Z Gallerie Settles False Claims for $15M; Whistleblower to Get $2.4M
California-based Z Gallerie has agreed to pay the federal government $15 million to settle allegations that the upscale furniture retailer knowingly submitted or caused the submission of false claims when it evaded customs duties on imports of wooden bedroom furniture from the People’s Republic of China (PRC), the U.S. Department of Justice announced last week.
The Department of Commerce assesses, and the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) collects, duties to protect U.S. manufacturers from unfair competition abroad by leveling the playing field for domestic products. The particular duties at issue in this case are antidumping duties, which protect domestic manufacturers against foreign companies “dumping” products on U.S. markets at prices below cost. Imports of wooden bedroom furniture manufactured in the PRC have been subject to antidumping duties since 2004.
The settlement announced today resolved allegations that Z Gallerie evaded antidumping duties on wooden bedroom furniture imported from the PRC from 2007 to 2014, by misclassifying, or conspiring with others to misclassify, the imported furniture as pieces intended for non-bedroom use on documents presented to CBP. For example, Z Gallerie allegedly sold certain Bassett Mirror Company products, including a six-drawer dresser and three-drawer chest, as part of a bedroom collection; however, these goods were misidentified on CBP documents, using descriptions such as “grand chests” and “hall chests,” in order to avoid paying antidumping duties on wooden bedroom furniture.
The allegations resolved by the settlement were originally brought by whistleblower Kelly Wells, an e-commerce retailer of furniture, under the qui tam provisions of the False Claims Act. The act permits private parties to sue on behalf of the United States those who falsely claim federal funds or, as in this case, those who avoid paying funds owed to the government or cause or conspire in such conduct. The act also allows the whistleblower to receive a share of any funds recovered. Wells will receive $2.4 million as her share of the settlement.
The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments. We have years of experience representing whistleblower clients who expose every kind of fraud against the government, including health care fraud, contract fraud, and tax fraud. Read more about our expertise in False Claims Act cases and how you can take action.