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Federal Authorities in Puerto Rico Reach Settlement Under the 'False Claims Act' Over Illegal International Trade Practices - U.S. Customs & Border Protection

SAN JUAN, Puerto Rico – On Oct. 20, 2020, Days and Towers, LLC. agreed to pay the United States of America the sum of  $817,927.58 to settle claims under the False Claims Act, 31 U.S.C. Section 3729 and unpaid customs duties.

The settlement is the result of coordinated efforts between the U.S. Attorney’s Office, District of Puerto Rico and the Global Trade Investigations (GTI) Task Force; an integrated Task Force of US Customs and Border Protection (CBP) and Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

The investigation leading to this settlement agreement revealed that from in or about August 2015 to in or about August 2019, Days and Towers submitted approximately 51 import product entries to CBP containing false tariff schedules intending to reduce its customs obligations.  

“CBP’s trade enforcement efforts seek to better identify, detect, and interdict shipments at risk of duty evasion,” indicated Gregory Alvarez, Director of Field Operations for Puerto Rico and the US Virgin Islands. “CBP advances these efforts through partnerships with the private sector, advanced technology, and integrated enforcement.”

 “This case underscores the collaborative efforts employed by the US Attorney’s Office, in coordination law enforcement partners of HSI and CBP under the CMLA to hold individuals and corporate entities accountable for fraudulent conduct that disrupts our nation’s international trade streams,” said U.S. Attorney W. Stephen Muldrow. “Our office will continue to investigate illegal trade practices and will aggressively pursue civil and criminal actions against those who attempt to defraud the United States.”

“Violations under the federal False Claims Act can result in significant fines and penalties as this case clearly demonstrates,” said Iván J. Arvelo, special agent in charge of HSI San Juan and U.S. Virgin Islands. HSI, along with our partners in the Caribbean Anti-Money Laundering Alliance, will continue working together against local and international money laundering and other serious financial crimes,” added Arvelo.

This case was prosecuted by Assistant U.S. Attorney Jorge L. Matos at the U.S. Attorney’s Office, in conjunction with HSI Special Agents Rafael O. Gonzalez and Ivan Serpa with the support of CBP.

Hong Kong, China Initiates Dispute Complaint Against US Origin Marking Requirements - World Trade Organization

Hong Kong, China has requested WTO dispute consultations with the United States concerning marks of origin requirements imposed by the US on goods produced in Hong Kong, China. The request was circulated to WTO members on 3 November.

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U.S. Department of Commerce Issues Affirmative Preliminary Antidumping Duty Determinations for Mattresses from Seven Countries -  International Trade Administration

WASHINGTON – Today, the U.S. Department of Commerce announced affirmative preliminary determinations in the antidumping duty (AD) investigations of mattresses from Cambodia, Indonesia, Malaysia, Serbia, Thailand, Turkey, and Vietnam.

Commerce preliminarily determined that exporters from the countries listed below have dumped mattresses in the United States at the following margins:

  • 252.74 percent for Cambodia;
  • 2.61 percent for Indonesia;
  • 42.92 percent for Malaysia;
  • 13.65 percent for Serbia;
  • 572.56 - 763.28 percent for Thailand;
  • 20.03 percent for Turkey; and
  • 190.79 – 989.90 percent for Vietnam.

As a result of today’s decisions, Commerce will instruct U.S. Customs and Border Protection to collect cash deposits from importers of mattresses from these seven countries based on the preliminary rates noted above. 

The petitioners are Corsicana Mattress Company (Dallas, Texas), Elite Comfort Solutions (Newman, Ga.), Future Foam, Inc. (Council Bluffs, Ind.), FXI, Inc (Media, Pa.), Innocor, Inc. (Red Bank, N.J.), Kolcraft Enterprises, Inc. (Chicago, Ill.), Leggett & Platt, Incorporated (Carthage, Miss.), and International Brotherhood of Teamsters (Washington, D.C.), and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO (Washington, D.C.). 

Commerce is scheduled to announce its final determinations in these cases on or about March 15, 2021.

