Pure Collection Ltd has settled a whistleblower allegation of purposefully evading U.S. customs fees on American customers’ orders of luxury cashmere knitwear.
Constantine Cannon LLP has said announced a $900,000 settlement on behalf of its whistleblower client in a lawsuit against Pure Collection Ltd.
Pure Collection is a Harrogate, England-based e-retailer of luxury cashmere and apparel goods.
The United States Government announced the settlement agreement today with Pure Collection and the e-retailer’s acting CEO, Samantha Harrison. The company and Ms. Harrison have collectively agreed to a settlement of $908,100 (USD) to the U.S. Government.
This lawsuit was one of the first to be brought by a U.K. whistleblower in which the U.S. Government intervened and successfully resolved the whistleblower’s False Claims Act (FCA) allegations. The whistleblower, Andrew Patrick of Harrogate, England, brought to Constantine Cannon’s London office information regarding Pure Collection’s practices. Mr. Patrick will be awarded 18 percent of the total settlement.
The qui tam, or whistleblower, lawsuit alleged that since 2007 the defendants fraudulently and systematically avoided paying U.S. customs duties on its goods shipped from the United Kingdom to customers in the United States. In an attempt to attract more U.S.-based customers, Pure Collection engaged in a practice commonly known as “splitting.” The defendants neither admitted nor denied liability.
Whistleblower Andrew Patrick worked for Pure Collection from 2010 to 2014, first as a sales representative in its U.K. call center and then in its U.K. packaging department. Mr. Patrick was trained to systematically split customers’ large orders to successfully avoid paying U.S. customs fees, saving the company millions of dollars, according to the suit.
Mr. Patrick brought his allegations to the attention of U.S. Customs and Border Protection in 2014, and later filed a whistleblower submission with the U.S. Internal Revenue Service in 2015. After the two initial unsuccessful attempts to alert U.S. authorities, Mr. Patrick approached Richard Pike, a solicitor-advocate and partner in Constantine Cannon’sLondon office, who specializes in advising whistleblowers under U.S. whistleblower programs. Mr. Patrick filed his whistleblower suit in 2016 in federal court in Maine.
Mr. Patrick is represented by Mary Inman, Richard Pike and Till Vere-Hodge in Constantine Cannon’s London office. Dan Murphy of Bernstein Shur, served as counsel in Maine, where the case was filed. Mr. Patrick is also represented by Molly Knobler of Phillips & Cohen.
Mary Inman, a partner in Constantine Cannon’s London office whose practice focuses on representing UK and EU whistleblowers under the American whistleblower programs, said:
Mr. Patrick is the first British whistleblower to expose a UK company for evading U.S. import duties and only the second to receive a financial reward under the whistleblower provisions of the False Claims Act.
As global business expands, European whistleblowers like Mr. Patrick play an increasingly vital role in alerting the U.S. Government to fraud schemes that cross international borders.
Richard Pike, a solicitor-advocate and partner in Constantine, said:
Mr. Patrick should be commended for his persistence in bringing these matters to the attention of multiple U.S. authorities and his foresight in being among the handful of British citizens who have availed themselves of the American whistleblower programs.
The American taxpayers owe Mr. Patrick a debt of gratitude for his courage in coming forward to expose these practices, many of which occurred on British soil but reverberated in the U.S.
Vere-Hodge, an associate in Constantine Cannon’s London office, said:
Pure arrogantly decided it didn’t need to play by the same rules as other retailers, and placed its own interests in profits and access to the U.S. market above the laws of the U.S. Government.
The Government’s successful resolution of Mr. Patrick’s case sends a clear message that this behavior will not be tolerated.
The federal False Claims Act (FCA) encourages whistleblowers of any nationality to expose companies that are defrauding the U.S. Government by allowing a private party from any country to file a civil lawsuit on the government’s behalf and providing for a reward of 15 to 25 percent of the Government’s civil recovery if the government joins, or intervenes in, the case, as the Government has done here. Mr. Patrick will receive 18 percent of the Government’s recovery.
The FCA is one of the most effective weapons in combatting fraud, waste, and abuse by those who contract with the U.S. Government. Since 2017, the U.S. has recovered upwards of $50 million in customs duties fraud cases alone. Just last week, the Wall Street Journal observed an increase in whistleblower cases exposing customs-related wrongdoing. Such fraud can be difficult to uncover without access to inside information; well-placed whistleblowers like Mr. Patrick are necessary to provide the information to help stop these practices.
Constantine Cannon would like to recognize the fine lawyers in the U.S. Attorney’s Office in the District of Maine for their work on the case, in particular, Civil Division Chief John G. Osborn and Assistant U.S. Attorney Andrew K. Lizotte.
United States of America ex rel. Andrew Patrick v. Pure Collection Ltd. et al., Case No. 2:16-cv-00230-GZS, United StatesDistrict Court for the District of Maine.