Customs Fraud by German Firm Costs $1.9 Million

A German company, KingKong-Tools GmbH & Co KG, and its American subsidiary,  will pay $1.9 million to settle allegations of customs fraud under the False Claims Act. The government alleged that King Kong was falsely labelling its tools as “made in Germany” when, in fact, the tools were made in China. By misrepresenting the origin of the tools, King Kong avoided paying higher tariffs. 

This case began when a competitor of King Kong filed a whistleblower complaint alleging that King Kong was manufacturing cutting tools in a Chinese factory. The tools were then shipped to Germany, where some additional processing was performed on some (but not all) of the tools. The tools were then shipped to the United States and declared to be “German” products. If the products had been correctly described as Chinese products, King Kong would have been required to pay a 25% tariff on Chinese goods. By falsely describing the tools as “German,” King Kong improperly avoided paying these tariffs.

The firm distributes wear parts for the recycling, forestry, construction and agricultural industry.

This civil settlement resolves a lawsuit filed in the U.S. District Court for the Northern District of Georgia under the False Claims Act, U.S. ex rel. China Pacificarbide, Inc. v. King Kong Tools, LLC, et al.

The False Claims Act is a federal law that imposes civil liability on any person who submits false claims to the federal government or its contractors. The law imposes treble damages and civil penalties on those who submit false claims. Under the law, whistleblowers (also called “relators”) who bring fraud to the government’s attention share in any recovery obtained by the government. Here, the relator will receive $286,861 from the settlement in this matter, plus attorney’s fees.