New York Packaging II LLC doing business as Redi-Bag USA, a New York-based supplier of custom bags, liners, and packaging, along with the company’s CEO, Jeffrey Rabiea, have agreed to pay $7.3 million to resolve allegations that they violated the False Claims Act by misrepresenting on customs entry forms the country of origin of polyethylene retail carrier bags, thereby evading antidumping duties owed to the United States.

To enter goods into the United States, an importer must declare, among other things, the country of origin of the goods, the value of the goods, whether the goods are subject to duties, and the amount of duties owed. 

U.S. Customs and Border Protection collects applicable duties, including antidumping duties assessed by the Department of Commerce. Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost. 

During the relevant time period, PRCBs from China were subject to antidumping duties.

The settlement resolves allegations that Redi-Bag USA and Mr Rabiea knew that the PRCBs they imported and supplied to customers across the United States were manufactured in China and transshipped through Hong Kong. 

Redi-Bag USA and Mr Rabiea nevertheless misrepresented on customs entry forms that the country of origin of the PRCBs was Hong Kong, thus evading anti-dumping duties assessed by the United States under Anti-Dumping Duty Order No. A-570-886 (ADD Order). 

When applicable, the ADD order imposed an antidumping duty of up to 77.57% on the value of PRCBs manufactured in China and imported into the United States. 

The U.S. government alleged that Redi-Bag USA and Mr Rabiea concealed the PRCBs’ true country of origin by hiding information from others, including the company’s customs broker and CBP, by directing employees to cover up ‘Made in China’ markings, directing the manufacturer to remove ‘Made in China’ markings, and directing the cancelation of orders after learning the orders would be inspected by customs authorities. 

The settlement with Redi-Bag USA and Mr Rabiea resolves a civil lawsuit filed by relator John Maierhoffer, a former contracted sales representative for Redi-Bag USA, under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and to share in a portion of the government’s recovery. 

The lawsuit was filed in the United States District Court for the District of New Jersey and is captioned United States ex rel. Maierhoffer v. New York Packaging II LLC, et al., Civil No. 21-20170 (D.N.J.). As part of the resolution, Mr Maierhoffer will receive approximately $1,332,250 of the settlement proceeds.