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September 23, 2016New York, NY, United StatesFinancial Crimes

New York apparel businesses charged in double-invoice scheme

NEW YORK — A civil complaint was filed in federal court Friday against several parties alleging a fraudulent scheme to avoid paying millions in import duties. The complaint stems from a joint investigation by U.S. Immigration and Custom Enforcement’s (ICE) Homeland Security Investigations (HSI) in New York and U.S. Customs and Border Protection (CBP).

The complaint alleges violations of the False Claims Act by Yingshun Garments Inc., an importer of women’s apparel manufactured in China; Marie Rogers former Managing Director of Yingshun; Import Global Designs Inc. and Olgrem Llc, successor entities to Yingshun; and Notations, Inc., a wholesaler of women’s apparel and Yingshun’s biggest customer. Allegedly, the defendants conspired to defraud and did defraud the U.S. government by engaging in a double-invoice scheme whereby Yingshun, presented false and fraudulent invoices to CBP for the purpose of avoiding import duties on garments sold to Notations. The complaint further alleges that Notations took actions to aid Yingshun in perpetrating and concealing the fraud.  

“These individuals allegedly defrauded the U.S. government out of millions of dollars in unpaid import duties,” said Angel M. Melendez, special agent in charge of HSI New York. “The action of creating fraudulent documents to cheat the system is deplorable and HSI will continue to work with CBP and the US Attorney’s office to aggressively investigate and bring to justice the most prolific fraudsters.”

As indicated in court documents, duties for merchandise imported into the United States are calculated by multiplying the value of the merchandise by the applicable duty rate. An importer or its agent must therefore disclose to CBP the value of all imported merchandise and furnish an invoice to justify that value. It is alleged that Yingshun created false and fraudulent commercial invoices for garments purchased by Notations, which undervalued the garments by 75 percent or more. Yingshun then submitted these false invoices to CBP and, based upon the gross undervaluations, paid significantly less in import duties than it actually owed.  Notations was aware of Yingshun’s fraudulent scheme and benefited from it, as Yingshun’s underpaying of import duties resulted in Notations paying lower prices for the garments it was purchasing from Yingshun, among other benefits. Rather than taking steps to prevent the fraud, Notations agreed to create and accept false and misleading documents in order to perpetuate the false impression that Yingshun’s fraudulent invoices reflected actual prices paid for the garments. Rogers managed all aspects of Yingshun’s business and facilitated the double-invoice scheme, including by utilizing a “formula” that generated garment prices for Notations that incorporated the underpayment of import duties. Rogers also created Import Global and Olgrem and continued Yingshun’s fraudulent scheme through these entities, in order to avoid detection by CBP. 

This case is being prosecuted by the U.S. Attorney for Southern District of New York’s Civil Frauds Unit.  

Updated: 09/26/2016