The Department of Justice (DOJ) and the cross-agency Trade Fraud Task Force have upped the ante by an order of magnitude in the government’s pursuit of customs fraud. On May 1, 2026—only a few months after setting its previous record-high customs-related False Claims Act (FCA) settlement of $54.4 million with Ceratizit USA, LLC—the DOJ shattered that record with a $549.5 million settlement with Perfectus Aluminum Inc., its subsidiary Perfectus Aluminum Acquisitions LLC, and a set of four affiliated warehousing companies. The Perfectus settlement resolves allegations that the defendants violated the FCA by evading antidumping and countervailing duties (AD/CVD). The settlement resolves three separate qui tam complaints filed by two individual relators and the Aluminum Extruders Council, an international industry association. Defendants were previously criminally convicted on charges related to the same scheme, and those convictions were affirmed by the Ninth Circuit in 2024.
Link to Settlement Summary: Settlement Summary:
The settlement resolves claims that, from July 2011 through June 2014, defendants made false statements on Customs Form 7501 Entry Summaries by misrepresenting over $880 million of extruded aluminum manufactured in the People’s Republic of China as finished merchandise “pallets,” thereby avoiding 374.15% countervailing duties and depriving U.S. Customs and Border Protection (CBP) of over $3 billion in duties owed. Defendants allegedly spot-welded the aluminum extrusions together to give the false appearance of functional pallets, but there were no sales to customers for those pallets over the covered time period.
This record-breaking settlement is set to be paid through the sale of defendants’ assets, with $349,594,030 of the total settlement amount to come from the sale of defendants’ warehouses and $200,000,000 from the sale of defendants’ aluminum pallets. Relators are due to receive 17.5% of the ultimate amount paid to the United States pursuant to the settlement.
Link to Takeaways: Takeaways:
Beyond its eye-popping bottom line, this settlement carries a number of important lessons for importers and anyone else who may face scrutiny under the DOJ’s increasingly-active FCA enforcement initiatives.
For one, the Perfectus settlement highlights how the combination of steep duties combined with the bounty provisions of the FCA create massive financial incentives for qui tam relators to come forward with actions, which in turn can lead to not just civil but criminal investigations, as well as bet-the-company financial exposure. It also highlights the risks of parallel proceedings, as here the qui tam actions predated the cited indictment and convictions, while those convictions in turn likely impacted the FCA settlement just announced.
Notably, while the size of the civil settlement is significant, it amounts to only a fraction of the overall evaded duties. The criminal restitution orders entered in April 2022 obligated defendants to pay CBP over $1.8 billion, and the civil FCA settlement resolves additional civil exposure at approximately 18% of the government’s stated total loss of more than $3 billion in evaded duties. The FCA provides for up to treble damages on the government’s loss. This reflects the practical reality that it may be difficult for DOJ and CBP to recoup from defendants that may now be insolvent.
This settlement also sheds light on the competitive implications of the current FCA enforcement landscape. The involvement of a trade association as a qui tam relator shows how the FCA’s whistleblower provisions are increasingly being used by competitors in customs cases. In addition, qui tam complaints and subsequent government investigations and enforcement actions may be supercharged by evolving data analysis tools, as demonstrated by the launch of DOJ’s new FOCUS Initiative.
Importers of goods subject to AD/CVD or other duties should consider this important practical takeaway: When a product classification decision could impact the assessment of duties, the nature of that classification may face scrutiny for both technical accuracy and for commercial substance, as demonstrated by the government’s inquiry into the commercial reality of the imported “pallet” sales, or the lack thereof. Importers in aluminum, steel, solar, and other heavily duty-regulated industries should treat this settlement as a signal that proactive compliance review of classification decisions is a best practice and should be supported by commercial documentation. As discussed above, with DOJ and industry coming together to create a more-aggressive FCA enforcement environment, the price of failing to implement compliance measures could be existential.
Finally, the Perfectus settlement may provide some indication of how the DOJ Civil Division will work with the nascent National Fraud Enforcement Division (NFED). In its press release announcing the settlement, DOJ Civil Division Assistant Attorney General Brett Shumate expressly aligned this settlement with the goals of NFED’s Task Force to Eliminate Fraud, indicating that cross-division cooperation may continue to drive heightened focus on customs fraud enforcement actions, with NFED potentially having direct influence on Civil Division’s priorities.