Multinational Manufacturer Must Pay $22 Million to Settle False Claims Act Allegations Related to Customs Fraud

In September, the U.S. Department of Justice announced that a German multinational corporation, Linde GmbH, and its U.S. subsidiary Linde Engineering North America LLC (LENA), had agreed to pay more than $22.2 million to resolve allegations the company had evaded import tariffs by knowingly making false statements on customs declarations. 

A whistleblower, identified only as Ms. Johnson, had come forward with information about the scheme and had filed a qui tam lawsuit in the U.S. Court for the Eastern District of Pennsylvania. For her information and subsequent assistance in the DOJ investigation, Ms. Johnson will receive about $3.7 million.

A calculated scheme to evade customs duties

Linde GmbH is a multinational corporation headquartered in Germany and a self-described leader in global industrial gases and engineering. Its 2019 revenues topped $28 billion. Linde claims a mission to “make our world more productive every day.” Among its many operations, Linde imports materials into the United States for use in the construction of natural gas and chemical manufacturing plants. 

During the years in question, 2011 to 2017, Linde’s Houston-based subsidiary LENA managed procurement, which included importing more than $500 million in goods into the United States. U.S. law requires importers like Linde to declare the country of origin of the goods, the value of the goods, whether the goods are covered by antidumping or countervailing duties, and the amount of duties owed. 

U.S. Customs and Border Protection relies on an importer’s representations to determine how much duties are owed.  The importer has an “affirmative duty” to use “reasonable care” to ensure its information is accurate so CBP can assess the proper duties. However, Linde’s reporting was deliberately manipulated to reduce the amount it paid in duties.

Numerous violations of law and policy 

U.S. trade policy is designed to stabilize the economy and bolster national security. Antidumping laws and countervailing duties prevent foreign entities from flooding the U.S. market with cheap imported goods. This protects American manufacturers from unfair trade practices and eliminates unfair incentives to buy foreign goods or hire foreign workers. 

By violating U.S. Customs laws, Linde defrauded the U.S. government. This triggered the False Claims Act, which enabled Ms. Johnson, a private citizen, to file suit on behalf of the U.S. government. Her lawsuit alerted the Department of Justice and U.S. Customs and Border Protection who joined in the investigation. 

Protecting the public from unfair practices

Linde’s scheme to evade duties was directed at the government but ultimately harmed the American people. Antidumping laws and countervailing duties protect American jobs. Without strict enforcement, American industries would suffer, and American workers could be priced out of their jobs. Failure to pay duties deprives the U.S. Treasury of funds, passing the burden to American taxpayers. 

As Jeffrey Bossert Clark, Acting Assistant Attorney General for the Department of Justice’s Civil Division, said, “This settlement reflects our commitment to hold accountable those who evade duties owed on imported goods, including antidumping and countervailing duties that level the playing field for U.S. manufacturers. The Department of Justice will zealously pursue those who seek an unfair advantage in U.S. markets by bringing underpriced goods into this country.” Brenda Smith, Executive Assistant Commissioner, CBP Office of Trade, stressed that, “Collecting revenue on behalf of the American people is something we take very seriously.”  

Cooperative settlement reached

Although Ms. Johnson filed her lawsuit anonymously and under seal, Linde seemed to have been wrestling with the issue internally. The Justice Department reports that even before Linde learned of an investigation, the company had “made a partial disclosure to CBP regarding its importing practices.” The settlement acknowledged Linde’s cooperation and did not make a judgment regarding liability. Commissioner Smith called the resolution of the case “an equitable and productive solution.” 

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