Z Gallerie to Pay $15 Million to Settle Alleged Customs Violations

SHERMAN OAKS, CA The Los Angeles-based upscale furniture chain Z Gallerie will pay $15 million to settle claims that the company schemed to avoid paying customs on wooden bedroom furniture imported from China.

The Department of Justice announced the settlement Wednesday, in a statement accusing the company of violating the False Claims Act designed to protect American companies and workers.

A Z Gallerie spokesman did not immediately return a call for comment.

“This settlement reflects the Department of Justice’s commitment to ensure that those who import and sell foreign-made goods in the United States comply with the law, including laws meant to protect domestic companies and American workers from unfair competition abroad,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Department of Justice will zealously pursue those who seek an unfair advantage in U.S. markets by evading the duties owed on goods imported into this country.”

The government collects duties to protect U.S. manufacturers from unfair competition abroad by leveling the playing field for domestic products. In this case, the duties are designed to protect American manufacturers from foreign companies “dumping” products on U.S. markets at prices below cost.

According to the Department of Justice, Z Gallerie allegedly misclassified the furniture to avoid paying duties. The department contends, Z Gallerie sold certain Bassett Mirror Company products, including a six-drawer dresser and three-drawer chest, as part of a bedroom collection; misidentified on documents using descriptions such as “grand chests” and “hall chests,” in order to avoid paying antidumping duties on wooden bedroom furniture.

“Companies that intentionally mislabel shipments or misrepresent the value of goods being imported into the United States to avoid paying the appropriate duties do so in an attempt to create an unfair advantage over businesses that play by the rules,” said Special Agent in Charge Nick S. Annan of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) in Atlanta. “This type of activity hurts legitimate U.S. businesses and, by extension, our overall national economy. Uncovering these types of schemes will continue to be a major investigative priority...”

The allegations against Z Gallerie were originally brought by whistleblower Kelly Wells, an online furniture retailer. Private parties are allowed to sue on behalf of the United States companies that avoid paying funds owed to the government. Such whistleblowers are entitled to receive a share of any funds recovered. Wells will receive $2.4 million as her share of the settlement.

Photo: Wikimedia Commons