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U.S. Intervenes in False Claims Act Suit Alleging Non-Payment of Import Duties

The United States has decided to intervene in a whistleblower lawsuit against Toyo Ink, a leading maker of printing inks with operations worldwide. The suit alleges that Toyo Ink and its subsidiaries intentionally presented the U.S. Customs and Border Protection with documents containing false country-of-origin information in order to avoid paying anti-dumping duties on imports of the ink companies’ colorant carbazole violet pigment number 23 (CVP-23). The specific corporations named in the suit are the Japanese company, Toyo Ink Manufacturing Co. Ltd. and a group of its U.S. subsidiaries, including Toyo Ink America LLC (based in Illinois), Toyo Ink International Corp. (located in New York) and Toyo Ink Manufacturing America LLC (located in New Jersey).

Anti-dumping and countervailing duties are assessed by the Department of Commerce and collected by U.S. Customs to protect American businesses by offsetting government subsidies given to importers of foreign products sold in the U.S. Since 2004, the U.S. has imposed such duties on the ink CVP-23 that is made in India and China. In this case the U.S. Department of Justice alleges that Toyo Ink falsely claimed that its CVP-23 ink was made in Japan and Mexico in an attempt to avoid paying the import duties. While Toyo Ink’s CVP-23 imports from India and China did undergo a finishing process in Japan and Mexico, the government contends that the final processing was not enough to alter the country of origin for purposes of the anti-dumping duties.

Whistleblower John Dickson filed the case initially in the U.S. District Court for the Western District of North Carolina under the qui tam provisions of the False Claims Act. The Act authorizes private individuals to file suit on the government’s behalf when they have evidence that misrepresentations have been made to the government in order to avoid paying amounts owed to the United States. The United States is then given a period of time within which to review the case and decide whether to intervene and take over prosecution of the case. The statute allows the government to collect three times its damages along with civil penalties.

To encourage whistleblowers to take action when they are aware of fraud against the government, the statute allows them to share in a portion of any recovery made in the lawsuit. When the government declines to intervene, the whistleblower’s share is greater. When the government takes over the case, as in this one involving Toyo Ink, the whistleblower’s share of any settlement or judgment, though still substantial, is reduced.

Waters & Kraus is a national firm with highly skilled lawyers practicing qui tam litigation in four offices, including Dallas, Los Angeles, San Francisco, and Baltimore. Our attorneys have decades of experience successfully representing whistleblowers in a variety of fraud cases. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.

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