Michele Beckwith Acting U.S. Attorney | U.S. Attorney for the Eastern District of California
The United States has initiated legal proceedings against Barco Uniforms Inc., along with Kenny Chan, David Chan, and several companies managed by them, on allegations of violating the False Claims Act. The federal complaint accuses the involved parties of underpaying customs duties on imported apparel.
Barco, known for selling uniforms to sectors like the healthcare and restaurant industries, sources apparel from several companies run by the Chan brothers. These companies import merchandise from countries, including the People’s Republic of China.
Importing goods into the U.S. requires proper declaration of their value, duty applicability, and the appropriate duty rates. Such declarations are backed by commercial invoices, which U.S. Customs and Border Protection (CBP) uses to assess duties. The lawsuit alleges that Barco and its affiliates intentionally undervalued imported apparel, providing false entry summaries to CBP to reduce payable duties. Even after a third-party auditor cautioned Barco about the risk of underpaying duties, the alleged practice persisted.
The complaint includes claims against several specific entities linked to the Chans: Able Allied Limited, Nathan Global Direct Inc., J&K Garment Inc., Mega Goodwill Ltd., JS Garment Co., and Superway Import & Export Inc.
Acting Assistant Attorney General Yaakov M. Roth of the Justice Department’s Civil Division reinforced the importance of complying with trade laws, stating, “The Department will hold accountable parties who evade or underpay duties owed on imported merchandise.”
Acting U.S. Attorney Michele Beckwith for the Eastern District of California emphasized that fraudulent schemes to underpay customs duties will not be tolerated. David Salazar, Director of Field Operations for CBP’s San Francisco Field Office, acknowledged the thorough investigative work done by CBP and its continued collaboration with other agencies to protect economic security.
The claims originated from a lawsuit filed by Toni Lee, a former Director of Product Commercialization at Barco, under the False Claims Act’s qui tam provisions, allowing private individuals to sue on behalf of the U.S. The government has since intervened in the case.
Handling the case are Senior Trial Counsel Elspeth A. England from the Justice Department’s Civil Division and Assistant U.S. Attorney David E. Thiess, with CBP and Homeland Security Investigations’ support. The case is named United States ex rel. Lee v. Barco Uniforms Inc., et al., No. 2:16-CV-1805 in the Eastern District of California.
Currently, the claims made by the United States remain allegations, with no legal determination of liability.
