Ohio Company Settles Case of Selling Chinese Products to USG

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A Columbus company has settled a case with the Justice Department in which it knowingly sold products from China to U.S. Government agencies. The company falsely claimed the goods were manufactured in a list of designated countries that have been determined to trade fairly with the U.S. China is not a designated country. The Trade Agreements Act prohibits sales of products to federal agencies that are manufactured in countries that do not have a reciprocal trade agreement with the U.S.

The settlement calls for Direct Resource, Inc. to pay $450,000, although it admitted no wrongdoing. The settlement arose from a whistleblower lawsuit filed more than 2 years ago. The case involved allegations that the company knowingly sold office supplies from China to federal agencies. China does not have a reciprocal trade agreement with the U.S.

The settlement highlights the fact that companies selling to the U.S. Government must carefully review and fully understand their contractual obligations. The Government Services Agency (GSA) contracts involved in the case required that the products sold to the Government must be manufactured from one of the designated countries. Contractual compliance, understanding the applicable laws and consequences of violations, as well as careful planning are necessary for any company involved with international trade, particularly those that also sell to the Government. Following these principles will help companies avoid whistleblower lawsuits, Government audits, or even possible criminal charges.

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