HOUSTON (CN)-The National U.S.-Arab Chamber of Commerce claims a former employee cost it $35,000 a month by counterfeiting its document-certification labels and siphoning off payments.
The National U.S.-Arab Chamber of Commerce, or NUSACC, is a nonprofit agency based in Washington, D.C. It sued its former employee Rand Zalzala in Harris County Court.
“NUSACC is America’s longest serving organization dedicated to facilitating business transactions between companies located in the United States, and the twenty-two nations of the Arab world,” according to the complaint.
NUSACC says it works with more than 25,000 businesses, mainly in the United States, to help them export goods to Arab countries by providing an essential document-certification service.
“Many Arab countries require consular approvals – a procedure that typically includes independent certification of U.S. commercial documents by NUSACC – before accepting imports from around the world,” the complaint states.
“Arab countries require these import controls to ensure proper documentation, to prevent corruption in the import process, and to discourage transshipments from third countries that could place Arab consumers at risk from substandard or potentially dangerous imports.
“In the United States, certifications of the origin of exports for Arab countries is conducted by NUSACC, which is authorized to provide this service by Arab ambassadors to the United States, by the League of Arab States, and by the General Union of Arab Chambers of Commerce, Industry, and Agriculture.”
To export goods from the United States to many Arab countries, a business must provide a certificate of origin, or a signed statement certifying where an export product was made, for the goods to clear Customs, according to the complaint.
NUSACC says errors in the commercial documents it certifies “are likely to cause costly delays for U.S. businesses” and “such errors may result in heavy fines, as well as delays in clearing of goods and shipments at ports of entry.”
Before March 2011, NUSACC says, it used a multi-colored ink stamp for its certification of certificates of origin.
But after the organization became concerned about falsification of the stamp at its Houston offices, it hired a company to develop a new label that “incorporated sophisticated security measures that helped prevent NUSACC certification from being counterfeited or duplicated.”
According to the complaint, “Counterfeiting of NUSACC certification labels harms NUSACC financially to an estimated value of $35,000 per month. It also damages NUSACC’s reputation and good name, and it undermines NUSACC’s value to its American clients and foreign interlocutors.”
The nonprofit says that in the 4 months after it introduced its new security label its document-certification revenue jumped by as much as $55,000 a month “including large numbers of documents processed by defendant” Rand Zalzala at its Houston office.
But, “A few months after introduction of NUSACC’s security label, in or about August 2011, NUSACC’s revenues pertaining to certification for Arab countries plummeted to under $100,000 per month,” the complaint states.
“Given the lack of change in demand for certification, coupled with the fact that no new providers of certification to Arab countries entered the U.S. market … the most plausible explanation for this sudden drop is that false security labels had been developed and were supplanting demand for NUSACC’s legitimate security label,” NUSACC says.
On Sept. 30, NUSACC says, it learned that a third party had submitted documents to the United Arab Emirates Embassy using counterfeit security labels purportedly issued by its Houston office.
NUSACC the suspect labels which were found to be “nearly identical” to its labels, but lacked the new security features.
“Although the documents were purported to have been certified by NUSACC’s Houston office, the certification was a forgery,” the complaint states.
NUSACC says it contacted the third-party source of the counterfeited labels.
“The third party claimed that it had paid for the certification labels; however, NUSACC’s records in the Houston office did not confirm that payment. As part of its investigation, NUSACC management in the Washington office contacted Zalzala in the Houston office and requested that Zalzala provide information and a sworn affidavit to support NUSACC’s claims against the third party. Zalzala abruptly left NUSACC’s Houston office that very day and never returned,” according to the complaint.
Zalzala had worked for the nonprofit for 14 years.
NUSACC says its subsequent investigation of Zalzala’s computer implicated her in the counterfeiting, and says it found that several of its numbered certification labels were missing from its Houston office.
“On information and belief, Zalzala was unlawfully profiting by making and using counterfeit security labels and selling them. It is unclear at this time whether the third party was complicit in the scheme,” NUSACC says.
NUSACC seeks damages from Zalzala for breach of fiduciary duty, misappropriation of identity for a commercial purpose and advantage, conversion, fraud, tortious interference, unjust enrichment and unfair competition.
It also seeks a permanent injunction to stop Zalzala from using its property, confidential information and trademarks, and ordering her to return all its property.
NUSACC is represented by Kenneth Krock of Houston.