Three New York based apparel importers have agreed to pay more than $2.7m to settle charges that they defrauded US Customs by evading quotas and undervaluing garments made in China.

In actions going back to 2001, the companies passed off Chinese-made garments as coming from either Russia or Korea, which meant they were able to import goods into the US that would otherwise have been prohibited.

The garments were sold by retailers including Wal-Mart Stores Inc, JC Penney Co Inc, Family Dollar Stores Inc, Kohls Corp and Marshalls, a division of TJX Companies Inc.

Since 2003, the companies and their principals also declared the value of certain goods entering the US to be less than the cost charged by the Chinese manufacturers.
 
They created shell companies which were named as the importers.
 
In total, the three apparel companies - Intertex Apparel Group Ltd, JJ Basics Inc, and Ben's Clothing Inc, trading as Red Zone - as well as their principals Jack Setton, Marc Setton, Vivek Bendre, Jacob Bensadigh and Steve Bensadigh, agreed to pay the government $2,798,872.50 to settle the charges.

However, they have not admitted any wrongdoing or liability.