Home Furnishings Company Agrees to pay $500,000 To Settle Alleged False Claim Act Violations
Although the False Claims Act has been used to expose Medicaid and Medicare fraud, it is also a handy tool for exposing fraud in other areas of government as well. Last month the Justice Department proved this when it announced that Home Furnishings Resources Group, Inc. (HFRG) has agreed to pay a half million dollar fine for violating the False Claims Act regarding its shipment of wooden bedroom furniture. The government alleges that the company did so to avoid playing anti-dumping fees from furniture imported from the People’s Republic of China (PRC). HFRG sells furniture that is heavily used in university student housing.
“The customs laws are intended to protect domestic companies and American workers from unfair foreign competition,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This settlement shows our commitment to pursue those who violate these laws and gain an illegal advantage in U.S. markets by evading the import duties owed on foreign-made goods.” Brenda Smith, Executive Assistant Commissioner, Office of Trade, CBP added at the time, “CBP is committed to ensuring a level playing field for all American businesses. We work with our federal partners to hold accountable those looking to circumvent U.S. trade laws.”
The settlement with HFRG resolves allegations that the home furnishings company sought to evade anti-dumping duties on its wooden furniture that it’s important from the PRC between 2009 and 2014. HFRG did so by misclassifying the furniture as non-bedroom furniture on official documents. (Non-bedroom furniture was not subject to an anti-dumping duty at the time.) The anti-dumping laws are designed to protect foreign companies from “dumping” products on the US at prices below cost. These duties are collected and assessed by the Department of Commerce, the Department of Homeland Security and Customs and Border Protection (CBP). Wooden bedroom furniture imported from the PRC has been the subject of anti-dumping duties since 2004. At the time, the wooden furniture HFRG imported from the PRC was subject to a 216% anti-dumping duty.
The impetus for this settlement came from a lawsuit that was filed by University Loft Company, a competitor of HFRG, under the whistleblower provisions of the False Claims Act. This act permits private parties to sue for false claims and to share in any recovery. University Loft Company is slated to receive approximately $75,000 as its share of the recovery. The government has, since 2009, sought to aggressively pursue people and companies that are alleged to have committed fraud against its agencies. Individuals who report alleged acts of fraud are able to use a whistleblower law firm to protect their interest and to consult with a false claims act attorney. The government, through its actions against companies and individuals that have been accused of fraud, has recovered billions of dollars since 2009.