If Commerce’s final determinations are affirmative, the U.S. International Trade Commission (ITC) will be scheduled to make its final injury determinations on or about April 26, 2021. If Commerce makes affirmative final determinations of dumping and the ITC makes affirmative final injury determinations, Commerce will issue AD orders. If Commerce makes negative final determinations of dumping or the ITC makes negative final determinations of injury, the investigations will be terminated and no orders will be issued. 

In 2019, U.S. imports of mattresses were valued at: 

•    $33.1 million for Cambodia;
•    $102.6 million for Indonesia;
•    $38.6 million for Malaysia;
•    $24.1 million for Serbia;
•    $18.7 million for Thailand;
•    $19.4 million for Turkey; and
•    $166.6 million for Vietnam.

The strict enforcement of U.S. trade law is a primary focus of the Trump Administration. Since the beginning of the current administration, Commerce has initiated 297 new AD and countervailing duty (CVD) investigations – a 271 percent increase from the comparable period in the previous administration.

The AD law provides American businesses and workers with an internationally accepted mechanism to seek relief from the harmful effects of unfair pricing of imports into the United States. Commerce currently maintains 540 AD and CVD orders – an all-time high – providing relief to American companies and industries impacted by unfair trade.

Foreign companies that price their products in the U.S. market below the cost of production or below prices in their home markets are subject to antidumping duties. 

Commerce’s Enforcement and Compliance unit within the International Trade Administration is responsible for vigorously enforcing U.S. trade laws and does so through an impartial, transparent process that abides by international rules and is based solely on facts submitted to the public record. 

Federal Register Notices:

Illicit Chinese Products Pose a Very Real Threat to the Safety and Economic Prosperity of the American People

LOS ANGELES—As the year-end holiday shopping season enters in full motion, U.S. Customs and Border Protection (CBP) officers assigned to the Los Angeles International Airport (LAX), international mail facility (IMF) intensified Operation Mega Flex, a CBP-led ongoing nationwide aggressive crackdown in detecting, intercepting and seizing illicit goods arriving in small parcels from China.

In just one day this month, CBP officers at LAX IMF intercepted 812 shipments containing counterfeit footwear, handbags, wearing apparel, prohibited plant and animal products, and other items that threaten the health and safety of consumers, undermine the competitiveness of U.S. businesses, and put U.S. agriculture and the environment at risk.

“Counterfeit and other illicit goods from China pose a very real threat to the safety and economic prosperity of the American people, said Carlos C. Martel, CBP Director of Field Operations in Los Angeles. “CBP will continue to use all methods at its disposal to ensure items entering the U.S. do not harm Americans and to foster a fair and competitive trade environment for American manufacturers.”

Available on illegitimate websites and sold in underground outlets, counterfeit commodities multiply the illegal profits of smugglers and traffickers. Consumers are tricked into believing they are buying an original product at a significant discount.

“The e-commerce explosion has created a collateral massive underground market for all sorts of illicit goods, from fake prescription medicine, electronics, wearing apparel to prohibited food products containing potentially deadly animal diseases,” said LaFonda Sutton-Burke, CBP LAX Area Port Director.

Through its nationwide Mega Flex operations, CBP has found that more than 13 percent of targeted shipments contain counterfeit goods or contraband. Since July 2019, CBP has seized more than 4,800 shipments and nearly 2,600 agriculture violations through Operation Mega Flex that posed health, safety, or economic threats to the United States and its people.

Operation Mega Flex is a CBP-led, interagency effort initiated in July 2019 to address Chinese trade violations and illicit networks in the international mail environment through period enhanced inspections. CBP conducts Mega Flex operations at International Mail Facilities and Express Consignment Hubs nationwide in coordination with U.S. Immigration and Customs Enforcement, the U.S. Postal Inspection Service, and the U.S. Food and Drug Administration.

Nationwide in fiscal year (FY) 2019, CBP seized 27,599 shipments containing goods that violated intellectual property rights. The total estimated MSRP of the seized goods, had they been genuine, increased to nearly $1.5 billion from over $1.4 billion in FY 2018. 

Watches and jewelry topped the list for number of seizures based on intellectual property rights (IPR) violations with 4,242 representing 15 percent of all such seizures.  Watches and jewelry continued as the top product seized for IPR violations by total MSRP value with seizures valued at over $687 million, representing 44 percent of the total MSRP value of seizures in this category. Violative wearing apparel and accessories seizures placed second by MSRP value, with seizures estimated to be valued at more than $226 million. 

