ANNOUNCEMENT 05 Oct 2016In October 2016, the government of the United States of America announced a change in import formalities.
NUMBER OF INTERVENTIONS
http://www2.ca3.uscourts.gov/opinarch/152169p.pdf. See also https://www.justice.gov/sites/default/files/civil/legacy/2011/04/22/C-FRAUDS_FCA_Primer.pdf, http://www.fcaupdate.com/2016/10/third-circuit-revives-reverse-false-claims-act-case-but-acknowledges-burden-on-defendants/, and http://www.strtrade.com/news-publications-false-claims-act-duty-evasion-court-102716.html
On October 5, 2016, the Court of Appeals for the Third Circuit issued a decision in the case of United States ex rel. Custom Fraud Investigations, LLC v. Victaulic Company (Case No. 15-2169) remanding a 'reverse' False Claims Act case to the District Court for the Eastern District of Pennsylvania. Legal analysts believe that the decision could lead to stricter enforcement of rules requiring that goods be marked with their country of origin. Under the False Claims Act, a 'whistleblower' that brings evidence of fraud to the government may be entitled to a reward. A 'reverse' false claim is one in which the alleged fraud involves an attempt to avoid a legal obligation (as opposed to a fraud aimed at improperly receiving funds from the government). At issue are provisions in the Tariff Act of 1930 mandating that pipe fittings manufactured outside the United States be marked with the country of origin; pipe fittings manufactured in the United States are typically unmarked. Imported pipe fittings that are not properly marked are subject to an additional 10% tariff. If improperly marked goods are discovered by customs officials, the importer has three options: (1) re-export the goods; (2) destroy the goods; or (3) mark them properly to be released for sale in the United States. In this case a private firm (Custom Fraud Investigations, LLC) alleged that many of the pipe fittings that Victaulic imported from China and Poland were not appropriately marked, and alleged that Victaulic's failure to pay the duties owed on foreign-manufactured pipe fittings constitutes reverse false claims. A district court had previously found that Victaulic's failure to pay marking duties did not amount to a reverse false claim, but the Third Circuit panel disagreed. In a two-to-one ruling it remanded the case to the district court for further consideration. The court observed that the 'reverse claims provision is clear: any individual who 'knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the Government' may be subject to liability.' In the event that the district court finds for the plaintiffs, it may create a new incentive for other private interests to bring claims and, in the process, increase a burden on importers.