United States of America ex rel. Sharon Joyce v. Global Office Furniture LLC and Malcom E. Smith

The United States District Court for the District of South Carolina is presiding over *United States ex rel. Sharon Joyce v. Global Office Furniture LLC and Malcom E. Smith*, a significant *qui tam* action under the False Claims Act (FCA). The case, initiated by a whistleblower, alleges that Global Office Furniture and its owner engaged in a multi-year "double-invoicing scheme" to fraudulently underpay over $2 million in customs duties on office chairs imported from China. The government has intervened, asserting that the defendants submitted false invoices to U.S. Customs and Border Protection (CBP) and attempted to destroy evidence of their fraud. This action signals a heightened focus by the Department of Justice on utilizing the FCA to combat tariff evasion and trade fraud, emphasizing the critical role of whistleblowers in uncovering such schemes.

The landscape of federal enforcement against fraud has expanded, with the False Claims Act (FCA), 31 U.S.C. § 3729 et seq., increasingly deployed beyond traditional areas like healthcare and defense contracting. A notable illustration of this trend is the case of *United States ex rel. Sharon Joyce v. Global Office Furniture LLC and Malcom E. Smith*, filed in the United States District Court for the District of South Carolina (No. 2:20-cv-01223-DCN). This action, brought initially by a whistleblower and subsequently joined by the U.S. government, targets alleged customs fraud, specifically the underpayment of tariffs through a sophisticated "double-invoicing scheme."

This case is particularly significant for legal practitioners as it underscores the Department of Justice's (DOJ) commitment to leveraging the FCA as a potent tool for enforcing trade laws and customs duties. It highlights the potential for substantial liability for companies involved in international trade that fail to adhere strictly to import regulations. The allegations of deliberate undervaluation of imported goods and subsequent attempts to conceal the fraud present a stark reminder of the severe consequences that can arise from non-compliance with federal payment obligations.

The article will delve into the specifics of the *Joyce* case, examining the statutory framework of the False Claims Act, the nature of the alleged fraudulent scheme, and the broader implications for businesses engaged in international commerce. It aims to provide practitioners with insights into the evolving application of the FCA in the realm of customs enforcement and the critical importance of robust compliance programs.

The False Claims Act (FCA), 31 U.S.C. § 3729 et seq., is the primary federal tool for combating fraud against the government. Enacted during the Civil War, it allows the government to recover funds lost to fraud and incentivizes private citizens, known as "relators," to bring *qui tam* lawsuits on behalf of the United States. If successful, relators can receive a share of the government's recovery. The FCA imposes liability on any person who, among other things, knowingly presents a false or fraudulent claim for payment or approval, or knowingly makes, uses, or causes to be made or used, a false record or statement material to a false or fraudulent claim. Crucially, the FCA also includes "reverse false claims" provisions, which impose liability on those who knowingly conceal or improperly avoid or decrease an obligation to pay money or transmit property to the government.

In the context of international trade, customs duties and tariffs represent an obligation to pay money to the government. The imposition of Section 301 tariffs on goods from the People's Republic of China, which increased significantly in 2019, created a financial incentive for some importers to seek ways to reduce their duty payments. It is against this backdrop that the *Joyce* case emerged. The relator, Sharon Joyce, a former office manager for Global Office Furniture, filed her *qui tam* complaint under seal in March 2020, alleging that her employer was engaged in a scheme to defraud U.S. Customs and Border Protection (CBP) of these duties. The government subsequently intervened in the lawsuit, signaling its belief in the merits of the allegations and its commitment to pursuing the claims.

The core of the *United States ex rel. Joyce* case revolves around allegations of a "double-invoicing scheme" orchestrated by Global Office Furniture, LLC (GOF) and its owner, Malcom E. Smith. According to the government's complaint, filed in July 2025, the defendants knowingly and improperly underpaid customs duties on office chairs imported from China between 2019 and 2023. This scheme allegedly involved creating two sets of invoices for each shipment: one reflecting the true value of the goods for internal and customer billing purposes, and another with a significantly lower, false valuation that was submitted to U.S. Customs and Border Protection (CBP). By presenting these undervalued invoices, GOF purportedly reduced the basis upon which customs duties were calculated, thereby evading over $2 million in tariffs.

The government's complaint asserts violations of the False Claims Act, specifically focusing on the defendants' alleged actions of making or using false records or statements material to an obligation to pay money to the government, and concealing or improperly avoiding or decreasing obligations to pay money to the government. The element of "knowingly" under the FCA can be satisfied not only by actual knowledge but also by deliberate ignorance or reckless disregard of the truth or falsity of the information. The allegations further include attempts by the defendants to destroy evidence related to furniture pricing after becoming aware of a federal investigation, which could be construed as further evidence of fraudulent intent and efforts to obstruct justice.

This case represents a significant expansion of FCA enforcement into the realm of customs fraud. Historically, customs violations were often addressed through administrative penalties or specific customs statutes. However, the DOJ's intervention in *Joyce* demonstrates a strategic decision to apply the FCA's robust civil penalties and treble damages provisions to tariff evasion. This approach aligns with a broader governmental focus on protecting federal funds and enforcing trade laws, particularly in the context of tariffs imposed under Section 301 of the Trade Act of 1974. The use of the FCA in this context also highlights the increasing importance of whistleblowers, like Sharon Joyce, in identifying and reporting complex financial frauds that might otherwise go undetected.

While the claims asserted by the United States remain allegations and there has been no determination of liability, the detailed nature of the alleged double-invoicing scheme and the reported attempts to destroy evidence suggest a strong factual basis for the government's intervention. The case will likely explore the intricacies of proving intent and materiality in the context of customs declarations, setting potential precedents for future FCA actions involving trade and tariff compliance.

The *United States ex rel. Sharon Joyce v. Global Office Furniture LLC and Malcom E. Smith* case serves as a critical reminder for all entities involved in international trade of the expansive reach and severe penalties associated with the False Claims Act. The Department of Justice's intervention in this *qui tam* action signals a clear and intensified commitment to prosecuting customs fraud and tariff evasion under the FCA, moving beyond traditional enforcement mechanisms. Companies that import goods into the United States, particularly those subject to specific tariffs, must ensure absolute accuracy and transparency in their customs declarations and invoicing practices.

Practitioners advising clients engaged in international trade should emphasize the necessity of robust internal compliance programs, thorough documentation of all customs filings, and regular audits to prevent and detect potential discrepancies. The allegations of evidence destruction in this case further underscore the importance of proper record-keeping and cooperation with government investigations. Failure to adhere to these principles can expose businesses and their principals to significant civil penalties, treble damages, and reputational harm under the False Claims Act, alongside potential criminal charges. This case highlights that vigilance in adhering to all federal payment obligations, including customs duties, is paramount to mitigating legal and financial risks.