Redi-Bag USA Reaches $7.3 million Settlement For Allegedly Hiding 'Made In China' Labels

A reusable bag company and its chief executive agreed to a $7.3 million federal settlement to resolve claims they disguised Chinese-made plastic bags to avoid antidumping duties.

Redi-Bag USA and its CEO Jeffrey Rabiea agreed to the $7.3 million settlement following claims they falsely designated Chinese-manufactured polyethylene retail carrier bags as originating from Hong Kong on customs entry forms, according to the Justice Department.

The duty Rabiea allegedly sought to avoid imposed tariffs of up to 77.5% on the value of Chinese-made polyethylene retail carrier bags, meaning falsely routing shipments through Hong Kong could have saved Redi-Bag from much of its import costs.

Federal prosecutors accused the company of ordering its employees to cover “Made in China” markings on its bags and telling the bags’ overseas manufacturer to remove the markings.

Redi-Bag also allegedly canceled orders when they were scheduled for inspection.

John Maierhoffer, a former contracted sales representative for Redi-Bag who sued the company in a whistleblower lawsuit in 2021, will receive about $1.3 million from the settlement.

Redi-Bag’s assets were acquired by AmerCareRoyal just one day before the settlement’s announcement, according to a press release, raising questions about how the new owner will manage any ongoing compliance obligations.

Antidumping duties on Chinese-made polyethylene retail carrier bags are designed to stop Chinese manufacturers from undercutting U.S. producers by selling below cost. The Justice Department’s Trade Fraud Task Force was launched last year to target customs evasion schemes and has exceeded $1 billion in total civil and criminal recoveries, penalties and forfeitures since its launch, according to CBS News, which noted the single largest case handled by the task force was a $549.5 million settlement over evaded aluminum duties in May.