Echelon Fitness Multimedia, LLC Agrees To Settle False Claims Act Allegations For $2,100,000

KNOXVILLE, Tenn. - Echelon Fitness Multimedia, LLC (Echelon), a Chattanooga, Tennessee-based company that sells connected fitness equipment, such as smart bikes, treadmills, and rowers and provides digital memberships that offer live and on-demand classes, agreed to settle allegations under the False Claims Act (FCA) that the Company deceptively undervalued fitness equipment imported into the United States to lessen tariff obligations and other import assessments owed to the United States. Under the terms of the settlement, Echelon will pay at least $2,100,000 to resolve the FCA claims.

According to filed documents, it was alleged that from September 2019 through January 2023, Echelon knowingly submitted inaccurate invoices to U.S. Customs and Border Protection (CBP) that underreported the cost of equipment purchased from a China-based manufacturer-assembler and repeatedly failed to include the cost of computer tablets incorporated into packaged equipment shipped from China to the United States when declaring the total values of the imported equipment to CBP, improperly reducing tariffs and other import assessments.

The civil settlement includes the resolution of a case filed in the U.S. District Court for the Eastern District of Tennessee under the qui tam, or whistleblower, provisions of the FCA by a relator, Mr. Greg Dahlstrom. Under the whistleblower provisions a private party, known as a "relator," can file an action on behalf of the United States and may receive a portion of any recovery. The qui tam case is captioned U.S. ex rel. Greg Dahlstrom v. Echelon Fitness Multimedia, LLC et al., Case No. 1:22-CV-222 (E.D. Tenn.) The relator will receive $420,000 of the proceeds from the settlement and possibly additional sums as permitted under the FCA.

Assistant U.S. Attorneys Alan G. McGonigal and Alexa Ortiz Hadley for the Eastern District of Tennessee represented the United States, with assistance from DHS Office of Inspector General (OIG).

The investigation and resolution of this matter illustrate the government's emphasis on combating waste, fraud, and abuse impacting the United States and its agencies. One of the most powerful tools in this work is the FCA. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to DHS at https://hotline.oig.dhs.gov/#step-1 or 800-323-8603.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

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