FDA, Homeland Security Agencies Take Additional Action to Prevent Import of Illegal and Harmful Medical Products Through International Mail Facilities - Food & Drug Adminstration

Recently, leadership from the U.S. Food and Drug Administration, the U.S. Customs and Border Protection (CBP), and the U.S. Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI) signed a Memorandum of Understanding (MOU) to stop harmful products that pose a threat to public health and attempt to enter the U.S. through International Mail Facilities (IMFs). The MOU will maximize inspection and detection capabilities in order to prevent this illegal activity.

As a core part of this collaborative effort, CBP and ICE-HSI will continue to partner with the FDA in joint operations at the IMFs to target illicit opioids, including fentanyl and other unapproved or unlawful drugs, medical devices and dietary supplements regulated under the Federal Food, Drug, and Cosmetic Act. This partnership is also critical in our continuing efforts to intercept fraudulent, counterfeit or illegitimate COVID-19 products that may pose risks to public health. Additionally, the agencies will work to coordinate ongoing activities through collaborative information sharing, shared facilities, and future coordinated operations.

“Americans must have confidence that the products they receive are reliable and fully comply with U.S. laws,” said FDA Commissioner Stephen M. Hahn, M.D. “The collaborative efforts we’ve announced will enable more resourceful, effective, and efficient oversight to prevent illegal and potentially harmful products from entering the United States—thereby aiding our essential mission to protect the health and safety of the American people. We remain committed to using all tools and authorities available and leveraging our strong relationship with our federal partners to help stop the illegal flow of counterfeit and unapproved medical products into our country.”

“International mail and express consignment are major conduits for drug smugglers. This has become more challenging for law enforcement as volumes have skyrocketed, and because of e-commerce and rapid shipping logistics,” said CBP Acting Commissioner Mark A. Morgan. “This partnership with FDA and ICE will ensure a whole-of-government approach that will provide additional resources and tools to disrupt these dangerous drugs from reaching our communities.”

“FDA and CBP are key partners in our mission to protect against counterfeit goods that could cause harm,” said Senior Official Performing the Duties of the Director Tony H. Pham. “ICE HSI special agents investigate and enforce violations of federal trademark, copyright and patent law and work to dismantle counterfeit operations and hold individuals involved in them accountable – mitigating risks to legitimate business and ensuring public safety.”

The FDA and CBP signed a letter of intent in April 2019, to maximize inspection and detection capabilities at the IMFs. As outlined in the letter of intent and in the recently signed MOU, the FDA, CBP, and ICE-HSI will expand the types of information and how that information is shared among the agencies to quickly and effectively identify trends in incoming violative packages. This collaboration involves sharing of both general and specific data points, which can be used to target impending product entries and to inform future enforcement strategies. An additional focus of this effort will be coordinating shared space as well as increased scientific presence at high-volume IMF locations, helping to facilitate and support real-time entry decisions and increased data sharing.

Since April 2016, when the FDA implemented its administrative destruction authority at all nine IMFs, the agency has destroyed more than 12.9 million capsules/tablets/pieces – weighing over 41.2 tons. The destruction of almost 13 million violative drug units by the FDA represents a key component of the agency’s public health mission, as these potentially dangerous drugs were destined for over 31,000 U.S. consumers. New authorities and resources provided by Congress under the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act have enabled the FDA to create a more efficient destruction process for violative drugs containing certain active pharmaceutical ingredients (APIs), and to expand its presence at IMF locations nationwide, which has resulted in more rapid, on-site scientific support, increased staffing and improved work facilities.

In fiscal year (FY) 2019, the FDA screened approximately 25,200 parcels containing more than 41,000 products at its IMF facilities. The agency subsequently refused to admit more than 35,000 of those products and nearly half (over 17,000 products) were identified as violative drugs and destroyed using FDA’s administrative destruction authority. So far in FY 2020, the FDA has screened approximately 27,500 mail parcels, containing almost 43,000 FDA-regulated products. Of these products, more than 34,000 were refused admission and more than 24,000 were violative drug products that have been destroyed.
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