The United States has initiated legal action against Barco Uniforms Inc., along with Kenny Chan, David Chan, and their associated companies, over alleged violations of the False Claims Act. The government claims they deliberately underpaid customs duties on imported apparel.
Barco, a seller of uniforms and other apparel to restaurants and healthcare providers, receives supplies from companies operated by the Chan brothers, including items manufactured in the People's Republic of China. To import goods into the United States, the value of goods, applicable duty rate, and duties owed must be declared to U.S. Customs and Border Protection (CBP), which relies on this information to collect duties.
The complaint alleges that the defendants used a double-invoicing strategy that undervalued the garments bought by Barco. This allegedly allowed them to pay less in duties than required. A third-party auditor had previously advised Barco about potential risks in underpayment and recommended verifying duty calculations with foreign suppliers.
In addition to Barco and the Chan brothers, the complaint includes the following entities: Able Allied Limited, Nathan Global Direct Inc., J&K Garment Inc., Mega Goodwill Ltd., JS Garment Co., and Superway Import & Export Inc. "Those who import and sell foreign-made goods in the United States must comply with all trade laws," remarked Acting Assistant Attorney General Yaakov M. Roth from the Justice Department’s Civil Division. Acting U.S. Attorney Michele Beckwith for the Eastern District of California emphasized the government's stance against fraudulent customs schemes.
David Salazar, Director of Field Operations at the CBP San Francisco Field Office, recognized the collaborative efforts with other agencies to protect the nation's economic security.
The case was initially filed by whistleblower Toni Lee, Barco Uniforms' former Director of Product Commercialization, under the False Claims Act’s qui tam provision. The Act allows private individuals to sue on behalf of the government and share any monetary recovery. The lawsuit, United States ex rel. Lee v. Barco Uniforms Inc., is being pursued by Senior Trial Counsel Elspeth A. England and Assistant United States Attorney David E. Thiess, with support from CBP and Homeland Security Investigations.
At present, the claims remain unproven, and no liability determination has been made.