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DOJ Catch Of The Week -- Ameri-Source

Posted  February 26, 2016

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to the Pennsylvania-based Ameri-Source importer companies — Ameri-Source International Inc., Ameri-Source Specialty Products Inc., Ameri-Source Holdings Inc. — their owners, Ajay Goel and Thomas Diener, and the related importer, SMC Machining LLC, incorporated at Goel’s direction and formerly owned by his wife.  On Monday, they agreed to pay $3 million to resolve charges they violated the False Claims Act by engaging in a scheme to evade customs duties on imports of small-diameter graphite electrodes from China.  These rods are used as fuel in electric arc and ladle furnaces, such as those used in steel manufacturing.  See DOJ Press Release.

According to the government, Ameri-Source evaded antidumping duties on 15 shipments of the electrodes from China from December 2009 to March 2012.  The Department of Commerce assesses these duties, and the Department of Homeland Security collects them, to protect U.S. manufacturers from foreign companies’ “dumping” products on U.S. markets at prices below cost.  The government claims Ameri-Source misclassified the size of the electrodes to avoid paying the duties which do not apply to larger diameter graphite electrodes.  Ameri-Source International admitted to misrepresenting the size of the subject rods and was sentenced to pay a $250,000 criminal fine, which was applied to the $3 million settlement amount.

In announcing the settlement, a string of government enforcers stressed their commitment to going after companies seeking to gain an unfair competitive advantage by avoiding the customs laws.  DOJ Civil Division Chief Benjamin Mizer pointed to the settlement as a demonstration that his agency will pursue “claims against anyone involved in a scheme to seek an unfair advantage in U.S. markets by evading duties on imported goods, including the individuals who run the companies.”  U.S. Attorney David Hickton for the Western District of Pennsylvania, echoed this strong sentiment: “This office’s aggressive criminal and civil enforcement efforts . . . demonstrate our resolve to ensure a level playing field for all.”  And Homeland Security Special Agent John Kelleghan joined in: “HSI special agents will continue to protect the revenue of the United States and aggressively investigate individuals and companies who attempt to operate outside our laws and regulations.”

The allegations originated in a whistleblower lawsuit filed by Graphite Electrode Sales Inc. under the qui tam provisions of the False Claims Act.  The company will receive a whistleblower award of approximately $480,000 from the proceeds of the government’s recovery.

Tagged in: Catch of the Week, Customs Fraud, FCA Federal, Whistleblower Case, Whistleblower Eligibility, Whistleblower Rewards,