Basco Pays More Than $1 Million to Make Alleged False Claims Act Violations Go AwayJanuary 16th, 2014 by DWM Magazine
An Ohio manufacturing company recently agreed to pay more than $1 million to resolve allegations that it violated the False Claims Act by submitting false customs declarations to avoid paying duties on aluminum extrusions from China that were at the time subject to combined antidumping and countervailing duties of more than 400 percent.
According to the Department of Justice, Basco Manufacturing Co. has consented to paying $1.1 million after being named as one of four companies to have allegedly engaged in an illegal practice known as transshipping to avoid paying required duties by shipping the aluminum extrusions manufactured by the Chinese company Tai Shan through Malaysia. In its lawsuit, the government alleges that the defendants knew the aluminum extrusions were merely repackaged in Malaysia and had not undergone any substantial transformation that would have justified the changing of the product’s country of origin from China to Malaysia.
“Companies that import products made abroad must comply with the law,” says Stuart F. Delery, the assistant attorney general for the Justice Department’s Civil Division, “including paying the import duties that protect 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.”
Don Gamble, Basco’s executive vice president for sales and marketing, says there were “multiple disagreements” between his company and DOJ before Basco opted to put the matter to rest. Under terms of the agreement, Basco admits no wrong-doing.
“We just felt like it was better to put it behind us and move on,” Gamble said.
According to the DOJ, Basco and the other 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.
The Department of Commerce is responsible for assessing imports, while the Department of Customs and Border Protections collects the antidumping and countervailing duties in an effort to protect American businesses by leveling the playing fields for domestic products. Chinese-made aluminum extrusions have been subject to antidumping and countervailing duties since 2010, while no such fees are charged on imports of such items from Malaysia.
Whistleblower James F. Valenti first brought the allegations against Basco and the other defendants in a complaint filed with the U.S. District Court for the Middle District of Florida under a provision of the False Claims Act that allows private parties to sue companies and individuals at the government’s behalf who have falsely claimed federal funds or have made false statements to avoid paying funds owed to the government.
Jeff Henderson, the director of member services at the Aluminum Extruders Council (AEC), lauded the federal government for its efforts.
“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,” he says.