Whistleblower Report Leads to $12.4 Million Settlement with Allied Stone in Customs Evasion Case

Global commerce is governed by a highly complex framework of rules. Customs laws, tariffs and provisions designed to protect American companies from unfair trade practices are complicated and fluid. Within an industry, one product might require certain treatment under the law, while another is classified completely differently. These subtle distinctions can make it tempting for a dishonest broker who believes they can outwit the system. 

Allied Stone Inc. in Dallas supplies various types of countertop and cabinetry products. The company imports different surfaces from China. When the company tried to misrepresent imported quartz as surfaces subject to lower duty rates, a woman named Melinda Hemphill blew the whistle on them. As a result of her qui tam lawsuit, Allied Stone and its owner, Jia Lim, will pay the government more that $12 million. Hemphill will collect a percentage of this amount for her role in uncovering the fraud. 

Quartz surfaces from China are subject to antidumping and countervailing duties. These additional costs are implemented to prevent foreign countries from subsidizing exporters so that they can sell products in the United States for a lower cost than what they charge at home. According to the Department of Justice, other surfaces, such as marble and crystallized glass, don’t incur the excess duties. 

By misclassifying or misdescribing the merchandise, the government alleged the defendants deprived the United States of lawfully owed duties. Of course, with billions of dollars in products entering the country each day, it is impossible for the government on top of every transaction. Whistleblowers are vital in situations like this to assist in the enforcement of customs law. A worker does not need to have a deep understanding of antidumping and countervailing duties to know that a package labeled as one product actually contains something else. Employees like Ms. Hemphill who have visibility into import practices and notice something wrong can file qui tam actions and may receive a significant share of recoveries.

Kardell Law Group handles qui tam litigation for whistleblowers in Texas and throughout the United States. Don’t hesitate to contact us if you believe your employer or someone else is violating laws covering the importation of goods. Financial recovery is typically limited to the first person who reports a problem.