March 9, 2015 — Employee insiders often know more about their employers’ fraudulent schemes against the government than they report. To encourage whistleblowers to take action when they are aware of fraud against the government, like the failure to pay anti-dumping or countervailing duties, the False Claims Act allows tipsters to share in a portion of any recovery made in the lawsuit. When the government declines to intervene, the whistleblower’s share is greater. When the government takes over the case, the whistleblower’s share of any settlement or judgment, though still substantial, is reduced.
Aluminum Importers Allegedly Engaged in Transshipping to Avoid Customs Duties on Materials Originating in China
Three importers of extruded aluminum from China have consented to pay more than $3 million to resolve a whistleblower lawsuit. The government was notified of the charges when James F. Valenti Jr. filed a qui tam lawsuit in federal court in Florida. Valenti’s share of the government’s recovery is $555,100.
Valenti’s False Claims Act lawsuit alleged that C.R. Laurence Co. Inc., Southeastern Aluminum Products Inc. and Waterfall Group LLC concocted schemes to avoid paying customs duties on aluminum extrusions imported from the People’s Republic of China. The companies use the aluminum in their shower enclosures.
The U.S. government imposes anti-dumping and countervailing duties on imported materials from certain countries, including the People’s Republic of China. The duties help to level the playing field for American businesses competing against companies that dump foreign products on the U.S. market at below-cost pricing or that undercut the market with low pricing made possible because of foreign subsidies.
In this qui tam lawsuit, the U.S. government alleged that C.R. Laurence, Southeastern and Waterfall filed false declarations with the U.S. Department of Homeland Security’s Customs and Border Protection (CBP) in an attempt to evade the antidumping and countervailing duties. The companies allegedly claimed that Malaysia was the “country of origin” of the aluminum extrusions. Anti-dumping and countervailing duties are not imposed on materials from Malaysia.
In truth, the aluminum allegedly originated in the People’s Republic of China and was only shipped through Malaysia. The three aluminum importers allegedly engaged in this practice of “transshipping” to avoid the duties that all companies must pay.
The amounts that each company will pay in settlement are as follows:
- C.R. Laurence Co. Inc. – $2,300,000;
- Southeastern Aluminum Products Inc. – $650,000; and
- Waterfall Group LLC – $100,000.
Contact Us to File a False Claims Act Lawsuit Targeting Companies that Evade Anti-Dumping and Countervailing Duties
While Waters & Kraus is not handling this particular False Claims Act case, we are representing whistleblowers in similar lawsuits. If you have comparable claims against another importer of foreign goods, contact us by email or call our qui tam attorneys at 800.226.9880 to learn more about our practice and how we can work together to notify the government about fraudulent abuses. Michael Armitage and Louisa Kirakosian, two of the firm’s qui tam attorneys in the Southern California office, protect tipsters throughout the whistleblower lawsuit process.
