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08/31/2011

HSI settles a civil lawsuit against a jewelry company engaged in a customs fraud scheme

NEW YORK — The United States has settled a civil customs lawsuit against an international jewelry company based in Hong Kong — along with its related New York State corporations. The company used bogus invoices to cheat the United States out of more than $1 million in customs duties over the course of a decade. This settlement comes as a result of an investigation conducted by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

Noble Jewelry and its related corporations, Noble Jewelry Limited and Chad Allison Corporation (collectively, "The Noble Jewelry Companies") accepted responsibility for underreporting the value of their imported merchandise. Consequently, they agreed to pay $3.85 million to the United States as damages and penalties under the False Claims Act.

"Companies that break our nation's Customs laws gain an unfair advantage over law-abiding competitors," said James T. Hayes, Jr., special agent in charge of HSI in New York. "HSI will use all of its resources to investigate companies that try to beat the system and bring them to compliance."

"This case is an excellent example of the essential public service a whistle-blower can perform by partnering with the government to expose illegal conduct that adversely affects the public fisc," said U.S. Attorney Preet Bharara, Southern District of New York. "It is also a reminder of our continued vigilance in pursuit of fraud and its perpetrators."

According to the court documents, the Noble Jewelry Companies are related through a common holding company, Noble Jewelry Holdings Limited, which is incorporated in the Cayman Islands and operates principally in Hong Kong. From approximately 1998 to 2010, the Noble Jewelry Companies engaged in a fraudulent scheme to avoid the payment of customs duties by presenting the government with bogus invoices, which significantly understated the value of the imported jewelry. These bogus invoices were used to calculate customs duties.

The Noble Jewelry Companies maintained a second set of books with accurate invoices, but they were withheld from the government. Through this fraud, they avoided paying more than $1 million in customs duties.

As part of the settlement, the Noble Jewelry Companies has admitted wrongdoing, and acknowledged that between 1998 and 2010:

  • They repeatedly presented to the government invoices for jewelry being imported into the United States that understated the value of the goods imported;
  • Maintained, for their own commercial use, separate invoices which accurately listed the value of the jewelry being imported;
  • Took steps to avoid detection; and
  • Deprived the government of hundreds of thousands of dollars of customs duties.

The allegations of fraud stated in the complaint were first brought to the attention of the government by a whistleblower, who filed a lawsuit under the False Claims Act. The False Claims Act permits the government to recover up to three times the amount of damages incurred by the United States, in addition to civil penalties ranging from $5,500 to $11,000 per violation.

Private parties who have knowledge of fraud committed against the government may file suit on behalf of the government and share in any recovery. The United States may then intervene and file its own lawsuit for treble damages and penalties, as it did in this case.