December 19, 2013 — The U.S. Department of Justice relies on whistleblowers to stop companies from cheating the government. The qui tam provisions in the False Claims Act give inside employees the tools they need to thwart fraudulent attempts to escape the payment of duties on imported products. In exchange for filing a lawsuit on behalf of the federal government, informants are rewarded with a portion of any lawsuit proceeds.
Basco Allegedly Submitted Phony Customs Documents to Dodge Import Duties on Chinese Goods
Basco Manufacturing Co. (Basco) has consented to pay $1.1 million to settle a whistleblower lawsuit alleging that the Ohio manufacturer violated the federal False Claims Act by making false customs declarations as part of a scheme to avoid paying duties on Chinese imports. The U.S. Department of Justice has announced that it has filed similar allegations against four other companies and two individuals.
To protect domestic companies from unfair competition by foreign manufacturers that “dump” their products for sale in the U.S. at below-cost prices, while receiving subsidies from their own governments at home, the Department of Commerce assesses antidumping duties on such foreign products. These countervailing duties offset the foreign subsidies and level the playing field for American companies. The duties are collected by U.S. Customs and Border Protection.
Basco manufactures shower enclosures that incorporate doors with aluminum frames. Since 2010, aluminum extrusions imported from China have triggered the antidumping and countervailing duties. Aluminum extrusions from Malaysia are not subject to the duties.
According to the Justice Department, Basco allegedly participated in a “transshipping” scheme to circumvent the duties by purchasing aluminum extrusions made by Tai Shan in China and shipping them to Malaysia first and then to the U.S. Basco allegedly knew that the Tai Shan aluminum extrusions were simply repackaged in Malaysia and that no substantial transformation took place that would warrant describing the aluminum’s country of origin as Malaysia rather than China. Nevertheless, Basco allegedly gave false declarations to the U.S. Department of Homeland Security Customs and Border Protection about the real country of origin just to escape the payment of antidumping and countervailing duties.
The whistleblower in the case is James F. Valenti Jr. His share of the $1.1 million settlement in the case against Basco has not yet been finalized.
Insiders on the Front Lines Fighting Fraudulent Scams Against Government
False Claims Act violations like those exposed here involving Basco are often discovered when whistleblower employees collaborate with government officials. The whistleblower lawyers at Waters & Kraus have a proven track record for offering knowledgeable legal counsel with successful results for brave informants. Contact us by email or call our False Claims Act attorneys at 855.784.0268 to discuss filing a whistleblower lawsuit.