports that would be required to implement the program. The SNPRM proposes SMS at any Part 139 certificated airport that is:
- Classified as a small, medium, or large hub airport in the National Plan of Integrated Airport Systems; and
- Identified by the U.S. Customs and Border Protection as a port of entry, designated international airport, landing rights airport, or user fee airport; or
- Identified as having more than 100,000 total annual operations which includes takeoffs and landings.
The original NPRM required all Part 139 airports to participate in SMS. Based on the numerous industry comments received, the FAA decided to amend the original proposal to instead apply it to certificated airports receiving the vast majority of passenger enplanements, operations, and international service. The original proposal would have applied to more than 500 certificated airports. The revised proposal would apply to approximately 260 airports. The industry will have 60 days to comment on the revised changes and other requirements proposed in the SNPRM. The comment period ends on September 12, 2016. Read more about SMS in the FAA Fact Sheet.
Funeral Home Settles FTC Charges it Violated Funeral Rule
Federal Trade Commission
A Montgomery, Alabama, funeral home has agreed to settle FTC charges that it violated the Funeral Rule. The Rule requires funeral providers to give consumers pricing and other important information when discussing funeral arrangements.
The FTC conducts annual undercover inspections of funeral homes to monitor compliance with the Funeral Rule’s disclosure requirements. These requirements include providing itemized price lists at the start of any in-person discussions of funeral arrangements, and casket or outer burial container purchases. The Rule also requires funeral homes to provide price information by telephone upon request, and generally prohibits them from requiring consumers to buy any item, such as a casket, as a condition of obtaining any other funeral good or service.
According to the FTC, on at least two occasions in 2012, Ross-Clayton Funeral Home Inc. failed to provide an itemized casket price list at the time and manner required by the Rule. The consent order, which the United States District Court for the Middle District of Alabama entered on June 23, requires the funeral home to pay a $16,000 civil penalty, and permanently prohibits it from violating the Funeral Rule.
For more information, read Shopping for Funeral Services and Complying with the Funeral Rule.
The Commission vote to authorize the filing of the proposed consent order was 3-0.
NOTE: Consent orders have the force of law when entered by the District Court judge.