Amended Complaint Presents 'Fatal' Arguments in Misclassified Metal Lids Fraud Case, Government Argues
An amended fraud allegation by the government against Crown Cork & Seal should withstand a motion to dismiss, a July 27 government opposition brief said (United S ork & Seal, USA, Inc., et al., CIT #21-361).
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The government alleges that between 2004 and 2009, defendants Crown Cork & Seal Co., Inc. and Crown Cork & Seal, USA, Inc. (CCS) conspired with others to misclassify metal lids imported from Europe into the U.S. in order to avoid duty payments, in a "concerted strategy" of fraud.
DOJ filed the case to collect unpaid duties over the alleged misclassification of 543 entries of "metal lids for food, beverage, household and consumer products." The U.S. argues that the goods are properly classified under Harmonized Tariff Schedule of the U.S. subheading 8309.90.0000 and dutiable at 2.6%, and that CCS attempted to classify its metal lids under the duty-free HTS subheading 7326.90.1000. The government conducted an investigation into the alleged criminal conduct for over a decade. Following an oral argument in May (see 2112130041), Judge Baker dismissed the first two counts, leaving only the negligence claim. The U.S. then filed an amended complaint seeking to revive the two dismissed counts. CCS moved to dismiss the new complaint in June (see 2206230033).
In the complaint, DOJ said the importer admitted it falsely classified all 543 entries at issue. "... the Government, which has spent the better part of a decade investigating this matter, knows this new allegation is simply not true," CCS argued. "The Crown Companies have never 'admitted to the Government that they falsely classified all of the 543 entries at issue.' Ever."
"The Amended Complaint Supplies A Factual Account of Defendants' Fraud That is 'Plausible On Its Face'," the government said. It identifies each of the 543 false statements made by CCS and CCS USA. It details how defendants carried out the fraud, identifies a motive for the fraud, and supplies evidence that CCS and CCS USA knowingly submitted false statements. The CCS companies were "sophisticated importers operating within a billion-dollar conglomerate" that specialized in the manufacture of the lids for over 100 years, so the misclassifications were "no coincidence or mistake," DOJ said.
The amended complaint lays out the alleged fraud conspiracy in detail, DOJ said. For each of defendants' 543 fraudulent entries, the amended complaint sets forth “'who, what, when, where and how’ of the alleged fraud” and allows the court to draw the "reasonable inference that the defendants are liable for the misconduct alleged," and thus meets the standards to withstand a motion to dismiss, DOJ said.