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Intellectual Property Rights and Commercial Fraud
02/22/2016

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4 Pennsylvania import companies, owners settle criminal charges for evading customs duties

PITTSBURGH —  Four Pennsylvania-based import companies and their owners agreed in federal court Monday to pay $3 million to resolve criminal charges and a lawsuit that alleges they engagement in a scheme to evade customs duties on imports of material used in steel mills.

The settlement of these matters resulted from an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), U.S. Customs and Border Protection (CBP) and the Department of Commerce’s Office of the Inspector General.

Ameri-Source International Inc., Ameri-Source Specialty Products Inc., Ameri-Source Holdings Inc., owned by Ajay Goel and Thomas Diener, and a related import company, SMC Machining LLC, incorporated at Goel’s direction and formerly owned by his wife, imported small-diameter graphite electrodes from the People’s Republic of China (PRC).  These devices are columns of synthetic graphite with diameters of around 16 inches or less which are used as fuel in electric arc and ladle furnaces, such as those used in steel manufacturing. 

The Department of Commerce assesses and CBP collects duties to protect U.S. manufacturers from unfair competition abroad by leveling the playing field for domestic products.  The specific duties in this case are “antidumping duties,” which protect domestic manufacturers against foreign companies from flooding U.S. markets with prices below the cost of production.  Imports of these specific devices from China have been subject to antidumping duties since Aug. 21, 2008. 

The settlement resolves claims that Ameri-Source International Inc. evaded antidumping duties on 15 shipments of small-diameter graphite electrodes from China between from December 2009 to March 2012.  Prosecutors contended that Ameri-Source International misclassified the size of the electrodes to avoid paying the duties.  There are no antidumping duties on larger diameter graphite electrodes.  Prosecutors also alleged that Goel, Diener and the other companies caused and conspired in the misrepresentation to evade duties. 

Ameri-Source International also waived indictment and pleaded guilty today to two counts of smuggling goods into the United States. Ameri-Source International admitted that on April 27, 2011 and June 9, 2011, the company falsely declared imported cargo from China as being graphite rods greater than 16 inches in diameter.  Chief Judge Joy Flowers Conti immediately sentenced the corporation to pay a $250,000 criminal fine within 10 days and applied the payment of the $3 million to the loss of antidumping duties of $2,137,420.00.

“This settlement underscores one of HSI’s primary efforts, which is to ensure a level playing field for companies engaged in legitimate trade and commerce with the United States,” said Special Agent in Charge John Kelleghan of Homeland Security Investigations (HSI) Philadelphia. “HSI special agents will continue to protect the revenue of the United States and aggressively investigate individuals and companies who attempt to operate outside our laws and regulations.”

“We are committed to protecting U.S. jobs and industries from those who seek an unfair advantage in the U.S. marketplace,” said U.S. Attorney David J. Hickton for the Western District of Pennsylvania.  “This office’s aggressive criminal and civil enforcement efforts to combat and prosecute the evasive practices of both the corporations and individuals who perpetrated this scheme demonstrate our resolve to ensure a level playing field for all.”

“Antidumping duties level the playing field for U.S. manufacturers,” said CBP Commissioner R. Gil Kerlikowske.  “This is a prime example of how U.S. Customs and Border Protection partners with the Department of Justice, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) and the U.S. Department of Commerce to enforce antidumping duty laws.”

“The Department of Commerce Office of Inspector General is dedicated to supporting bureaus such as the International Trade Association in protecting the U.S. economy from the type of criminal activity disclosed in this case,” said Special Agent in Charge Duane E. Townsend of the U.S. Department of Commerce Office of Inspector General.  “We greatly appreciate the cooperation and efforts of HSI and the U.S. Attorney’s Office that resulted in this agreement.”

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.  The act permits private parties to sue on behalf of the government those who falsely claim federal funds or, as in this case, those who 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 has done here.  The act also allows the whistleblower to receive a share of any funds recovered through the lawsuit.  Graphite Electrode Sales Inc. will receive approximately $480,000 as its share of today’s settlement.

The case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Western District of Pennsylvania, CBP, ICE HSI’s Pittsburgh office, in conjunction with the National Intellectual Property Rights Coordination Center, and the Department of Commerce’s International Trade Administration and Office of Inspector General.

The lawsuit is captioned United States ex rel. Graphite Electrode Sales, Inc. v. Ameri-Source Holdings, Inc., et al., Case No. 13-cv-0474 (W.D. Pa.).  The claims resolved by this settlement are allegations only; there has been no determination of liability except as admitted in the criminal proceedings.

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Last Reviewed/Updated: 02/23/2016