I thought you might be interested in a customs fraud case involving a footwear importer recently unsealed in the U.S. District Court for the Eastern District of California.
The indictment unsealed late last week alleges that Thomas Romeo, the owner of a footwear importer (Romeo and Juliette, Inc.), engaged in a scheme to defraud the U.S. government of customs duties. The alleged scheme involved intentionally understating the value of footwear the company imported into the United States from 1994 through March 2010 (at Mr. Romeo’s direction). The undervaluation resulted in the company not paying at least $5.6 million in duties and fees that were legally owed. The indictment also alleges that Mr. Romeo provided a “false and fictitious document purportedly from a customs broker” to ICE during the investigation (the document advises Romeo and Juliette to pay duty on the understated value). The document was alleged to have been created by employees of Romeo and Juliette, at Mr. Romeo’s direction. Mr. Romeo is also alleged to have instructed employees to make false statements to ICE, if questioned during the investigation.
This case is interesting on a number of levels. First, it demonstrate that CBP/ICE are actively pursuing trade fraud cases. What appears to have started as a routine trade compliance inquiry turned into more based on the evidence CBP/ICE uncovered. Second, it will be interesting to see if any of Romeo and Juliette’s customers are drawn into the case. Romeo and Juliette’s products are sold by a number of major retailers (under the BEARPAW brand) and, while none are likely to have been involved in the scheme (and the indictment does not allege that any were involved), it would be interesting to know if the prices Romeo and Juliette offered these customers were “too good to be true” or not. If Romeo and Juliette did pass at least some of the (substantial) cost savings on to its customers in the form of lower prices, a question could be raised as to whether the customers should have known that something was amiss (or at least asked why the prices on the imported footwear were so low).
We expect that a plea agreement will ultimately be reached in this matter and a trial will be avoided.
If you have any questions about this matter, or customs issues more generally, please let us know.