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October 3, 2017New York, NY, United StatesFinancial Crimes

Notations Inc. settles $1 million civil suit for falsifying invoices

NEW YORK — Pursuant to an investigation led by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) New York, and U.S. Customs and Border Protection (CBP), Notations, Inc. (Notations), a garment wholesaler based in Warminster, Pennsylvania, with a showroom in New York, has settled civil fraud claims brought under the False Claims Act. 

As alleged in the complaint, Notations repeatedly ignored warning signs that its business partner, which imported garments from China, was engaged in a scheme to underpay customs duties owed on the imported garments it sold to Notations.  Pursuant to the settlement, Notations admits and accepts responsibility for failing to act in response to indications of fraudulent conduct, agrees to pay $1 million in damages, and agrees to implement measures designed to prevent future fraud by Notations or its business partners. 

“Evading the payment of customs duties to increase profit is not a victimless crime; it has a negative effect on the U.S. economy and law-abiding importers.  HSI special agents will continue to work diligently with the officers of CBP to locate these offenders and put an end to their fraudulent business practices,” stated Special Agent in Charge of HSI New York, Angel M. Melendez.

“As global supply chains grow more complex, it is important for American businesses to know their suppliers and be confident of their integrity.  The outcome of this case is a testament to the dedication of our partners in the United States Attorney’s Office, Homeland Security Investigations, and the men and women of CBP in enforcing our nation’s trade laws and holding accountable those perpetrating this type of fraud,” said CBP Acting Director Leon Hayward.

As alleged in the complaint-in-intervention filed last year, Yingshun Garments, Inc. (Yinghsun), an importer of women’s apparel manufactured in China, and Import Global Designs Inc. (Import Global) and Olgrem, LLC (“Olgrem”), successor entities to Yingshun, and Marie Rogers, an owner and/or officer of each entity, engaged in a double-invoice scheme whereby Yingshun (and later Import Global and Olgrem) presented false and fraudulent invoices to CBP, showing prices for imported garments that were discounted by 75 percent or more, for the purpose of avoiding customs duties on the garments.  Notations, which was Yingshun’s biggest customer, aided the fraudulent scheme by ignoring warning signs that Yingshun’s irregular business practices were highly suggestive of fraud.

As part of the settlement, Notations agreed to pay $1 million in damages.  Notations also admits and accepts responsibility for its failure to take action in response to multiple warning signs that Yingshun, Import Global and Olgrem were undervaluing their imported goods and therefore paying less in import duties than they should have been paying.  Notations also has agreed to implement a written compliance policy which will include measures to educate its employees on identifying red flags for fraud in import transactions, to monitor the conduct of its business partners who act as importers of overseas goods and to report all potentially fraudulent conduct to CBP.  

This matter was initiated by a relator pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. § 3729 et seq.  Claims against Yingshun, Import Global, Olgrem and Marie Rogers remain pending.   The government’s case is being prosecuted by the U.S. Attorney for the Southern District of New York Office’s Civil Frauds Unit.