The U.S. government has filed a $1.5 million lawsuit against a small importer of retail plastic bags from China, alleging that the company, Sigma Plastic Inc. of La Puente, Calif., falsely claimed the items were produce bags to avoid anti-dumping duties.
The government's June 22 lawsuit also prompted the similarly-named Sigma Plastics Group of Pompano Beach, Fla., one of North America's largest plastic sheet and film makers, to issue a statement that it had no connection to the California firm and threatening legal action for trademark infringement.
The U.S. government alleges that Sigma in California kept two sets of records and falsely told U.S. customs officials that seven shipments of plastic shopping bags from China, all entering the port of Los Angeles/Long Beach between September 2009 and September 2010, were produce bags.
Produce bags had a 3 percent duty, while plastic retail carrier bags from China had an additional 77.5 percent penalty assessed as a result of U.S. government anti-dumping investigations.
Reporting them as produce bags allowed Sigma to avoid more than $264,000 in taxes, the lawsuit said.
“The defendants' actions in creating two sets of invoices (one kept internally explaining that various entries contain PRCBs, and the other submitted to [U.S. Customs and Border Protection] claiming that entries only contain plastic produce rolls) represents a wanton disregard for the relevant facts and indifference to or disregard for statutory obligations,” the lawsuit said.
The government said it is seeking additional penalties of $775,000, which represents the sales value of the bags in the U.S., and $529,000, or twice the amount of tax revenue it lost, from the company and from Sigma President Eve Farlin Ng and Vice President Tjun Hong.
The lawsuit said the bags came from a Chinese manufacturer, Xiamen Richin Plastic Co. Ltd.
Similar descriptions on various sourcing websites said a “Canadian-funded” company of that name was set up in Xiamen, Fujian province, in 1985 to manufacture low and high density polyethylene bags for export to North America, Europe and Japan.
A person answering the phone at Sigma's office in California said the company had no comment.
Sigma Plastics Group in Florida, which has $2.6 billion in sales and 43 factories in North America, issued a statement June 24 that said “the Sigma Plastics Group is not and never has been related to Sigma Plastics Inc. that is being sued by the federal government.
“The Sigma Plastics Group will be pursuing any and all legal action against Sigma Plastics Inc. and their obvious deceptive use of a reputable trade name that has been built over the course of 37 years,” it said.