top of page
Search

Customs Valuation: A $10M Import Fraud

Whistleblower reveals $10M Customs Valuation Fraud by US importers. A critical lesson for all.


What Questions We Will Answer in this blog:

  • How can undervaluation in import declarations lead to significant legal and financial consequences?

  • What measures can importers take to ensure compliance with customs regulations?

  • How do whistleblower cases under the False Claims Act impact import professionals?


Introduction

In global trade, integrity, accountability, and attention to detail are paramount. Importers face myriad risks and responsibilities when declaring goods to Customs. Falsifying invoices to evade duties is a severe breach, as highlighted by a recent $10 million customs fraud case involving Precision Cable Assemblies (PCA) and Global Engineered Products (GEP).

“Customs fraud doesn’t just undermine the system; it jeopardises businesses and their reputation. Ensuring compliance is a non-negotiable responsibility.” – Arne Mielken, Managing Director of Customs Manager Ltd.

Abbreviations We Use in this Blog

  • CBP: Customs and Border Protection – the US federal agency responsible for regulating and facilitating international trade.

  • FCA: False Claims Act – a US law allowing whistleblowers to bring lawsuits on behalf of the government for fraudulent actions.


What Was the Fraud Case About?

Importers have a duty to declare the accurate value of goods to Customs. The PCA and GEP case serves as a stark reminder of what happens when companies do not adhere to this rule. From 2016 to 2021, these two Wisconsin-based companies, importing goods from China, engaged in a fraudulent scheme that significantly undervalued their imported goods.

They altered invoices by reducing the declared value by 70%, resulting in millions of dollars in lost duties. Their customs agent unknowingly filed the falsified documents, but the impact was substantial, leading to a settlement of over $10 million.


What Are the Key Risks for Importers?

This case is a chilling example of the risks importers face when they try to cut corners:

  1. Financial Penalties: The penalties for customs fraud can be devastating. PCA and GEP paid $10 million in fines and settlements to cover the duties they tried to avoid. This is an astronomical cost compared to the savings they thought they could secure.

  2. Reputation Damage: Beyond the financial loss, the damage to a company’s reputation can be irreversible. Once a business is linked with fraud, the trust built with customers and partners can erode overnight.

  3. Legal Consequences: Whistleblowers like Travis Grob, a former employee, brought this case forward under the FCA. Whistleblower cases are rising, with the government stepping in to enforce laws rigorously.


What Are the Best Practices for Customs Compliance?

The customs process is complex, but following best practices can mitigate risks and protect your business from such dire consequences.

  • Ensure Accurate Valuation: Always provide truthful and accurate values when submitting entry documents. The value of goods determines the duties owed, and any attempt to falsify this information can lead to significant penalties.

  • Collaboration with Customs Professionals: Import professionals and customs agents play a critical role in ensuring compliance. Their expertise is indispensable in navigating the intricate customs processes. Engage trusted customs consultants to ensure you’re meeting all legal requirements.

  • Use Professional Training: Regular training for your team on customs regulations, export controls, and sanctions can prevent costly mistakes. My team offers bespoke consultancy and training tailored to your needs.

  • Document Integrity and Accountability: Maintain transparency in your trade processes. All commercial documents should reflect the actual value of the transaction. Internal audits can ensure that documentation aligns with the reality of the transactions.

  • Risk Awareness and Adaptability: The trade landscape is ever-evolving. Be aware of regulatory changes, like the imposition of additional duties on Chinese goods in 2018, which contributed to PCA and GEP's fraudulent behaviour. Always stay adaptable to new rules and tariffs.


How Does the False Claims Act Work?

The False Claims Act is a powerful tool in the fight against customs fraud. It allows individuals with inside knowledge of fraud to come forward and file a lawsuit on behalf of the government. In return, whistleblowers may receive a share of the recovered amount, as was the case here, where Grob received $1.26 million.


This should be a wake-up call for all customs professionals. Falsifying documents or evading duties isn't just risky; it's a surefire way to attract the attention of whistleblowers and the government.


Arne’s Takeaway

Compliance with customs laws is a must. The $10 million settlement against PCA and GEP demonstrates the significant risks of undervaluing goods to evade duties. Working closely with trusted customs agents, ensuring accountability, and maintaining transparency are the foundations of professional integrity in global trade.


Expert Recommendations

To avoid customs fraud and mitigate risks:

  • Engage professional customs consultants to verify compliance with valuation and duty regulations.

  • Conduct regular audits of your import documentation to ensure accuracy and truthfulness.

  • Invest in training for your team on customs, export controls, and sanctions.

  • Monitor regulatory changes closely to stay ahead of new laws and duties.


How My Team and I Can Help

Along with a great team of specialists, we offer comprehensive support for customs compliance. My team and I support all your import-export operations, including bespoke consultancy and practical assistance. We provide public, in-house, and on-demand training tailored for customs professionals, importers, exporters, and their partners. Our membership services include weekly customs trade intelligence and updates. We also offer UK import and export customs clearance services. For more details on services, visit www.customsmanager.org.


Sources That We Base Our Information in This Blog On

Where To Find More Information On Topic

Subscribe to The Customs Watch for the latest updates on customs, export controls, and sanctions. Visit our Knowledge Hub Content Library at www.customsmanager.info for more on customs compliance. Members can search for specific topics here.


I am New To Your Website; what Do I do?

Welcome! Thanks for reading our content. If you found it valuable, I invite you to get STANDARD Membership to our Trade Intelligence service. Only in this way will you be able to receive updates directly in your inbox. STANDARD membership is free of charge. To get started, leave your e-mail address at www.customsmanager.info


Learn With Me

My team and I offer extensive training on customs compliance, export controls, and sanctions. Please visit www.customsmanager.org/events to explore the course plan and book one of our public courses.


About the Author

I (Arne Mielken) am a customs, export control, and sanctions expert with over 20 years of experience. I have worked as an executive director for many years in Big 4 Consultancy, global trade management technology companies, and many international trade and export UK and EU trade associations. I am proud to be a Freeman of the City of London and a Liveryman of the Worshipful Company of World Traders and a member of many customs, export control & sanctions associations.


Connect With Me & My Team

You can learn more about me here and connect with me on LinkedIn. I also run a channel where you can get free tips and advice on customs, export controls, and sanctions.

Disclaimer: The information provided in this blog post is for educational purposes only and should not be construed as legal advice. Consulting with legal professionals, specialists, or specific compliance requirements and guidance is recommended. Book a free call with our expert at Customs Manager Ltd.



コメント

Terms of Website Use

Cookie policy

Privacy policy

© 2025 by Customs Manager Ltd.

bottom of page