Importers to Pay more than $5.2 Million to Resolve Allegations they Evaded Customs Duties in Violation of the False Claims Act

U.S. Attorney John F. Bash of the Western District of Texas announced today that Blue Furniture Solutions, LLC, its successor XMillenium, LLC, and two of the companies’ former executives—CEO Yingqing Zeng and CFO Alex Cheng—have agreed to pay more than $5.2 million to resolve allegations that they violated the False Claims Act by evading customs duties and fees on furniture imported from China.

In July 2015, University Loft Company filed a False Claims Act qui tam action in the U.S. District Court for the Western District of Texas, Austin Division, alleging that Blue Furniture and others were importing wooden bedroom furniture into the U.S. without paying the required anti-dumping duties and other customs fees.  After investigating University Loft’s allegations, the United States elected to intervene in the action.

In its complaint, the government alleged that Blue Furniture, XMillenium, Zeng, and Cheng conspired to evade millions of dollars in anti-dumping duties and customs fees by falsely describing wooden bedroom furniture imported from China as “metal” or “non-bedroom” furniture on documents submitted to U.S. Customs and Border Protection.  The defendants manipulated images of their products in packing lists and invoices, and directed their Chinese manufacturers to ship furniture in mislabeled boxes and to falsify invoices to help the defendants avoid detection by authorities in the United States.

To resolve the government’s allegations, Blue Furniture and XMillenium consented to entry of a final judgment holding them jointly and severally liable to the U.S. in the amount of $4,679,987.19.  Zeng and Cheng separately agreed to pay $460,000 and $90,000, respectively, to resolve their personal liability.  In addition, Zeng and Cheng each pleaded guilty last year in the U.S. District Court for the District of South Carolina to criminal charges of conspiracy to defraud the U.S. in violation of 18 U.S.C. §§ 371 and 542. [United States v. Zeng et al., No. 2:19-CR-64-DCN (D.S.C.)].

“Companies that import goods from China or other foreign countries without paying the required duties and fees threaten the livelihood of American manufacturers and their workers, who are put at an unfair disadvantage relative to their foreign counterparts.  My office will not hesitate to use every tool available—both criminal and civil—to make sure that these companies and their executives are held accountable,” stated U.S. Attorney Bash.

U.S. Attorney Bash commended the efforts of U.S. Customs and Border Protection, Department of Homeland Security Office of Inspector General, and U.S. Immigration and Customs Enforcement Homeland Security Investigations for their investigation of this matter.  Assistant U.S. Attorney Thomas Parnham and former Assistant U.S. Attorney Susan Strawn represented the government in the civil lawsuit.  The case is United States ex rel. University Loft Company v. Blue Furniture Solutions, LLC et al., Civil Action No. 1:15-CV-588-LY (W.D. Tex.).