$3 Million Settlement for False Claims Act Suit Alleging Evaded Customs Duties

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On Monday, February 22nd, 2016, the Department of Justice announced that four Pennsylvania-based companies and two individuals had agreed to pay $3 million to settle a False Claims Act Suit involving customs duties. The companies—Ameri-Source International Inc., Ameri-Source Specialty Products Inc., Ameri-Source Holdings Inc., and SMC Machining LLC—and the individuals—Ajay Goel and Thomas Diener – were accused with evading customs duties on imports of small-diameter graphite electrodes from China, which are used as fuel in electric arc and ladle furnaces. The U.S. government alleged that the companies had deliberately misclassified the electrodes as a larger size from December 2009 to March 2012; because larger size electrodes are not subject to antidumping duties, the misclassification allowed the companies to evade the necessary customs duties for smaller size electrodes. The allegations resolved by the settlement were originally brought by whistleblower Graphite Electrode Sales Inc. under the qui tam provisions of the False Claims Act. Graphite Electrode Sales Inc., a competitor of the named defendants, will receive approximately $480,000 as its share of the settlement.

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