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Baron & Budd Obtains $2.5 Million Settlement from ADCO Industries for Evading Customs Duties
[December 05, 2023]

Baron & Budd Obtains $2.5 Million Settlement from ADCO Industries for Evading Customs Duties

Today, the national law firm Baron & Budd announced a $2.5 million settlement with ADCO Industries, Xiamen Atlantis MFC Co., Raymond E. Davis, and Calvin Chang in the largest customs fraud case in which the government has intervened involving a scheme to avoid payment of tariffs enacted during the Trump administration.

This False Claims Act suit was brought forward by company insiders who uncovered a double-invoicing scheme between ADCO, a seller of commercial products like shelves, dollies, and safety cutters, and their supplier, Xiamen. According to the suit, ADCO conspired with the Chinese manufacturer to fraudulently underreport the value of the imported goods to the government in order to pay duties on the deflated product values rather than their actual value.

In 2018 and 2019, the Trump Administration imposed an unprecedented schedule of tariffs and duties on thousands of products imported into the United States-largely targeting products imported from China. Although these are commonly referred to as the "Trump tariffs," the Biden Administration generally has kept these increased tariffs and duties in place. As a result, customs fraud is on the rise, as some companies are using illegal methods to avoid paying what they owe.

"Experts continue to debate whether the Trump tariffs have accomplished their goal of protecting American labor interests at home," according to Baron & Budd shareholder Andrew Miller. "What is not debatable is the fact that these tariffs have created a greater incentive for fraud by companies who elect not to pay the increased duties."

Given that millions of containers and billions of dollars worth of goods enter the country each day, it is impossible for U.S. Customs and Border Protection to detect every instance of fraud on its own, especially while companies hatch new schemes to skirt payment of these tariffs. To combat this issue, the government relies on whistleblowers to both detect and prosecute customs fraud.

These individuals often possess valuable insider knowledge concerning their own company's fraudulent activities or may observe similar misconduct by a competitor. Whistleblowers with information regarding a company's evasion of tariffs, duties, or other customs-related fraud can initiate legal action under the False Claims Act. This legislation empowers whistleblowers to claim a portion of the funds recovered by the government in the event of a successful enforcement action. Under the settlement announced today, the whistleblowers will receive 20 percent of the amount recovered by the government.

"Customs fraud not only undermines the integrity of our trade system, but also cheats the government and taxpayers out of critical funds," said Baron & Budd attorney Noah Rich. "Whistleblowers play a vital role in exposing unethical actions and helping ensure a level playing field for honest businesses."

Customs duties are essential for ensuring fair competition among U.S. manufacturers. Moreover, the funds generated from these duties are allocated to critical programs, including veteran's benefits, education, and infrastructure development. When companies engage in tactics to evade their duty obligations, they not only gain an unjust advantage in U.S. markets, but they deprive the federal government and taxpayers out of much-needed revenue. The Qui Tam attorneys at Baron & Budd are actively working with the U.S. Department of Justice on customs fraud cases. Potential whistleblowers with knowledge of customs fraud might be company insiders working in logistics, bookkeeping, and accounts receivable, or customs import brokers. Some of the most common fraudulent schemes to evade tariffs or duties include misclassifying imported goods, misrepresenting their country of origin, fraudulently underreporting their value, and transshipping and relabeling products.

Company insiders and customs brokers alike should be wary of Chinese imports that suddenly reflect product values significantly lower than the costs of those very same items just a few years ago. This is often a tell-tale sign that a company is fraudulently reducing its customs duties owed to the government. To learn more about customs fraud and how to combat it, visit

About Baron & Budd, P.C.

Baron & Budd, P.C. is among the largest and most accomplished plaintiffs' law firms in the country. With more than 40 years of experience, Baron & Budd has the expertise and resources to handle complex litigation throughout the United States. As a law firm that takes pride in remaining at the forefront of litigation, Baron & Budd has spearheaded many significant cases for hundreds of public entities and tens of thousands of individuals. Since the firm was founded in 1977, Baron & Budd has achieved substantial national acclaim for its work on cutting-edge litigation, trying hundreds of cases to verdict and settling tens of thousands of cases in areas of litigation as diverse and significant as dangerous and highly addictive pharmaceuticals, defective medical devices, asbestos and mesothelioma, wildfires, environmental contamination, fraudulent banking practices, e-cigarettes, motor vehicles, federal whistleblower cases, and other consumer fraud issues.

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