Business Identity Theft: Are You the Importer of Record?

Something stinks in Kairali Decan, Inc. v. United States and it’s not the foreign foods that were imported into the country.  It seems that a fraud was under way, but no one seemed to recognize it despite the information that Kairali Decan provided to the Food & Drug Administration (FDA) and CBP.

Kairali Decan is a California business that imports and wholesales foreign foods.  In January 2007, a shipment arrived from Sri Lanka at the Port of San Francisco, identifying Kairali Decan as the importer of record.  The entry summary was signed by a “Khan” who was identified as the “CEO”.  The shipment was delivered per instructions that were issued on purported Kairali Decan letterhead, which was signed by “Salman F. Khan, Director”.

When this shipment arrived, the entry documents (or lack thereof) should have raised an eyebrow, at the very least.  The entry documents did not include any contact information and, more importantly, did not include a commercial invoice identifying the purchaser of the goods.  (In case anyone forgot, this is required by 19 C.F.R. § 141.86(a)(2)).  Second, the customs bond contained an undecipherable signature of an individual who did not indicate that he was an officer of Kairali Decan and did not include the company’s corporate seal.  (Again, there are bond requirements that must be met!  19 C.F.R. § 113.21 et seq.)  

Kairali Decan learned of this entry after the entry had been made and at a much later date.  Kairali Decan first learned of this entry when it received a Notice of FDA Action.  The Notice listed the products that were imported and Kairali Decan recognized the products as being from Sri Lanka.  Now, believe it or not, Kairali Decan knew of only one importer in the area that imported food from Sri Lanka, and that was Mr. Salman-Fariz.  Kairali Decan contacted Mr. Salman-Fariz, who admitted that he had imported the goods under Kairali Decan’s name!  I suppose we can give Mr. Salman-Fariz props for so readily admitting that he stole Kairali Decan’s identity.  But, he took it a step further…he assured Kairali Decan that he would “take care of the matter.”  Spoiler alert….Mr. Salman-Fariz did not make good on his promise!  Did you really think he would?!

The real CEO for Kairali Decan advised the FDA that the goods had been imported by Mr. Salman-Fariz, that Kairali Decan was not the importer of record, and that Mr. Salman-Fariz was the responsible party.  Kairali Decan’s CEO also personally visited CBP and provided them with the same information.

Although this case is really about when did Kairali Decan have notice of this matter and whether Kairali Decan properly followed the administrative process; there are more disturbing issues brewing.

First, why didn’t anyone say the F word?  That’s right, it seems obvious that the entry documentation was lacking, incorrect and incomplete and a Fraud was underfoot.  Mr. Salman-Fariz admitted to stealing Kairali Decan’s identity to make the entry!  Second, the court seems to blame Kairali Decan for being so “oddly blasé” in the way it handled a matter in which the entry was falsely made under its name.  Oddly blasé?  What was Kairali Decan suppose to do?  They learned late in the game that their identity had been stolen.  They told the FDA import specialist and CBP that they were not the importer of record and they provided the agencies with evidence to support this claim.  Kairali Decan provided a letter from the identity thief, himself, in which he admitted that he was the purchaser and importer of the goods at issue and, again, advised that he would settle the final outcome” on the shipment.

Kairali Decan, believing that they had done all they could to address the stolen identity issue submitted a petition seeking relief from the assessment of liquidated damages.  Afterall, everyone now knew that Kairali Decan was not the importer of record.  Well, CBP didn’t buy it.

Importers are going to have to pay attention and step it up.  Even though Kairali Decan did not import the goods and told the agencies that they were not the importer–Kairali Decan still had an obligation to follow the administrative proceedings of filing a protest to fight a matter it had nothing to do with.

In Kairali Decan, it seems that someone was asleep at the wheel.  There were so many red flags with this entry and Kairali Decan did a great deal to establish that they were not “at fault”.  Be sure you carefully read and understand all correspondence you receive from CBP.  Pay attention to all dates and deadlines.  And, contact your Customs counsel to fully understand your rights, responsibilities, and potential risks.

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About Adonica Wada

Adonica Wada is a partner with the law firm of Simon Gluck & Kane LLP. She is an international trade attorney focusing on import- and export-related matters.
This entry was posted in Court of International Trade, Customs and tagged , , , , . Bookmark the permalink.

3 Responses to Business Identity Theft: Are You the Importer of Record?

  1. It can happen with exports, too. I was once performing an export compliance review of a freight forwarder’s AES filings with a data extract from Census. There were a number of records filed using the freight forwarder’s EIN (IRS#) as the USPPI, and some unrecognized EIN for the filer. An ABI query of that other EIN revealed it to be another freight forwarder.

    During a friendly call to that other forwarder, we figured out that the actual USPPI, when asked for their EIN, pulled out an old Shipper’s Letter of Instruction from my forwarder, and read them the forwarder’s EIN.

    Problem resolved, no real violations, and Census made the necessary adjustments to the records.

    Jim Dickeson
    Import Export Geeks
    http://www.importexportgeeks.com

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