6 California Companies Ordered to Pay $1.83 Billion for Helping Skirt AD/CVD
A federal judge ordered six companies in Southern California to pay $1.83 billion for their role in a scheme to skirt $1.8 billion in antidumping and countervailing duties on aluminum, disguised as "pallets," exported to the U.S., the U.S. Attorney's Office for the Central District of California announced. Two aluminum companies and four warehousing businesses, all related to each other, were sentenced to five years' probation and ordered to pay $1.83 billion in restitution. The companies were convicted last year (see 2108240013).
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The six companies, along with an indicted Chinese manufacturer, its president and other individuals, lied to CBP to avoid AD/CV duties on aluminum extrusions from China, the U.S. Attorney's Office said. In the scheme, aluminum was sold to U.S.-based companies controlled by Zhongtian Liu, the former president of China Zhongwang Holdings -- Asia's largest aluminum extrusions manufacturer.
The aluminum sold to the U.S. companies was aluminum extrusions spot-welded together to make them appear to be functional pallets, the U.S. Attorney's Office said. The sales were meant to inflate China Zhongwang's value.
Following the imposition of the AD/CV duties in 2011, China Zhongwang said there was a large demand for the aluminum pallets in the U.S. While the company's reports said the pallets were being sold to independent third parties, they were being stockpiled in Liu-controlled companies in warehouses in Southern California. Since no one was using the pallets, Liu set up aluminum melting facilities to reconfigure the aluminum into a form with commercial value, the U.S. Attorney's Office said.
The six companies are Perfectus Aluminum and its subsidiary Perfectus Aluminum Acquisitions, which was created to oversee companies that received aluminum pallets shipped to the U.S. after the AD/CV duties were imposed in 2011, and warehouse owners Scuderia Development, 1001 Doubleday, Von Karman and 10681 Production Avenue. "The Perfectus and Warehouse defendants were integral participants in this conspiracy,” prosecutors wrote in a sentencing memorandum. “Indeed, they existed only to perpetrate it.” Four defendants, including Liu and China Zhongwang, have been indicted but have not yet appeared in court, the U.S. Attorney's Office said.