Importers to Pay $3 Million to Settle Competitor's AD Duty Evasion Whistleblower Suit
Three Pennsylvania importers and their corporate officers will pay $3 million to settle another importer’s whistleblower lawsuit that alleged the companies evaded antidumping duties, said the Justice Department on Feb. 22 (here). Graphite Electrode Sales, purportedly the largest importer of the product in the U.S., alleged in a False Claims Act suit that Ameri-Source International, Ameri-Source Specialty Products, Ameri-Source Holdings, corporate officers Ajay Goel and Thomas Diener, and a cross-owned importer, SMC Machining, engaged in the duty evasion scheme. Per the terms of a settlement agreement, the importers pleaded guilty Feb. 22, some 10 days after the government joined the case.
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Under the agreement, Ameri-Source admitted to falsely declaring that graphite electrodes it imported from China had a diameter greater than 16 inches in an effort to escape AD duties, which cover electrodes with a diameter of 16 inches or less. The evasion cost the government $2,137,420 in uncollected AD duties, said DOJ. Ameri-Source also pleaded guilty to criminal smuggling charges, and was immediately sentenced by a federal judge to pay a $250,000 penalty, it said.
According to the whistleblower complaint filed by Graphite Electrode Sales in 2013, Ameri-Source and its owners and affiliates also declared the electrodes under an HTS number for graphite rods and falsely represented that the Chinese-origin electrodes were from India and South Korea. In some instances, an apparently related company in India imported graphite electrodes from China for “reworking” before exporting them to Ameri-Source in the U.S. Investigators hired by Graphite Electrode Sales found the Indian company was a “shell company” to transship electrodes that only operated a warehouse in Mumbai. Ameri-Source did not admit to these charges in the settlement. It did not immediately respond for comment.
The complaint alleged that Graphite Electrode Sales was losing customers to Ameri-Source as a result of the evasion scheme. The market price for small diameter graphite electrodes in 2013 was $2.25 per pound, but Ameri-Source was offering them at $1.85 per pound, a price at which only Chinese manufactures are capable of selling, it said. “There are no legitimate suppliers that are capable of marketing electrodes at $1.85 per pound to customers in the United States, other than Chinese manufacturers.” Graphite Electrode Sales will receive $480,000 of the settlement for its role as whistleblower.
Email ITTNews@warren-news.com for a copy of the settlement or complaint.