Linde: Classification, Value, and Free-Trade Claims

In the Linde False Claims Act settlement, the company agreed to pay the United States more than $22.2 million to resolve allegations that it knowingly used false customs declarations to avoid import duties. The imports supplied natural gas and chemical manufacturing plants. For someone who knows the purchasing or import records, the comparison is concrete: what the business brought into the country, what it told U.S. Customs and Border Protection and what it paid.

Linde’s Imports and the Settlement

The Linde customs fraud lawsuit ended in an agreement to pay the United States over alleged duty evasion on plant-construction materials. The Justice Department announced the settlement on September 25, 2020. It covered Linde GmbH and its U.S. subsidiary, Linde Engineering North America LLC.

Linde GmbH, headquartered in Germany, imported more than $500 million in goods between 2011 and 2017. Its Houston-based subsidiary managed procurement and logistics. That puts the settlement beside an industrial import operation, with purchasing and shipping decisions made inside the same business whose declarations Customs relied on.

A whistleblower brought the qui tam case on the government’s behalf. Under the announced resolution, the Linde whistleblower was to receive approximately $3.7 million as a share of the government’s recovery.

How the Alleged Customs Declarations Changed the Duty

The government alleged that, during that import period, Linde avoided duties by misrepresenting the nature, classification and valuation of imported merchandise and the applicability of free trade agreements. Some of the allegedly avoided amounts were antidumping and countervailing duties.

For an insider, the useful comparison is between the product the business ordered and the description and classification used to bring that product through Customs. A purchasing record describes what the plant needed. The declaration tells Customs what entered the country. When those accounts differ, the person who knows the goods can explain what the paperwork leaves out.

Valuation also reaches the choices behind an engineering project. In announcing Linde’s settlement, the Justice Department explained that valuation requirements help prevent an incentive to use foreign engineers instead of hiring in the United States. That puts the engineering work behind imported materials into the competitive picture, alongside the price of the goods themselves.

Customs relies on importers’ declarations to determine the duties owed. Those declarations include the goods’ origin and value, whether antidumping or countervailing duties apply, and the amount owed. The importer is responsible for getting that information right.

We see the competitive problem plainly. A business that pays the duty carries it in its costs. A business that evades it keeps the money. The government loses revenue, and the honest supplier has to compete against a price that leaves out a government bill.

Why Unpaid Customs Duties Can Be a Reverse False Claim

A reverse false claim concerns money owed to the government. In Linde’s case, the government alleged that false declarations reduced the duties the United States should have received.

The Congressional Research Service’s 2009 report, Qui Tam: The False Claims Act and Related Federal Statutes, explains the direction of the transaction:

That is why an import operation belongs in a conversation about the False Claims Act. The alleged loss was at the border, where duties went unpaid, rather than in a bill sent to a government customer.

What a Customs Insider Can Connect

Useful customs evidence connects the goods, the declaration and the duty owed. In a business importing materials for industrial plants, someone working in purchasing may understand what was ordered, while someone handling logistics may understand what was declared. We work with your own knowledge to bring those parts of the transaction together.

For a case involving allegations like Linde’s, we would compare the valuation reported at entry with the commercial records behind the purchase. For a claimed free-trade preference, we would examine the goods’ origin and the basis the company used for claiming that treatment. The point is to connect a specific purchasing or import decision to the duty bill.

What people inside the business understood matters too. A warning about a classification, a valuation review or a decision about how to describe the goods can explain why the same information kept reaching Customs. Those communications help show what the company knew when it acted.

Your part of the operation may give a declaration meaning that its words alone do not convey. You may know why the company ordered a particular product or who chose the description that followed it into the import paperwork.

What Linde Adds to the Customs Pattern

Sigma Corporation’s customs-duty judgment concerned antidumping duties on imported welded outlets. The company’s failure to investigate its duty obligations mattered to the case. For an insider, the question reaches beyond what a declaration said to how the business decided it owed no duty.

Toyo Ink’s $45 million settlement addressed a different representation about imported goods. The government alleged that pigment from China and India, finished in Japan and Mexico, was declared as originating in those latter countries even though the finishing did not sufficiently transform it. Where the pigment was made and what happened to it afterward were central to the alleged duty evasion.

The whistleblower in that case was the president of a competing domestic producer. A competitor’s knowledge of the product can therefore matter alongside an employee’s view of the import operation. The person who recognizes the mismatch may be inside the purchasing department or across the table bidding for the work.

Partial Disclosure and the Whistleblower Case

Linde made a partial disclosure to Customs about its importing practices before the United States told the company about its investigation. The Justice Department acknowledged Linde’s cooperation, and the resolution also settled the whistleblower’s lawsuit.

We see an important point in that sequence: the company’s disclosure and the whistleblower’s award were both part of this resolution. The company’s account was not the only one that counted.

What Share Is Possible?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Import Records Leave Out

If you know the goods, the declared value or the decision behind a claimed duty reduction, speak to our whistleblower experts about how the duty went unpaid. We build the case around your knowledge, bring in customs fraud whistleblower lawyers who understand classification and valuation disputes, and stay beside you as the case moves forward.