Mayer Brown secures major appellate victory in $26 million customs fraud case

Mayer Brown achieved a significant appellate victory on behalf of its client, Island Industries Inc., in the US Court of Appeals for the Ninth Circuit. The Ninth Circuit upheld a $26 million judgment against Sigma Corp., a New Jersey-based importer, for violating the False Claims Act (FCA) by knowingly making false statements to US Customs to evade antidumping duties on Chinese-made pipe fittings. The court’s published opinion affirms that the FCA applies to fraudulent evasion of customs duties, rejecting Sigma’s argument that the Tariff Act precludes FCA liability in such cases.

The case, originally tried in 2021, centered on allegations that Sigma and other defendants worked with Chinese manufacturers to misclassify imports and avoid paying a 182.9% tariff, depriving the US government of substantial revenue. The Ninth Circuit’s decision confirms that both the FCA and the Tariff Act provide remedies for customs fraud, and that Congress intended these statutes to coexist in protecting the government from financial loss due to fraudulent conduct.

The Mayer Brown team was led by partners Kelly Kramer, Nicole Saharsky (who argued the appeal), and Matthew Marmolejo, along with counsel Mitchell Hendy, from the firm’s Washington DC and Los Angeles offices.

The case is Island Industries, Inc., et al v. Sigma Corporation, et al.

The victory was covered by media in outlets such as Reuters, The Daily Journal, Law360, and Bloomberg Law.

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