Basco to Settle False Customs Claims For $1.1M; Whistleblower Amount TBD

Posted: 11/25/2013  browse the blog archive

Basco Manufacturing Co. (Basco) has agreed to pay $1.1 million to resolve allegations that it violated the False Claims Act by making false customs declarations to avoid paying duties on products imported from the PRC (People’s Republic of China), the Department of Justice announced last week.

The U.S. government alleged that Basco made false declarations to the U.S. Department of Homeland Security Customs and Border Protection to avoid paying antidumping and countervailing duties on aluminum extrusions imported from the PRC.  These companies allegedly misrepresented that the aluminum extrusions, used in the manufacturing of shower enclosures and other products, were imported from Malaysia.

Antidumping and countervailing duties exist to protect U.S. businesses and level the playing field for domestic products. Antidumping duties protect against foreign companies “dumping” products on U.S. markets at prices below cost, while countervailing duties offset foreign government subsidies. Unlike the PRC, there are no duties due for aluminum extrusions imports made in Malaysia.

Basco allegedly engaged in a scheme to avoid duties by shipping the aluminum extrusions manufactured by in the PRC through Malaysia, a practice called transshipping.   The U.S. government alleges that Basco and the defendants knew that the aluminum extrusions were merely repackaged in Malaysia and did not undergo a substantial transformation that may have justified changing the product’s country of origin from the PRC to Malaysia.

The lawsuit was originally filed by James F. Valenti Jr., a public policy lawyer, under the whistleblower provisions of the False Claims Act.  The False Claims Act allows private parties with knowledge of fraud against the government to sue on behalf of the government and share in the recovery.  Valenti’s portion of the settlement has yet to be decided.

The Chanler Group, in association with the Hirst Law Group, represents whistleblowers who take action under the False Claims Act to report fraud committed against the federal and state governments.  We have years of experience representing whistleblower clients who uncover fraud of every kind perpetrated against our government including, health care fraud, contract fraud, and tax fraud.  Read more about our expertise in False Claims Act cases and how you can take action.