AD Duty Avoidance Scheme Could Yield Criminal Penalties, Prison Time
A Chinese company, its former president, and others have been indicted for orchestrating a complex financial scheme to avoid U.S. antidumping duties of up to 400 percent on aluminum extrusions from China, according to a press release from U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. The three-year scheme defrauded the U.S. out of $1.8 billion in AD duties.
The press release states that the Chinese company exported to the U.S. large amounts of aluminum extrusions that were spot-welded together to make them appear to be functional pallets, which would be finished goods not subject to the AD duties. The aluminum was then stockpiled at warehouses in southern California and the former president arranged bogus sales of the pallets to companies he controlled in the area to falsely inflate the value of the Chinese company. Because there was no actual demand for the pallets, aluminum melting facilities were built or acquired to reconfigure the aluminum into a form with commercial value.
The indictment also alleges a massive money laundering scheme that was used by the defendants to funnel hundreds of millions of dollars through shell companies to the U.S.-based aluminum companies controlled by the former president. The funds were then transferred to the Chinese company and other shell companies as payments for the aluminum.
According to the press release, all of the defendants have been charged with conspiracy, nine counts of wire fraud, and seven counts of passing false and fraudulent papers through a customhouse. Nearly all of the defendants also face seven counts of international promotional money laundering. If they were to be convicted, the individual defendants would face a statutory maximum penalty of five years in federal prison for the conspiracy charge and up to 20 years for each of the remaining 23 counts. HIS adds that if the companies were to be convicted they would face substantial monetary penalties.
For more information on compliance with AD/CV duty requirements, please contact trade attorney Kristen Smith at (202) 730-4965.