$549.5 Million Penalty in False Claims Act Case Against Duty Evasion

The Department of Justice reports that two companies and four affiliated warehousing companies have agreed to pay a total of $549.5 million to settle allegations that they violated the False Claims Act by knowingly and improperly evading, or conspiring to evade, antidumping and countervailing duties on aluminum extrusions imported from China.

Under the FCA importers are civilly liable for (1) knowingly making, using, or causing to be made or used a false record or statement material to an obligation to pay or transmit money (e.g., import duties) or property to the U.S. government, or (2) knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the U.S. government. Damages of up to three times the amount of money improperly withheld, as well as other penalties, may be imposed. The qui tam provisions of the FCA allow a private party to file an action on behalf of the U.S. and receive a portion of any recovery.

According to a DOJ press release, the settlement resolves allegations that for three years the companies knowingly made, and caused others to make, false statements on entry summaries that were material to obligations to pay AD/CVD duties. Specifically, the companies misrepresented more than 2.2 million aluminum extrusions that were spot-welded together to make them appear to be functional pallets as finished merchandise not subject to AD/CVD duties.

The DOJ noted that its Civil Division coordinated this action through the Trade Fraud Task Force, a cross-agency effort “designed to pursue enforcement actions against parties who seek to evade tariffs and other duties, as well as smugglers who seek to import prohibited goods into the American economy.” The DOJ added that FCA matters will continue to be “on the forefront of the battle against fraud.”