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Case Involving Evasion of AD Duties on Certain Mainland Chinese Goods Nets Hefty Fine

Three importers and their owners and a related importer have agreed to pay US$3 million to resolve allegations that they misclassified imported goods to evade AD duties on small diameter graphite electrodes from mainland China, according to a 22 February press release from the U.S. Department of Justice. One of the defendants also pleaded guilty to two counts of smuggling by falsely declaring imported cargo as being large diameter graphite electrodes from mainland China, which are not subject to AD duties. The press release states that a federal judge sentenced this company to pay a US$250,000 criminal fine and applied the payment of the US$3 million to the loss of AD duties of US$2,137,420.

The allegations were originally brought by a whistle-blower under the qui tam provisions of the False Claims Act, which permits private parties to sue on behalf of the government those who falsely claim federal funds or, as in this case, avoid paying funds owed to the government or cause or conspire in such conduct. The United States may intervene in and take over the lawsuit, as it did here. The FCA also allows the whistle-blower to receive a share of any funds recovered through the lawsuit, which in this case will amount to approximately US$480,000.

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