Pennsylvania patio furniture company Grosfillex Inc. has agreed to pay $4.9 million to settle allegations it dodged import duties on Chinese aluminum products by filing false customs forms and disguising materials as furniture kits.
The settlement resolves claims that Grosfillex violated the False Claims Act by evading antidumping and countervailing duties, which are designed to protect American manufacturers from unfairly priced foreign goods.
The Justice Department announced that Grosfillex knowingly submitted false customs forms to U.S. Customs and Border Protection, claiming certain extruded aluminum furniture parts from China weren’t subject to import duties.
In some cases, the company allegedly repackaged aluminum extrusions as sham furniture “kits” to avoid detection. In others, Grosfillex failed to correct customs forms even after learning they contained false information about duty obligations.
“Antidumping and countervailing duties protect American companies from unfair subsidies and trade practices that harm domestic industries,” Assistant Attorney General Brett Shumate of the Justice Department’s Civil Division said in a news release. “Today’s settlement demonstrates that the Justice Department will continue to actively pursue those who knowingly fail to pay customs duties.”
The case originated from a whistleblower lawsuit filed by Edward Wisner, a former employee of Grosfillex. Under the False Claims Act, private citizens can sue on behalf of the government and share in recoveries.
Wisner will receive $962,662.74 from the settlement for bringing the scheme to light.
“This settlement should serve as a warning that the United States Attorney’s Office for the Eastern District of Pennsylvania will use every tool available to combat fraud in international trade,” U.S. Attorney David Metcalf for the Eastern District of Pennsylvania said, per the news release. “We will pursue those who seek an unfair advantage in U.S. markets by attempting to evade paying the customs, duties, or tariffs on foreign imports meant to level the playing field for U.S. manufacturers.”
The Commerce Department assesses antidumping duties to combat foreign companies selling products below cost in U.S. markets. Countervailing duties offset the subsidies foreign governments provide to their exporters.
Both mechanisms aim to protect domestic manufacturers from unfair competition.
“The investigation into Grosfillex Inc. highlights our relentless dedication to enforcing our nation’s trade laws and protecting the integrity of our economy,” said Special Agent in Charge Edward V. Owens of Homeland Security Investigations at the Philadelphia office.
The settlement represents allegations only, with no determination of liability. The investigation involved coordination between the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Eastern District of Pennsylvania, and Customs and Border Protection.
Tips about potential customs fraud can be reported to CBP here.