On November 14, 2013, the Department of Justice (DOJ) announced that Ohio-based Basco Manufacturing Co. (Basco) agreed to pay $1.1 million to resolve allegations that the company violated the False Claims Act by submitting false customs declarations to avoid paying duties on aluminum extrusions from China, which at the time were subject to combined antidumping and countervailing duties of over 400 percent.
As part of the case, the DOJ has also taken over the pending false claims allegations against four other companies and two individuals. The defendants named in the lawsuit are California-based C.R. Laurence Co., Florida-based Southeastern Aluminum Products Inc., Texas-based Waterfall Group LLC, New York-based Northeastern Aluminum Corp., Northeastern’s owner William Ma, and Robert Wingfield, the U.S. representative of Chinese exporter Tai Shan Golden Gain Aluminum Products Ltd. (Tai Shan).
Citing a public report, Jeff Henderson, director of Member Services at the Aluminum Extruders Council (AEC), said, “The AEC applauds the DOJ for their work in this investigation. The U.S. domestic extrusion industry can be confident that the Federal Government is committed to defending existing antidumping and countervailing duty orders protecting our industry from the illegal and unfair trade practices of Chinese extruders. This is the second known circumvention case brought to justice by the DOJ. This should send a warning to anyone who intends to violate the government’s orders that they will be found and prosecuted to the full extent of the law.”
In its November release, the Assistant Attorney General for the Justice Department’s Civil Division, Stuart F. Delery, said, “[c]ompanies that import products made abroad must comply with the law, including paying the import duties that protect domestic manufacturers and producers from unfair competition. The Department of Justice is committed to enforcing the law against those who fail to pay the government money it is owed, just as it will enforce the law against those who falsely claim government funds.”
According to the DOJ, Basco and the defendants named in the government’s lawsuit allegedly engaged in a scheme to avoid duties by shipping the aluminum extrusions manufactured by Tai Shan in the PRC (Peoples Republic of China) through Malaysia – a practice called transshipping. The U.S. government alleges that Basco and the defendants knew that the aluminum extrusions were merely repackaged in Malaysia and did not undergo a substantial transformation that may have justified changing the product’s country of origin from the PRC to Malaysia.
Rick Merluzzi, chairman of the AEC, stated, “Given the importance of the antidumping and countervailing duty orders to the domestic industry, the government’s aggressive enforcement of those orders to catch those who attempt to evade the duties is very welcome. The AEC remains committed to ensuring these orders are appropriately enforced and will continue to monitor any and all attempts to circumvent the orders by others.”