U.S. Attorney Lapointe Announces $7.6 Million Settlement of Civil False Claims Act Lawsuit Against Womenswear Company for Underpaying Customs Duties on Imported Women’s Apparel

MIAMI - Markenzy Lapointe, U.S. Attorney for the Southern District of Florida and Bruce Murley, Acting Director of Field Operations for U.S. Customs and Border Protection's (CBP) San Francisco/Portland Field Office announced that the United States has resolved a civil qui tam lawsuit in which the United States intervened for settlement purposes against Alexis, LLC, a womenswear company, for underpaying customs duties on imported apparel. In connection with the resolution, the United States filed a Complaint in Intervention against Alexis, LLC. The settlement, which is not an admission of liability by Alexis, LLC, resolves claims that between Jan. 1, 2015 through Dec. 31, 2022, Alexis, LLC violated the False Claims Act (FCA) by materially misreporting to CBP the value of imported apparel and thereby avoided paying the full amount of customs duties and fees owed on the imported merchandise.

Alexis, LLC paid a total of $7,691,999.63 to the United States to resolve this matter. Alexis, LLC, and its senior management fully cooperated with the United States' investigation. Among other things, Alexis, LLC voluntarily and timely submitted information and records to the United States through which Alexis, LLC disclosed facts and evidence relevant to the government's investigation that was not in the possession of the United States. These submissions assisted the United States in determining the losses caused by the underreporting of customs duties on the imported apparel during the relevant time period. Moreover, Alexis, LLC and its senior management implemented compliance procedures and employee training to preclude future issues.

The case was initiated when a whistleblower filed a complaint, Case No. 1:22-cv-21412-FAM (S.D. Fla.), in federal court in Miami. Alexis, LLC, and the settling parties disputed the whistleblower's allegations. The Court entered, on Aug. 8, 2024, an Order of Dismissal Pursuant to the Agreed Motion to Dismiss that the United States and the Relator filed upon Alexis, LLC's settlement payment.

CBP is the agency responsible for enforcing U.S. laws related to the importation of merchandise into the United States, including the collection of duties. The Harmonized Tariff Schedule of the United States (HTSUS) provides the applicable classifications and duty rates for all merchandise imported into the United States. As part of the importation process, an importer must accurately classify imported merchandise pursuant to the HTSUS and correctly calculate its value. This and other information must be provided to CBP so that it can properly assess duties, collect accurate statistics, and determine whether all other applicable legal requirements have been met.

U.S. Attorney Markenzy Lapointe said, "As this settlement demonstrates, the United States Attorney's Office for the Southern District of Florida, along with our CBP partners, will, while continuing to hold accountable entities that engage in improper trade practices and deny our government vital revenues, work to resolve such matters in the interests of justice." He thanked CBP for their significant assistance and support with this matter.

"CBP's Apparel, Footwear & Textile Center of Excellence and Expertise worked in collaboration with CBP's Office of Chief Counsel and the U.S. Attorney's Office for the Southern District of Florida to review thousands of documents, hundreds of entry summaries, and analyzed financial reports provided by Alexis, LLC as relevant to the undervaluation and underpayment of duties," said Acting Director of Field Operations, Bruce Murley, of the CBP San Francisco Field Office. "CBP is proud of the investigative work and analysis done by its employees on this case and will continue to work collaboratively with inter-agency stakeholders to safeguard our nation's economic security."

As a part of the settlement, Alexis, LLC admitted and acknowledged errors and omissions with respect to imported women's apparel, and occasionally accessories, during the 2015 through 2022 period. Alexis, LLC admitted and acknowledged that it: (i) failed to apportion the value of "Assists," in the form of fabric and garment trims, to the customs value of the imported merchandise, and that the value of certain "Assists" should have been included in the customs value; (ii) found, and thereafter corrected and reported to CBP other entry documentation issues including certain discrepancies between customs forms and the associated sales-related documentation; (iii) identified instances involving classification errors relating to sections of the textile chapters of the HTSUS; and (iv) identified entries with incorrect port of entry codes. As the Importer of Record, Alexis, LLC acknowledged and accepted responsibility for these errors. Alexis, LLC's senior management worked with their expert trade counsel to implement a robust set of internal and external procedures and corrective actions to prevent any future violations, ensure accurate reporting moving forward, and apply rigorous discipline to its import protocols. As part of the settlement, Alexis, LLC, and its senior management represented that they seek the highest level of import compliance as a corporate goal.

Assistant U.S. Attorney James A. Weinkle, the Affirmative Civil Enforcement Coordinator for the U.S. Attorney's Office for the Southern District of Florida, handled this case.

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