By Jeffrey A. Newman Esq. MBA
The Department of Justice (“DOJ”) announced a $549.5 million settlement with Perfectus Aluminum Acquisitions LLC (“Perfectus Aluminum”) and four affiliated companies (collectively, ending resolve allegations that they violated the False Claims Act (“FCA”) by evading customs duties.[1] The settlement is the largest trade-related settlement under the FCA.
DOJ alleged that Perfectus Aluminum Inc., Perfectus Aluminum Acquisitions LLC and four affiliated warehousing companies made false statements on customs forms to avoid paying antidumping and countervailing duties on more than 2.2 million aluminum extrusions imported from China between 2011 and 2014. The companies allegedly spot-welded the aluminum extrusions together to make them seem like “pallets,” which were not subject to duties. The government claims that the companies did not have customers for the pallets, which the government alleges were never sold.
In August 2021, a federal jury found the aluminum and warehouse companies guilty of conspiracy (18 U.S.C. § 371), wire fraud (18 U.S.C. § 1343) and passing false and fraudulent papers through a customhouse (18 U.S.C. § 545). The aluminum companies also were found guilty of international promotional money laundering (18 U.S.C. § 1956(a)(2)(A)). In April 2022, the federal district court ordered the six companies to pay $1.83 billion in restitution and sentenced them to five years of probation and also entered a final order of civil forfeiture for the government to seize the pallets.
Perfectus Aluminum and the Warehouses imported large volumes of aluminum extrusions from China, which are subject to antidumping and countervailing duties upon importation into the United States. The aluminum extrusions were spot-welded together to resemble pallets and declared upon importation as finished merchandise exempt from the antidumping and countervailing duties. False Claims cases were brought against Perfectus Aluminum and the Warehouses in 2015, 2017, and 2018.
The Perfectus Defendants knowingly and improperly avoided antidumping and countervailing duties owed on more than 2.2 million aluminum extrusions in the form of “pallets,” which they misrepresented to CBP as finished merchandise not subject to antidumping and countervailing duties. The pallets were simply aluminum extrusions that were spot-welded together to make them appear to be functional pallets. In fact, there were no customers for these pallets imported by the Defendants between 2011 and 2014, and no pallets were ever sold. On August 23, 2021, a jury in the Central District of California convicted the Perfectus Defendants of Conspiracy to Commit an Offense Against the United States or Defraud the United States, among other things. United States v. Perfectus Aluminum Inc., et al., No. 2:19-cr-00282-GK (C.D. Cal.).
In addition to the recent FCA resolution, Perfectus Aluminum was criminally convicted of conspiracy to defraud the United States, wire fraud, and money laundering in August 2021.[2] The convictions were appealed and then affirmed by the U.S. Court of Appeals for the Ninth Circuit in July 2024.[3] As part of those convictions, Perfectus Aluminum and the Warehouses were ultimately ordered to pay over $1.8 billion in restitution to U.S. Customs and Border Protection (“CBP”).
Jeffrey Newman, JD, MBA, a former prosecutor, is a whistleblower lawyer whose firm represents physicians and other healthcare providers who become whistleblowers in healthcare fraud cases. The firm also takes cases involving tariff fraud and export control fraud. Whistleblower laws in the U.S. allow individuals with information about export control violations or tariff fraud to report it under the False Claims Act, which, if successful, awards the whistleblower a percentage of the amount collected. The Firm’s website is www.JeffNewmanLaw.com. Attorney Newman can be reached at Jeff@Jeffnewmanlaw.com or at 617-823-3217. For other blogs, see: http://JeffNewmanLaw.com
