Federal Government Files Complaint in Hirst Law Group’s False Claims Act Case Alleging Customs Fraud

May 13, 2025 — Hirst Law Group, P.C. announced today that the United States has filed a complaint-in-intervention against Barco Uniforms Inc. (Barco), Kenny Chan, David Chan, and several companies operated and controlled by the Chans. Based on Hirst Law Group’s original complaint, the federal government alleges that the defendants violated the False Claims Act by knowingly and improperly underpaying customs duties owed on imported apparel.

The case was initially filed under seal in 2016 by a whistleblower, also called a “relator,” represented by Hirst Law Group, P.C. The relator’s original complaint was unsealed on January 15, 2025, after the United States informed the court of its intention to intervene.

Barco sells apparel, including uniforms, to retailers, restaurants, and health care providers throughout the United States. The Chans operate multiple overseas companies, primarily in China, that supply Barco with apparel manufactured abroad.

To import merchandise into the United States, a party making the entry must declare — among other things — the value of the goods, whether the goods are subject to duties, the applicable duty rate, and the amount of duties owed. A commercial invoice reflecting the value of the goods is required to support the declarations submitted to the government. The government relies on these representations to levy and collect duties on imported merchandise.

The relator, Toni Lee, was an insider at Barco when she learned of the defendants’ actions. Among other things, her complaint through Hirst Law Group alleged that:

The defendants conspired to falsely understate the duties owed on the entry documentation for goods purchased by Barco from the Chans’ companies.
The defendants exchanged cost breakdowns with artificially low duties.
Barco relied upon the lower costs to outbid competitors for contracts to supply goods to domestic clients.
Management and executive level employees at each company were aware of and approved of the fraud.

The United States’ complaint-in-intervention incorporates and elaborates on the relator’s original complaint, as well as developments that unfolded during Hirst Law Group’s and the government’s continued investigation of the fraud. Among other things, the government’s complaint-in-intervention alleges that the defendants used a double-invoicing scheme featuring false entry summaries presented to the Customs and Border Patrol (CBP) that undervalued imported goods purchased by Barco, thereby reducing the duties paid on the merchandise. The government further contends that the defendants continued to underpay customs duties even after a third-party auditor advised Barco of risks associated with the underpayment of duties and recommended that Barco “double-check” duty calculations underlying prices that Barco agreed to with its foreign suppliers. In addition to Barco, Kenny Chan, and David Chan, the government’s complaint alleges claims against the following entities operated and controlled by the Chans: Able Allied Limited, Nathan Global Direct Inc., J&K Garment Inc., Mega Goodwill Ltd., JS Garment Co., and Superway Import & Export Inc.

Several government attorneys provided statements in a press release issued by the Department of Justice:

“Those who import and sell foreign-made goods in the United States must comply with all trade laws,” said Acting Assistant Attorney General Yaakov M. Roth of the Justice Department’s Civil Division. “The Department will hold accountable parties who evade or underpay duties owed on imported merchandise.”
“We will not allow parties engaging in fraudulent schemes to underpay rightful customs duties to profit at the expense of the American public,” said Acting U.S. Attorney Michele Beckwith for the Eastern District of California.
“CBP is proud of the investigative work and analysis done on this case and will continue to work collaboratively with interagency stakeholders to safeguard our nation’s economic security,” said Director of Field Operations David Salazar of the U.S. Customs and Border Protection (CBP) San Francisco Field Office.

The lawsuit was originally filed under the qui tam provisions of the False Claims Act by Hirst Law Group, P.C., representing Ms. Lee, the former Director of Product Commercialization at Barco. The statute permits private parties, like Ms. Lee, to file suit under seal on behalf of the United States for false claims and to share in any recovery. The act also permits the United States to intervene in and take over responsibility for such an action, as it has done in this case.

“We all owe a debt to courageous whistleblowers who come forward and report fraud against the government,” said Michael A. Hirst, founder of Hirst Law Group. “Our clients and our firm will continue to work hard to ensure that taxpayers are refunded for any fraudulent conduct.”

“Hirst Law Group and Ms. Lee appreciate that the government reviewed our evidence thoroughly, continued to work with us, and found merit in our allegations, ” Hirst added.

The claims asserted are allegations, and there has been no determination of liability.

Senior Trial Counsel Elspeth A. England of the Civil Division’s Commercial Litigation Branch, Fraud Section, and Assistant U.S. Attorney David E. Thiess for the Eastern District of California are working for the United States in the matter, with assistance provided by CBP and Homeland Security Investigations. The case is United States ex rel. Lee v. Barco Uniforms Inc., et al., No. 2:16-CV-1805 in the U.S. District Court for the Eastern District of California.

Hirst Law Group P.C. represents whistleblowers in federal and state False Claims Act, SEC, CFTC, IRS and employment cases around the country. Cases handled by the firm’s employees, both while working for the United States and since joining the firm, have recovered hundreds of millions of dollars and have been reported on television, radio, and newspapers nationally and abroad. A case involving the largest recovery against a single hospital in US history was the subject of a book “Coronary” (Simon and Schuster, 2007), and the firm has also been featured in the books “Whistleblower” and “Retaliation” (Bay Tree Publishing, 2010, 2013). The firm includes a former United States Attorney’s Office supervisor of False Claims Act cases for the government and a former government fraud auditor. For more information, contact the firm at 530-756-7700 or via the firm’s website: www.hirstlawgroup.com.