Temple St. Clair to Pay Government $796K+ in Customs Case

New York--Jewelry brand Temple St. Clair has agreed to pay the U.S. government nearly $800,000 after settling a suit involving failure to pay customs duties and  inventory that was not properly marked.

A former inventory manager for the jewelry brand was the one who brought the case under the False Claims Act. The act allows whistleblowers, also known as relators, to file a lawsuit on behalf of the government to recover money an individual or business has avoided paying to the United States. If the government successfully recovers the money, then the whistleblower receives a portion of that recovery.

The ex-employee filed her complaint in the U.S. District Court for the Southern District of New York against Temple St. Clair LLC and three individuals--jewelry designer and brand founder Temple St. Clair Carr; her husband and brand President Paul Engler; and Vice President of Sales Jamie McGrath--in June 2015.

The settlement was filed June 21. It and the original suit were unsealed the following day. (Suits brought under the False Claims Act are required to be sealed in order to protect the investigation.)

According to court documents, the whistleblower was responsible for preparing customs documents for the import and export of jewelry and loose gemstones during her time at Temple St. Clair. Her complaint outlined several schemes allegedly undertaken by the jewelry brand to evade or underpay U.S. customs duties.

In addition, the U.S. government filed a complaint-in-intervention, which allows a third party to join the plaintiff in a complaint, containing similar allegations.

The complaint alleges that between 2011 and 2017, Temple St. Clair LLC underreported the value of goods imported from Italy, Sri Lanka and Thailand; obtained duty-free treatment on some imported jewelry that didn’t qualify; and failed to declare to Customs and Border Protection jewelry brought into the U.S. for commercial purposes, thereby unlawfully avoiding payment of customs duties.

The complaint also stated that the company, “failed to affix permanent markings to jewelry manufactured in Sri Lanka or Thailand identifying the jewelry’s country of origin” when it entered the U.S., then sold the jewelry to retailers without any markings indicating country of origin.

(Title 19, U.S. Code, Section 1304 requires jewelry be permanently marked with the country of origin at the time of import.)

According to Sanford Heisler Sharp, the law firm that represented the whistleblower, the case is thought to be the first in New York in