Ohio-Based Basco Manufacturing Co. to Pay $1.1 Million for Allegedly Falsifying Customs Documents to Evade Import Duties on Chinese Products
United States Sues Four Other Companies and Two Individuals for Similar Violations
The Department of Justice announced today that Ohio-based Basco Manufacturing Co. (Basco) has agreed to pay $1.1 million to resolve allegations that it violated the False Claims Act by making false customs declarations to avoid paying duties on products imported from a Chinese manufacturer, and that it has filed a complaint against four other companies and two individuals based on similar allegations. 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).
“Companies that import products made abroad must comply with the law, including paying the import duties that protect domestic manufacturers and producers from unfair competition,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery. “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.”
The government’s settlement and complaint involve allegations that Basco and the companies named in the lawsuit made false declarations to the U.S. Department of Homeland Security Customs and Border Protection to avoid paying antidumping and countervailing duties on aluminum extrusions imported from manufacturer Tai Shan in the People’s Republic of China (PRC). Allegedly, these companies misrepresented that the aluminum extrusions, which are used in the manufacture of shower enclosures and other products, were imported from Malaysia.
The Department of Commerce assesses, and Customs and Border Protection collects, antidumping and countervailing duties to protect U.S. businesses and level the playing field for domestic products. Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost, while countervailing duties offset foreign government subsidies. Imports of PRC-made aluminum extrusions have been subject to antidumping and countervailing duties since 2010. No such duties are due on imports of such items made in Malaysia.
“Circumvention of our country’s import laws causes substantive harm to U.S. businesses and our economy,” said Acting U.S. Attorney for the Middle District of Florida A. Lee Bentley III. “These laws must be strictly enforced so that our companies can remain competitive in markets throughout the world.”
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 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.
“Antidumping and countervailing duties enforcement is a priority for Customs and Border Protection due to the significant role that it plays in the economic security of the United States,” said Director of Field Operations for Customs and Border Protection Vernon Foret. “Customs and Border Protection is responsible for facilitating the legitimate flow of trade, while enforcing the laws against the evasion of duties intended to protect against unfair trade practices.”
The allegations against Basco and asserted in the government’s complaint were brought by whistleblower James F. Valenti Jr. in the U.S. District Court for the Middle District of Florida under the qui tam, or whistleblower, provisions of the False Claims Act. The Act permits private parties to sue companies and individuals on behalf of the government who have falsely claimed federal funds or, as in this case, made false statements to avoid paying funds owed to the government. The Act also allows the government to intervene in and take over a lawsuit, as it has done in this case, and entitles the whistleblower to receive a share of any funds recovered through the lawsuit. Valenti’s share of the Basco settlement has not yet been determined.
The investigation was handled by the Department of Justice Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Middle District of Florida; the Department of Homeland Security U.S. Customs and Border Protection and Immigration and Customs Enforcement; and the Department of Commerce International Trade Administration.
The lawsuit is captioned United States ex rel. Valenti v. Tai Shan Golden Gain Aluminum Products Ltd., et al., Case No. 11-cv-368 (M.D. Fla.). The government’s claims against Basco, and against the defendants named in the government’s complaint, are allegations only; there has been no determination of liability.