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Smartphone-case firm settles whistleblower lawsuit over customs duties for $4.3M


A Colorado company that sells protective cases for smartphones and tablets has agreed to pay $4.3 million to settle a whistleblower lawsuit, in which it was charged with violating the False Claims Act and the Tariff Act of 1930 by knowingly underpaying customs duties owed to the United States, according to two federal agencies.

The former employee who is the whistleblower in the case will receive $830,000 of the settlement total, the U.S. Attorney's Office of the District of Colorado and the U.S. Department of Homeland Security's Customs and Border Protection division said in a statement Monday.

The United States charged that from Jan. 1, 2006, through Dec. 31, 2011, Fort Collins Colo.-based OtterBox L.L.C. knowingly omitted information to customs related to the value of imported products that it manufactured overseas.

The United States also charged that it made false statements in other documents submitted to customs. It said the company knowingly underpaid customs duties it owed to the United States because of its omissions and false statements.

The lawsuit by the whistleblower, who was not identified in the government's statement, was filed under the False Claims Act in 2011.


“America's economic security and prosperity are at the heart of U.S. trade law,” said Denver-based U.S. Attorney John Walsh in a statement. “Customs duties are a significant source of revenue for the United States, and this settlement demonstrates that the Department of Justice will zealously enforce their lawful collection.”

“OtterBox experienced rapid global growth during the period alleged in the complaint,” OtterBox President and CEO Brian Thomas said in a statement. “We work diligently to conduct our business responsibly and previously self-reported two customs payment discrepancies. We corrected those isolated incidents, enhanced our internal controls and proactively paid all duties that were owed.

“With resolution of this matter, we are pleased to continue to focus on manufacturing and innovating technology protection products that our customers know and trust, and remain dedicated to being a responsible corporate citizen.”

The company also said in its statement that there has been no admission of liability, that it has never knowingly underpaid customs duties, and that the privately held firm has not been accused of any other customs violations during its 16-year history.