And Yet Another Customs Fraud Settlement -- Two Canadian Steel Companies Pay $19M to Settle False Claims Act Allegations

By the Constantine Cannon Whistleblower Team

Last Wednesday (May 20), the Department of Justice (DOJ) announced that two Canadian steel companies — Farjess Inc. and Royal Canadian Steel Inc. — and their owner Feroz Jessani agreed to pay $19 million to settle allegations they violated the False Claims Act by failing to pay customs duties owed on flat-rolled steel that was manufactured in Europe and Asia.[1]

It comes just a week after DOJ announced the whopping $549.5 million that California-based Perfectus Aluminum agreed to pay to settle False Claims Act charges of evading customs duties on aluminum extrusions imported from China.  That was the largest customs fraud settlement ever, ten times larger than the prior record amount of $54.4 million that Ceratizit USA agreed to pay in December to settle similar allegations.

What Was the Alleged Customs Fraud By Farjess and Royal Canadian?

An importer of goods into the United States must declare to Customs and Border Protection (CBP) the country of origin of the goods, their value, the customs duties they are subject to, and the amount of customs duties the importer owes.  According to the Government, Farjess, Royal Canadian Steel, and Jessani misrepresented to CBP that the country of origin of certain flat-rolled steel was Canada or the United States, when the true country of origin was China, Indonesia, Italy, Turkey, or Vietnam.  They did so to avoid paying the customs duties they owed on these European and Asian imports.

Is Customs Fraud a DOJ Enforcement Priority Under the False Claims Act?

As it has done in all its recent customs fraud settlements, the Government stressed in its press release announcing the settlement its strong commitment to going after customs fraud:

• • “Import duties serve an important role in protecting our national interests generally and the American steel industry in particular. [DOJ] will zealously pursue anyone who fraudulently evades the duties owed on steel products imported into this country.”  [DOJ Civil Chief Brett Shumate]
  • “This settlement underscores the United States’ strong commitment to enforcing trade laws and maintaining the integrity of our supply chains. . . . This case sends a clear message that CBP . . . will continue to uphold the rule of law and protect the interests of American businesses and consumers.”  [CBP Acting Director of Center of Excellence and Expertise Jonathan Restivo]
  • “Since 1789, the United States has imposed tariffs and collected customs duties on imports to fund government operations, provide public services and protect American industry. This record-setting settlement underscores [Homeland Security’s] commitment to protecting American manufacturers and consumers from unfair trade practices and ensuring the integrity of our nation’s economic policies.”  [Acting Special Agent of Homeland Security Investigations Jared Murphey]

This commitment is further reflected in the record Perfectus and Ceratizit settlements and the many other False Claims Act settlements involving customs fraud over the past year — Harman International (November 2025); Allied Stone (August 2025); Global Plastics and Marco Polo International (July 2025); Grosfillex (July 2025); Evolutions Flooring (March 2025).  It is further reflected in (i) DOJ’s launch last August of a Customs Fraud Task Force to “aggressively pursue” customs fraud and smuggling, and (ii) DOJ’s expansion last May of its Corporate Whistleblower Awards Pilot Program to specifically target customs fraud.

According to Constantine Cannon whistleblower lawyer Dan Noel, “With all this recent enforcement activity, the government has made it very clear that customs fraud remains a top priority.”  Noel’s own experience in bringing these cases further confirms DOJ’s hearty appetite for customs fraud matters.  He says, “No matter the district where we file these False Claims Act matters, the DOJ response has taken our allegations extremely seriously and indicated they will devote the resources necessary to fully investigate the matter.”

What Role Do Whistleblowers Play in Reporting Customs Fraud?

Noel expects the string of customs frauds settlements to continue, especially given the prevalence of whistleblowers in bringing these matters forward under the qui tam provisions of the False Claims Act.  These provisions allow whistleblowers to bring lawsuits on behalf of the Government against companies committing customs fraud and other fraud against the Government.  In return, they can receive up to 30% of the Government’s recovery.

The majority of customs fraud cases have been originated by whistleblowers under these provisions of the statute.  That is how the most recent enforcement action against Farjess, Royal Canadian, and Jessani originated.  The whistleblower in this matter was Shamsh Dhala, a broker who worked with Farjess.  Dhala will receive a whistleblower award of roughly $3.6 million from the proceeds of the Government’s recovery.

Whistleblowers were also responsible for originating the Perfectus, Ceratizit, Harman, Allied Stone, Grosfillex, and Evolutions Flooring matters under the qui tam provisions of the False Claims Act.  Noel says, “Given the difficulty of detecting these schemes from outside the company, it is not surprising that so many of these matters are brought by whistleblowers with an inside window into the wrongdoing.”

Recognizing this reality, the Government has used these settlements to encourage other customs fraud whistleblowers to come forward with the promise of financial awards.  As it did in the press releases announcing the Perfectus and Ceratizit settlements, DOJ specifically called out whistleblowers in the most recent press release urging whistleblowers “to alert the government to credible allegations of fraud, including utilizing the qui tam provisions of the False Claims Act or through the Department’s Corporate Whistleblower Program.”

Constantine Cannon Has Substantial Experience Representing Customs Fraud Whistleblowers Under the False Claims Act

Constantine Cannon has substantial experience representing customs fraud whistleblowers under the False Claims Act.  In one of our more recent cases, the firm represented a whistleblower alleging an auto parts distributor misclassified brake pads imported from Asia to avoid millions of dollars of customs duties.  The company settled that matter for $8 million with our client receiving 18.5% of the Government’s recovery.

If you would like to learn more about our other whistleblower successes, customs fraud, the False Claims Act, or what it means to be a whistleblower more broadly, please do not hesitate to contact us.  We will connect you with an experienced member of the Constantine Cannon whistleblower team for a free and confidential consultation.

[1]  See https://www.justice.gov/opa/pr/canadian-steel-companies-and-owner-pay-19m-settle-false-claims-act-allegations-relating.

Tagged in: Customs Fraud, False Claims Act,