On Friday, April 18th, the Public Affairs Office of the United States Department of Justice issued a notice accusing Barco Uniforms and its suppliers of violating the False Claims Act by underpaying tariffs through fraudulent means.
The U.S. government filed a lawsuit against Barco Uniforms, Kenny Chan, David Chan, and companies operated and controlled by the Chan brothers, alleging that they intentionally and improperly underpaid import clothing tariffs, in violation of the False Claims Act.
Barco Uniforms sells clothing, including uniforms, to clients such as restaurants and healthcare facilities. Kenny Chan and David Chan operate multiple companies that provide clothing manufactured overseas to Barco, including products from China.
Yaakov M. Roth, Acting Assistant Attorney General for the Civil Division, stated, “Those importing and selling foreign goods in the United States must comply with all trade laws. The Department of Justice will hold accountable those who evade or underpay the duties they owe.”
Michele Beckwith, Acting U.S. Attorney for the Eastern District of California, emphasized, “We will not tolerate schemes to underpay tariffs through fraud that harm the interests of the American people.”
David Salazar, Director of Operations for the San Francisco office of U.S. Customs and Border Protection (CBP), expressed pride in the investigation and analysis of the case and reiterated the commitment to collaboration with inter-agency partners to safeguard the nation’s economic security.
Generally, when importing goods into the United States, the declaring party must provide information such as the value of the goods, whether tariffs are due, applicable tax rates, and the amount of taxes owed. CBP relies on this declaration to assess import duties. The declaring party is required to attach a commercial invoice reflecting the actual value of the goods to support the declaration information.
The U.S. government alleges that the defendants conspired and deliberately undervalued the imported clothing purchased from foreign suppliers to evade or reduce tariffs.
The complaint specifically mentions the defendants using a “double invoice” scheme to submit false import summaries to CBP, undervaluing the imported goods to lower the payable tariffs. The government further noted that a third-party auditing firm warned Barco of the risks of underpaying tariffs and advised them to “reconsider” the prices agreed upon with overseas suppliers, but Barco continued to underpay tariffs.
In addition to Barco, Kenny Chan, and David Chan, the government’s lawsuit also targets entities operated and controlled by the Chan brothers. These companies include: Able Allied Limited, Nathan Global Direct Inc., J&K Garment Inc., Mega Goodwill Ltd., JS Garment Co., and Superway Import & Export Inc.
The lawsuit was originally filed by Toni Lee, former Director of Product Commercialization at Barco Uniforms, under the False Claims Act’s “whistleblower” provision. This law allows private individuals to bring lawsuits on behalf of the U.S. government for false claims and share in a portion of any recovered funds. It also permits the government to intervene and take over such lawsuits, as in this case.