Defense wins despite client pleading the Fifth 100 times

A business owner who invoked the Fifth Amendment over 100 times in a trial accusing him of violating the federal False Claims Act by engaging in a smuggling scheme won a unanimous defense verdict Friday after a seven-person jury deliberated about a day.

Tony Hang, the victorious defendant, was represented by Paul Murphy and Daniel N. Csillag of Murphy Rosen LLP, and Hang's company, Unichem, was represented by Jason Liang and John Ly of Liang Ly LLP.

Hang and his company were accused of defrauding the U.S. government out of millions in import duties by intentionally mislabeling tons of the food supplement glycine before it passed through U.S. customs from China.

Ji sought almost $11 million in damages. Under the False Claims Act, the relator could have also sought treble damages and would have been entitled to 25% to 30% of the total award and the government would have received the rest.

Despite the serious accusations by a relator who pursued the case privately through the False Claims Act on the government's behalf, the jury found no wrongdoing.

"We are very happy and delighted with the outcome and pleased the jury was able to cut through all the evidence and deeply understand what had happened," Murphy said. "Obviously the Fifth was a challenge but the facts are what mattered and what spoke in the case and the jury agreed."

Hang invoked the Fifth Amendment over 100 times when opposing counsel questioned him about the alleged scheme. Unichem's vice president, Mark Grieco, also pleaded the Fifth during his testimony.

Adding to the defense attorneys' burden, due to an alleged computer failure, Hang did not provide custom documents relating to the merchandise in question.

The case included several rare and unique elements. Not only was it brought under the False Claims Act -- a type of case rarely taken to trial -- but since the U.S. government declined to pursue action, the relator or whistleblower -- who was convicted of a felony in another matter -- litigated the case with his own lawyers.

The relator, David Ji, a competing business owner and Hang's former boss, allegedly sued Hang three times before.

Ji was represented by Michael Magnuson and Molly Magnuson of the Law Offices of Michael Magnuson.

Hang claimed Ji, his former boss and former friend, pursued the case after the relationship went sour after Hang started a competing business. United States et al. v. Pacific Chemical International Inc. et al., 14-CV7203 (C.D. Cal., filed Sept. 15, 2014).

The trial seems to have served as a field study on jury inference. U.S. District Judge Michael W. Fitzgerald repeatedly interjected to instruct the jury about what they could infer from witnesses invoking the Fifth Amendment, or having been convicted of a previous felony.

Before closing arguments began Thursday, the judge read jury instructions, which included: "You have heard that David Ji has been convicted of a felony. This conviction may be considered along with all the other evidence in deciding on whether or not to believe David Ji and how much weight to give his testimony and for no other purpose.

"You have heard Tony Hang and Mark Grieco decline to answer certain [questions] on the ground their Fifth Amendment privilege against self incrimination," Fitzgerald said. "...You are permitted but not required to draw the inference that the withheld information would have been unfavorable to Tony Hang ..."

"We are very grateful for the jury's time and attention to detail, thankful for the result of the case, and obviously very happy with how the trial turned out," defense attorney Liang said.