The Justice Department announced on Sept. 4 that it settled two more False Claims Act whistleblower suits related to evasion of antidumping and countervailing duties on aluminum extrusions from China, with Robert Wingfield of Texas and Bill Ma of New Jersey agreeing to pay $385,000 and $50,000, respectively (here). According to DOJ, Wingfield, the U.S. sales representative for Chinese exporter Tai Shan Golden Gain Aluminum Products Ltd., “conspired with domestic importers to submit false information to the government to evade duties” by misrepresenting the Chinese extrusions as goods of Malaysia. Ma formed a company to act as importer of record “in an attempt to shield the real importers from liability,” said DOJ. The two settlements are the latest in a series that stem from the allegations of James Valenti, the CEO of sourcing consultant World Trade Group (see 13111924 and 1502170019).
The following lawsuits were filed at the Court of International Trade during the week of Aug 24-30:
The Court of International Trade will allow a fraud penalty case against a Florida seafood importer to proceed, denying on Aug. 24 a motion to dismiss from Rupari Food Services. Rupari contended CBP did not provide enough evidence of fraud to back its $2.8 million penalty case. However, relying heavily on the controversial testimony of a Rupari customer relating a conversation he had with a now-deceased Rupari employee, CIT ruled that the government made enough of a case to survive a motion to dismiss.
No lawsuits are listed in the court's PACER database as having been filed at the Court of International Trade during the week of Aug 17-23:
The Court of International Trade on Aug. 20 denied a motion from the government to collect penalties for negligent misclassification from an importer that appears to have gone out of business (here). Following the company’s prior disclosure that it had misclassified entries of medical scrubs, Selecta had filed a prior disclosure and paid CBP over $800,000 in unpaid duties. The government then brought a penalty action under 19 USC 1592, seeking to collect a civil penalty of $51,102. By then Selecta had disappeared, so CIT declared the company to be in “default,” meaning the court had to accept all of the government’s arguments to be true, provided they are sound. However, in its complaint, the government alleged only that Selecta had made “material false statements” that “constituted negligent violations” of Section 1592 “because Selecta failed to exercise reasonable care.” The complaint lacked “specific, well-pled facts” to convince the court that a negligent violation of Section 1592 had occurred, said CIT. As such, the court denied the government’s motion, and gave it 60 days to fix its complaint before the case is dismissed.
A Canadian drug distributor and several of its high-ranking employees face years in prison and at least $78 million in forfeited proceeds from a scheme to smuggle unapproved drugs in to the U.S., according to an indictment unsealed on Aug. 7 by the Montana U.S. District Court. CanadaDrugs.com and its CEO Kristjan Thorkelson, as well as several affiliated companies and their executives and sales managers, are being charged with conspiracy, smuggling and money laundering, with potential prison sentences ranging up to 20 years.
The U.S. Court of Appeals for the D.C. Circuit on Aug. 17 upheld its own year-old ruling decision finding parts of the Securities and Exchange Commission’s Conflict Minerals Rule to be unconstitutional (here). In response to an SEC request for rehearing, the appeals court continued to hold that the requirement to say if a product is “not DRC conflict free” in company reports and on company websites illegally compels speech in violation of the First Amendment. Under the Conflict Minerals Rule, companies that use tantalum, tin, gold or tungsten that may have originated in the Democratic Republic of the Congo or an adjoining country must declare their products are not DRC conflict free (see 12082308). Reports for 2015 were due on June 1. The latest guidance from the SEC, issued in the aftermath of the D.C. Circuit’s original ruling in April 2014 that found the regulations unconstitutional (see 14041517), is that companies do not have to identify the products as "DRC conflict undeterminable" or "not found to be DRC conflict free,’’ but should disclose the facilities used to produce the conflict minerals, the country of origin of the minerals and the efforts to determine the mine or location of origin (see 14050226).
The following lawsuits were filed at the Court of International Trade during the week of Aug 10-16:
Bauxite pellets containing additives that are used as proppants in the hydraulic fracking industry are classifiable as bauxite ore, and not as ceramic wares articles, said the Court of International Trade in a July 22 decision that was released publicly on Aug. 12. Over arguments to the contrary from the government, CIT found that dopants added to the bauxite during production to lower the firing temperature and increase the crush resistance of the final product did not change the basic character of the material as bauxite. It also ruled that the resulting products did not have to be used to make metal in order to be classified as an ore.
The following lawsuits were filed at the Court of International Trade during the week of Aug 3-9: