Otter Products LLC, the company that makes OtterBox smartphone and tablet cases, has settled a whistleblower lawsuit alleging that the company violated federal law by underpaying customs duties, North Colorado Business Report reports. According to U.S. Attorney John Walsh’s office, the company has paid $4.3 million to the U.S. government. The statement was announced Monday by the U.S. Attorney’s Office for the District of Colorado, Department of Homeland Security and U.S. Customs and Border Protection.
In 2011, former OtterBox supply chain director Bonnie Jimenez filed a whistleblower lawsuit in the U.S. District Court in Denver. The suit was first reported by BizWest last year. Assistant U.S. Attorney Amanda Rocque negotiated the settlement, resulting in a $830,000 award for $830,000 for Jimenez.
OtterBox had many of its products made in China between 2006 and 2011 and then imported for distribution and sale, North Colorado Business Report says. The company was supposed to submit entry documents to U.S. Customs and pay for any customs duties to on those imported products. It was alleged that the company knowingly underpaid customs duties. In the past, OtterBox said it would vehemently fight the lawsuit.
Previous, there were discrepancies in two of the company’s customs payments. Those incidents were corrected.
Federal authorities accused the company of omitted a portion of the value of OtterBox cases on imported product documents from Jan. 1, 2006 through Dec. 31, 2011 and allegedly made false statements in other document submitted to Customs and Border Protection. These actions violated the False Claims Act, the suit alleged.
Under the False Claims Act, whistleblowers who know about fraud against the US can submit their claims by bringing a lawsuit on behalf of the government. The whistleblower gets a portion of the settlement if those allegations are proven to be true in an investigation.
“America’s economic security and prosperity are at the heart of U.S. trade law,” said Walsh in the statement. “Customs duties are a significant source of revenue for the United States, and this settlement demonstrates that the Department of Justice will zealously enforce their lawful collection.”