Echelon Fitness Multimedia, a Chattanooga-based smart exercise equipment company that has cast itself as a Peloton rival, agreed to pay at least $2.1 million to settle federal allegations it underpaid tariffs and import fees, officials said.
Federal prosecutors accused the company of intentionally submitting inaccurate invoices to customs officials from September 2019 to January 2023, according to a U.S. Attorney's Office press release.
The company's supply chain vice president, Greg Dahlstrom, filed a False Claims Act case against Echelon on the government's behalf in June 2022, according to court records.
"Defendants accomplished their fraud by failing to include/account for the true cost of goods and by keeping two sets of invoices and giving the United States only the false and fraudulent ones," his complaint said.
Prosecutors claimed Echelon undervalued the cost of equipment it purchased from a Chinese manufacturer and repeatedly failed to disclose the value of computer tablets that were integrated into the equipment.
The government accepted the settlement amount for its civil claims as a compromise based on the defendant's financial condition, according to the agreement.
Under whistleblower provisions in the law, Dahlstrom, a Tennessee resident, will receive $420,000 of the settlement proceeds and potential additional sums, the press release said.
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