$8 Million in Penalties for Evading AD Duties, Violating Contract Ban on Foreign Input
The Department of Justice reports that a U.S. defense contractor and one of its subcontractors have agreed to pay $6 million and $2 million, respectively, to resolve allegations that they violated the False Claims Act by selling or conspiring to sell defective goods to the U.S. military and, in the case of the subcontractor, knowingly evaded antidumping duties.
According to a DOJ press release, the primary contractor’s contracts with the military prohibited the use of a specific input from foreign countries (except Canada) to maintain domestic manufacturing capability in the interest of national defense. However, the U.S. alleged that over a two-year period the subcontractor knowingly misrepresented the content of an input imported from China to avoid paying applicable AD duties of 305 percent. The U.S. further alleged that the contractor used this illegally imported input purchased from the subcontractor, which also violated the engineering specifications required by the contracts, in the goods it sold to the military.
The DOJ notes that prior to these civil settlements five former employees and agents of the subcontractor pleaded guilty to criminal offenses related to the importation scheme and were ordered to pay more than $14 million in restitution.