Notations, a US garment wholesaler has agreed to pay a million dollars in damages and implement measures designed to prevent future fraud by Notations or its business partners. The wholesaler repeatedly ignored warning signs that its business partner, which imported garments from China, was engaged in a scheme to underpay customs duties owed on the imported garments it sold to Notations.
Yingshun Garments, an importer of women’s apparel manufactured in China, and Import Global Designs and Olgrem, successor entities to Yingshun, engaged in a double-invoice scheme whereby Yingshun and later Import Global and Olgrem presented false and fraudulent invoices showing prices for imported garments that were discounted by 75 per cent or more for the purpose of avoiding customs duties on the garments.
Notations, which was Yingshun’s biggest customer, aided the fraudulent scheme by ignoring warning signs that Yingshun’s irregular business practices were highly suggestive of fraud. As a part of the settlement, Notations has agreed to implement a written compliance policy that will include measures to educate its employees on identifying red flags for fraud in import transactions, to monitor the conduct of its business partners who act as importers of overseas goods and to report all potentially fraudulent conduct.