6 Companies Convicted of Evading $1.8 Billion in AD/CV Duties on Chinese Aluminum Extrusions

A federal jury found six companies guilty of a conspiracy to defraud the U.S. through a “wire-and-customs” fraud scheme in which $1.8 billion in antidumping and countervailing duties were avoided on aluminum extrusions imported to the U.S. from China, the U.S. Attorney's Office for the Central District 0f California said Aug. 23. Disguising the extrusions as “pallets,” the goods were shipped to the U.S. and sold to fraudulently inflate a Chinese company's revenues, the Department of Justice said. Litigation over the aluminum pallets has been going on in multiple venues (see 2011090041).

The guilty verdict was levied against two aluminum companies and four warehousing businesses, all of which are related to each other. They are Perfectus Aluminum Inc., Perfectus Aluminum Acquisitions LLC (a Perfectus subsidiary), Scuderia Development LLC, 1001 Doubleday LLC, Von Karman and 10681 Production Avenue LLC. The jury also found China Zhongwang Holdings Ltd., Asia's largest aluminum extrusion manufacturer, and its former president and chairman, Zhongtian Liu, guilty of lying to CBP to skirt the AD/CV duties that were put in place in 2011.

The aluminum extrusions were spot-welded together to give the appearance of functional pallets, DOJ said. Liu and his holding company lied about the existing demand for the aluminum pallets in the U.S., although the involved companies had not made a single sale of pallets. Liu built and acquired aluminum melting facilities to get the goods from pallet form back to their aluminum extrusion state. Further, Liu and the other defendants came up with fraudulent sales of aluminum to Liu's companies in Southern California to inflate China Zhongwang's value, DOJ said.

The companies laundered hundreds of millions of dollars through shell companies to the U.S.-based aluminum companies, DOJ said. These funds were then transferred to China Zhongwang and other shell companies as payment for the aluminum. Liu, and three other charged defendants, including China Zhongwang Holdings, have not yet appeared in court to face charges. A sentencing hearing has been set for Dec. 13.