Redi-Bag USA and CEO Agree to Pay $7.3 Million to Resolve False Claims Act Allegations Involving Evaded Customs Duties

The Department of Justice (DOJ) has announced that New York Packaging II LLC, doing business as Redi-Bag USA, and its CEO, Jeffrey Rabiea, have agreed to pay $7.3 million to resolve allegations that they violated the False Claims Act (FCA) by misrepresenting the country of origin of imported plastic bags and evading antidumping duties owed to the United States.

Redi-Bag supplies custom bags, liners, and packaging products to customers throughout the United States. The allegations involved polyethylene retail carrier bags imported into the country during a period when bags manufactured in China were subject to significant antidumping duties.

Importers are generally required to disclose the country of origin, value, applicable duties, and other information about goods entering the United States. U.S. Customs and Border Protection (CBP) collects those duties, including antidumping duties imposed by the Department of Commerce to address foreign products sold in the United States at unfairly low prices.

According to the government, Redi-Bag and Rabiea falsely represented that certain bags originated in Hong Kong when they were manufactured in China and merely transshipped through Hong Kong. Specifically, the government alleged that Redi-Bag and Rabiea knew the bags were manufactured in China but identified Hong Kong as their country of origin on customs entry forms. By doing so, they allegedly avoided antidumping duties that could reach 77.57% of the value of the imported products.

The DOJ further alleged that Redi-Bag and Rabiea took steps to conceal the bags’ actual origin from the company’s customs broker and federal authorities. The alleged conduct included directing employees to cover “Made in China” markings, asking the manufacturer to remove those markings, and canceling orders after learning that customs authorities intended to inspect them.

The case illustrates that FCA exposure is not limited to health care claims or traditional government contracts. The FCA may also apply when a company allegedly provides false information that reduces or avoids an obligation to pay money to the government. This theory, commonly referred to as a “reverse false claim,” allows the government to pursue entities that allegedly conceal or improperly avoid customs duties, tariffs, refunds, or other financial obligations.

DOJ Continues Focus on Customs and Trade Fraud

The settlement reflects the DOJ’s continued commitment to using the FCA to address alleged customs and tariff evasion. In 2025, DOJ launched a cross-agency Trade Fraud Task Force intended to coordinate civil and criminal enforcement involving unlawful efforts to avoid tariffs and other import duties. The day before announcing the Redi-Bag settlement, the DOJ announced that the Task Force had surpassed $1 billion in recoveries and charged losses in less than one year.

Companies that import goods should ensure that country-of-origin declarations are supported by accurate manufacturing and shipping records. Importers should also carefully oversee communications with foreign manufacturers, freight forwarders, and customs brokers and should investigate any inconsistencies involving product markings, invoices, certificates of origin, or shipping routes.

The involvement of a company’s CEO in the settlement is also significant. Executives who direct or knowingly participate in customs reporting decisions may face individual exposure when the government contends that inaccurate information was intentionally submitted or concealed.

Former Sales Representative Filed Whistleblower Action

The matter arose from a lawsuit filed under the FCA’s qui tam provisions by a former contracted sales representative of Redi-Bag, who will receive approximately $1.33 million from the settlement proceeds.

GWB represents businesses and individuals in connection with government investigations and False Claims Act litigation. If you need assistance with such a matter, contact us today.