Acting Manhattan U.S. Attorney Files Lawsuit Against Jewelry Importer And Settles Claims Against Its Former President For Fraudulently Underreporting Value Of Jewelry To Evade Customs Duties | USAO-SDNY
By: Date: August 2, 2020 Categories: New York - Southern District


Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Brenda Smith, Executive Assistant Commissioner for U.S. Customs and Border Protection’s (“CBP”) Office of Trade, and Troy Miller, Director, CBP Field Operations New York, announced today that the United States has filed a civil fraud lawsuit against ANAYA GEMS, INC. (“ANAYA GEMS”), a company that sold jewelry to retailers and was previously based in Long Island City, New York, and its former president, ANSHUL GANDHI (“GANDHI”), for defrauding the United States by falsely underreporting to CBP the value of jewelry imported from Hong Kong and Thailand, and thereby avoiding customs duties owed on the goods.  Specifically, the Government alleges that ANAYA GEMS did not report the value of the diamonds contained in the jewelry, or grossly understated their value.  The Hong Kong and Thailand companies that assembled the finished jewelry shipped to ANAYA GEMS used diamonds that were obtained from India-based companies owned, operated, and/or controlled by GANDHI’s family members.

Simultaneous with the filing of the lawsuit, the United States has resolved the claims against GANDHI pursuant to a settlement agreement approved today by U.S. District Judge Edgardo Ramos.  Under the settlement, GANDHI will pay $415,000 to the United States and made admissions regarding his conduct and the company’s conduct.  Specifically, GANDHI admitted that ANAYA GEMS routinely and knowingly underpaid customs duties for jewelry containing diamonds imported from Hong Kong and Thailand.  The amount paid by GANDHI under the settlement is based on the Office’s assessment of his ability to pay based on the financial information he provided.  ANAYA GEMS is no longer operating.

Acting U.S. Attorney Audrey Strauss said:  “Anaya Gems and its former president engaged in a fraudulent scheme to short-change the Government of customs duties owed for imported jewelry by falsely reporting its value.  Our Office will continue to hold companies, as well as their executives, accountable when they try to evade paying the legally required custom duties on imported goods.” 

Executive Assistant Commissioner Brenda Smith said:  “U.S. Customs and Border Protection maintains a zero-tolerance policy for trade fraud and other unfair trade practices that undermine the competitiveness of U.S. businesses.  Our auditors, attorneys, and analysts in New York played an important role in this investigation, and I want to recognize their outstanding work.  We are proud to partner with the U.S. Attorney’s Office to level the playing field for legitimate traders by steadfastly enforcing U.S. trade laws.”

CBP Field Operations Director Troy Miller said:  “This case is a great example of CBP’s historical mission of protecting the revenue of the United States and coincides with the 231st anniversary of the creation of the United States Customs Service.  I would like to thank our partners for their efforts in this priority trade enforcement action.”

The Complaint filed in Manhattan federal court alleges that from 2010 through 2017, ANAYA GEMS and GANDHI engaged in a scheme to fraudulently underpay customs duties on jewelry containing diamonds imported from Hong Kong and Thailand.  They carried out this scheme by causing false representations to be made concerning the value of the jewelry on entry documents filed with CBP, and by submitting invoices that did not reflect the true value of the jewelry.  ANAYA GEMS’ own records reflected the fraudulent scheme, showing the difference between the true values of the jewelry and the false values that were declared to CBP, as well as the duty that ANAYA GEMS would have been required to pay if it had lawfully reported the actual value of the jewelry.  In many instances, upon receipt of a shipment of jewelry from Hong Kong or Thailand, an ANAYA GEMS employee would handwrite on the manufacturer’s receipt the actual value of the diamonds contained in the imported merchandise so that the company could track this information.  ANAYA GEMS then provided its customs broker with the versions of these invoices without the handwriting – and without the actual value of the diamonds – and the customs broker submitted those invoices to CBP. 

As part of the settlement approved today by Judge Ramos, GANDHI admits, acknowledges, and accepts responsibility for the following conduct: 

  • As the president of the company during the period relevant to the Government’s allegations, GANDHI was closely involved in managing the day-to-day operations of ANAYA GEMS.
     
  • ANAYA GEMS imported jewelry containing diamonds (the “Jewelry”) from manufacturers based in Hong Kong and Thailand (collectively, the “Manufacturers”).  The diamonds used in the Jewelry assembled by the Manufacturers were obtained from companies that shared common ownership with ANAYA GEMS, including India-based companies Antrix Diamond Exports, Ltd., Shubh Exports, and Netaya Jewels PVT Ltd. (collectively, the “Diamond Suppliers”).  GANDHI’s family members, including his father, owned, operated and/or controlled the Diamond Suppliers. 

 

  • The Manufacturers used the diamonds provided by the Diamond Suppliers to create the finished Jewelry that was exported to ANAYA GEMS.  The Manufacturers were not billed for, and did not pay for, the diamonds that they used to assemble the finished Jewelry.
     
  • ANAYA GEMS routinely and knowingly underpaid customs duties for the Jewelry imported from Hong Kong and Thailand.  The entry documents submitted by ANAYA GEMS for the Jewelry imported from Hong Kong and Thailand were false.  ANAYA GEMS regularly and knowingly misrepresented the actual value of the Jewelry on entry documents filed by its customs broker with CBP by not including the value of the diamonds, or grossly understating the value of the diamonds, contained in the Jewelry. 
     
  • ANAYA GEMS also, through its customs broker, submitted to CBP inaccurate invoices to support the declared values, which omitted the value of the diamonds or grossly understated the value of the diamonds.
     
  • GANDHI was involved in pricing the Jewelry for purposes of selling the merchandise to retailers.  When calculating the prices to sell merchandise to retailers, GANDHI and ANAYA GEMS staff used the actual value of the pieces – including the value of the diamonds – as opposed to the values reported to CBP.  
     
  • GANDHI was aware of ANAYA GEMS’ obligation to report the accurate value of the imported Jewelry to the CBP, which included the full value of any diamonds included in the Jewelry.  GANDHI knew that the invoices used by ANAYA GEMS’ customs broker to record the value of the merchandise declared on the entry summary forms did not include the full value of the diamonds contained in the Jewelry.  GANDHI was aware that ANAYA GEMS did not accurately report the value of Jewelry imported from Hong Kong and Thailand and that this resulted in the underpayment of customs duties that were due and owing to the United States.

In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had previously been filed under seal pursuant to the False Claims Act.

Ms. Strauss thanked U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations for their assistance with the case. 

The case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorney Jeffrey K. Powell is in charge of the case.



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