Misclassifying Textiles: ADI Fined $2.33M

American Dawn Inc. (ADI), Los Angeles, recently reached a settlement with the U.S. Attorney’s Office for Northern Georgia regarding charges of violations of the False Claims Act. Specifically, federal authorities allege that, “American Dawn intentionally misclassified goods imported into the United States in order to pay lower tariff rates,” according to an agency news release. To resolve these allegations, ADI agreed to pay $2.33 million.

Attempts to obtain a response from company officials regarding the allegations were unsuccessful.

The U.S. Attorney’s office initiated an investigation after a former ADI employee filed a “qui tam” or whistleblower complaint in the Northern District of Georgia under the False Claims Act. The act permits a private individual, called a relator, to sue on behalf of the government for false claims and to share in any recovery. In this case, the relator will receive approximately 17% of the settlement. Click here for details.