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Clothing Cos. Pay $6M for Customs Duty Scam
In a major customs duty scam, two New York-based clothing companies, STARGATE APPAREL, INC. (now named EXCEL APPAREL CORP.) and RIVSTAR APPAREL, INC., along with their former CEO, JOSEPH BAILEY, have been caught and will pay a total of $6 million to the United States for misrepresenting the value of imported clothing to avoid paying customs duties.
According to U.S. Attorney Audrey Strauss, Stargate, Rivstar, and their former president engaged in various fraudulent schemes to short-change the government of customs duties owed for imported clothing by falsely under-reporting its value. This settlement, along with the separate criminal action against Bailey, demonstrate that the Office will hold companies, as well as their executives, accountable when they try to evade paying the legally required customs duties on imported goods.
HSI Special Agent in Charge Peter C. Fitzhugh said, “For over a decade these clothing companies used ‘double-invoice’ schemes to underpay customs duties that were owed to the U.S. for garments being imported into the country, resulting in millions of dollars in customs duties lost. HSI worked closely with U.S. Customs and Border Protection and the U.S. Attorney’s Office for the Southern District of New York to achieve this settlement, requiring the defendants not just to accept responsibility, but also to pay the Government $6 million and enhance their compliance policies.”
Under the civil settlement approved today by U.S. District Judge J. Paul Oetken, BAILEY will pay $3.2 million to the United States, and STARGATE, RIVSTAR, and the employee stock ownership plan that currently owns the companies will together pay a total of $2.8 million to the United States. BAILEY, STARGATE, and RIVSTAR admitted and accepted responsibility for their conduct as further described below.
As part of the settlement, STARGATE and RIVSTAR will implement a written compliance policy that will include measures designed to ensure that they pay duties on the full, actual value of all future imports and otherwise comply with applicable customs laws and regulations. Last year, BAILEY pled guilty and was sentenced to six months in prison for engaging in certain of the conduct related to STARGATE imports that is at issue in the Government’s civil complaint.
This case is a testament to the dedication of our partners in the United States Attorney’s Office, Homeland Security Investigations, and the men and women of CBP in enforcing our nation’s trade laws and punishing those perpetrating this type of fraud.
CBP Acting Director of New York Field Operations Marty Raybon said, “The settlement reached today is a testament to the dedication of our partners in the United States Attorney’s Office, Homeland Security Investigations, and the men and women of CBP in enforcing our nation’s trade laws and punishing those perpetrating this type of fraud.”
Key Facts
- State: New York
- Category: White Collar Crime|Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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