UPDATED: University Loft reaps $3.5M from unfair-competition claims

Greenfield-based University Loft will receive $2.25 million for blowing the whistle on a Dallas-based competitor that failed to pay duties on furniture imported from China, the Justice Department announced Monday.

 

University Loft said it also is set to collect $1.3 million from a settlement in a separate unfair-competition lawsuit it filed in Texas state court against the Dallas company, University Furnishing LP.

The $2.25 million will come out of a $15 million settlement University Furnishings agreed to pay to settle the government’s allegations the company made false statements to avoid paying duties on wooden bedroom furniture imported from China from 2009 to mid-2012.

 

The two deals will reap a total of $3.55 million for University Loft, a manufacturer of dorm and military furniture that employs about 200 at factories in Greenfield and in Tennessee.

 

"We are grateful that the Department of Justice, in collaboration with other government agencies, has once again demonstrated its commitment to the American worker by aggressively pursuing cheaters that unfairly compete by illegally evading customs duties," James Jannetides, University Loft's founder and president, said in a statement.

The allegations resolved by the Justice Department settlement were lodged by University Loft under the whistleblower provisions of the False Claims Act, the Justice Department said.
 

The act permits private parties, on behalf of the United States, to sue entities that might have made false claims to avoid government obligations. It entitles the whistleblower to a share of settlement proceeds.

 

University Loft has had its own scrapes with government investigators.

 

In 2009, University Loft agreed to pay $400,000 after the Justice Department alleged the company knowingly sold Malaysian-made furniture to government agencies, which violated the Trade Agreements Act.

 

That fine stemmed from whistle-blowing by another University Loft competitor, California-based Furniture by Thurston, IBJ reported in 2010.

 

A year after the Justice Department levied that fine, federal agents from the Department of Defense, Air Force, Defense Criminal Investigative Service, and Immigration and Customs Enforcement served a sealed search warrant at the company's Greenfield headquarters and factory. They spent hours going through the company’s files. But no arrests were made, and government officials did not bring charges.

 

The raid was a big setback for the company, which was founded in 1986 by James Jannetides, who started making dorm furniture in his parents’ basement as a college student.

 

“Any time you’ve got a bunch of agents coming, people think you’re guilty until you’re proven innocent,” he told IBJ in 2012.

 

University Loft said in a press release that a portion of its recovery will go toward educating students about the importance of strong business ethics and corporate conduct. University Loft previously helped establish the business ethics chair at Southern Illinois University, Jannetides' alma mater.