US Customs Duty Whistleblower Lawsuit Settles for $6 million
NYC whistleblower attorney Timothy J. McInnis announced today a $6m settlement against an importer of Chinese apparel and related companies. The settlement resolves a False Claims Act lawsuit against Joseph Bailey and his two New York City companies, Stargate Apparel, Inc. and Rivstar Apparel, Inc. The case began with the filing of a qui tam whistleblower complaint under seal in the United States District Court for the Southern District of New York in 2014. The settlement agreement among the whistleblower, the United States and the defendants was approved by U.S. District Judge J. Paul Oetken on July 28, 2021.
The action, initiated by a former employee, alleged that the defendants submitted invoices to the U.S. Customs and Border Protection (“CBP”) that understated the true value of the clothing that they imported into the United States in order to avoid paying millions of dollars in U.S. customs duties. The United States investigated the whistleblower’s allegations and joined in the lawsuit. All the defendants admitted the allegations against them as part of the civil settlement. Bailey also pleaded guilty to related criminal charges and was sentenced to 6 months in federal prison.
According to attorney McInnis, a former federal prosecutor, the whistleblower who brought this action will receive more than $1.2m (20%) for the information he provided. That unnamed person was “very courageous and extremely helpful to the United States during the ensuing
civil and criminal investigations,” according to McInnis. McInnis also acknowledge the tremendous work and successful results of the Assistant U.S. Attorneys and federal agents on the matter.
The case is captioned, United States of America ex rel. John Doe, Plaintiffs, v. Stargate Apparel, Inc., Rivstar Apparel, Inc. and Joseph Bailey,. Defendants, Index No. 1:14-cv-08991-JPO (S.D.N.Y.)
For additional information, please contact Timothy J. McInnis, Esq. of McInnis Law at (212) 292- 4573 or tmcinnis@mcinnis-law.com.
