United States v. Inn Foods, Inc

United States v. Inn Foods, Inc

Between the year 1987 and 1990, Inn Foods Company imported frozen produce from six Mexican famers. These famers had agreed to issue invoices which were understated in value. For every understated invoice, Inn Foods confirmed on the estimation of the market’s actual value of the produce. Later, the company submitted the differences in prices to these famers. Investigations by the US custom and border protection s found that the company had undervalued its purchases by an approximation of $3.5 million and had subsequently paid lower tariffs to the government. Owing to these revelations, the American government filed a case against Inn Foods at the court of international trade. The court rule that the company was liable for fraud and assessed the amount of the unpaid taxes to be $624,602.55, it also applied and extra fine of $7.5 million.

Although Inn Foods appealed the court’s decision, claiming that it had acted out of the negligence and no fraud had occurred, the facts fully support the courts’ observation that Inn Foods were very much aware that the invoice for each particular shipment of the good purchased were undervalued and therefore, false. This is because the famers had sent the company a copy of the undervalued invoice which was employed to value the entries for the purpose of custom. Additionally, the facts of the case affirmed the evidence that the famers had informed the company with regard to the undervaluation of the shipped produce.

The reasoning of the court with regard to its decision on this matter was largely based on a letter sent by one of the famers to Inn Foods. Part of the letter stated that “we dispatch. Broccoli spears priced at 0.50/lb, the invoice will read 0.28/lb.” Upon receiving the undervalued factura, an accounting supervisor at Inn Foods altered the prices so as to reflect both the true and higher price estimate. This is enough evidence to support the point that the company participated in fraudulent acts intentionally.

Reference

Miller and Cross.(2009) “ACP BUSINESS LAW 110 OCC” : Cengage Learning Custom

Publishing. ISBN: 9781285108841