Our client’s False Claims Act case against luxury womenswear retailer Alexis LLC, which settled last week for $7.6 million, has been featured in numerous articles.  The various press reports highlighted the four different ways in which Alexis LLC is alleged to have evaded payment of its fair share of its customs duties owed to the federal government.

Alexandra Harrell at Sourcing Journal described Alexis LLC’s modus operandi alleged in the lawsuit as “failing to report to CBP (Customs and Border Protection) the correct valuation of goods imported into the country, using double-invoicing, failing to apportion the value of assists in the form of fabric and garment trims to the customs value of imported merchandise, and submitting customs entries with incorrect Harmonized Tariff Schedule of the United States (HTSUS) classifications and port of entry.”  Fashion Label Alexis Caught Evading Trade Tariffs, Faces $7.6M Settlement  Sourcing Journal quoted Whistleblower Partners attorney Mary Inman on why the use of double-invoicing schemes like the one employed by Alexis LLC in this qui tam case is problematic.

“When you’ve got a set of invoices that reflects the true price and one that reflects a lower price, there’s not a lot of reasons for going to those kinds of lengths and creating those kinds of systems; particularly when you weigh that against the fact that, although the wrongdoing didn’t start out during the Trump tariff era, there was an additional 7.5 percent Section 301 tariff applied, so that gives you additional motive for why you want to try and avoid responsibility to pay your full customs duty.”

In Alexis LLC’s home state, South Florida Business Journal, quoted Mary Inman on why enforcement of the customs laws remains a top priority for the government: “All importers have an obligation to play by the rules and pay their fair share of the customs duties that are due. This settlement shows that the government will not tolerate the alleged shortchanging of the customs duties it is owed, which puts law-abiding American businesses at an unfair disadvantage.” Luxury clothing retailer to pay $7.6M in whistleblower settlement

Meanwhile, Bloomberg also reported on the settlement, highlighting that the customs duties and fees that were not paid were on women’s clothing imported into the U.S. from China. Clothing Importer, US Reach $7.6 Million False Claims Settlement

For more information about customs fraud, check out our resources page on this topic.