Surety Company Needs to Pay Duties on Undervalued Diamond Jewelry Imports, DOJ Tells CIT
Surety company International Bond & Marine is responsible for over $730,000 in unpaid duties resulting from a diamond jewelry company's fraudulent import scheme, the Department of Justice alleged in a Dec. 6 complaint filed at the Court of International Trade. Due to the terms of the bond agreement between International Bond and the jewelry company, Anaya Gems, the surety must cover the unpaid duties that accrued as a result of Anaya Gems' efforts to undervalue its jewelry shipments and underpay customs duties owed, DOJ said (United States v. International Bond & Marine, Ltd., CIT #21-00611).
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Between 2010 and 2018, Anaya Gems brought in multiple shipments of diamond jewelry where it then sold the jewelry to retailers. The goods were brought in from manufacturers based in Hong Kong and Thailand, among other places, while the diamonds were shipped to the manufacturers from companies that shared common ownership with Anaya Gems. The companies that supplied the diamonds to the Hong Kong and Thailand-based manufacturers, though, billed Anaya Gems rather than the manufacturers for the costs of these gems.
This system was running smoothly until a whistleblower levied a lawsuit against Anaya Gems and its owner, Anshul Gandhi, for underreporting the diamond jewelry shipments. According to the complaint, Anaya Gems would have diamonds shipped from India-based affiliates to manufacturers in Thailand and Hong Kong, who didn’t own the diamonds and did not include their value in the price charged to Anaya. When the jewelry was imported into the U.S., the value of the diamonds was either understated or completely omitted from the total customs value on entry documentation.
Over this nearly eight-year period, Anaya Gems avoided paying over $1.3 million in duties, taxes and fees. In August 2020, after Gandhi pleaded guilty, Gandhi and the U.S. reached a settlement to resolve the customs fraud lawsuit, which saw the owner forfeit $415,000 to settle the False Claims Act case (see 2008050044).
Not satisfied with this payment, though, the U.S. then initiated a new action against the surety company that's on the hook for Anaya Gems' unpaid duties. Due to the terms of the bond agreement, International Bond is responsible for paying $734,390 in unpaid duties, plus any interest that accrues on the unpaid duties. Counsel for International Bond did not respond to a request for comment.