DOJ Announces Major FCA Settlement Relating to Evaded Customs Duties

On May 12, the US Department of Justice (DOJ) announced a significant False Claims Act (FCA) settlement that underscores the government’s continued inter-agency focus on customs fraud, tariff evasion, and cross-agency trade enforcement.

Under the settlement, California-based Perfectus Aluminum, Inc., Perfectus Aluminum Acquisitions LLC, and four affiliated warehousing companies (collectively the Perfectus Defendants) agreed to pay $549.5 million to resolve allegations that they knowingly evaded antidumping and countervailing duties on aluminum extrusions imported from China.

The action reflects coordinated enforcement efforts among DOJ’s Civil Division, Customs and Border Protection (CBP), and DOJ’s Trade Fraud Task Force. It also reinforces a broader trend that we have previously discussed in our September 4, 2025, December 19, 2025, and March 20, 2026 LawFlashes: Tariff evasion and customs fraud remain key enforcement priorities for the current administration.

ALLEGED SCHEME

The settlement resolves civil allegations that, between 2011 and 2014, the Perfectus Defendants improperly avoided antidumping and countervailing duties on more than 2.2 million aluminum extrusions imported from China. In 2011, the US Department of Commerce issued antidumping and countervailing duty orders on aluminum extrusions from China (2011 AD/CVD Orders). The orders exempted certain finished merchandise from the applicable duties.

According to DOJ, the Perfectus Defendants falsely represented aluminum extrusions as finished merchandise not subject to the 2011 AD/CVD Orders and “knowingly made, and caused others to make, false statements on Customs Form 7501 Entry Summaries that were material to obligations to pay duties owed to CBP on extruded aluminum.”

The settlement follows related criminal proceedings arising from the same conduct. United States v. Perfectus Aluminum Inc., et al., No. 2:19-cr-00282-GK (C.D. Cal.). In August 2021, a jury in the Central District of California convicted the Perfectus Defendants of conspiracy to commit an offense against the United States or defraud the United States and related offenses. Following the convictions, the court authorized the government to seize 279,808 aluminum pallet structures and ordered the Perfectus Defendants to pay $1.8 billion in restitution to CBP.

The civil settlement also resolves three qui tam relator actions filed in the Central District of California between 2015 and 2018 and later consolidated in December 2025. United States ex rel. Rapport v. PengCheng Aluminum Enterprise Inc., et al., No. 5:15-cv-00712 (CD Cal.). As part of the resolution, relators will receive 17.5% of the settlement—roughly $96 million.

Although the relators’ complaint remains under seal, the related criminal indictment provides insight into the types of conduct DOJ may view as indicators of tariff evasion, including allegations that:

• Extrusions were “tack-welded” into pallet shapes and imported “as purportedly finished merchandise” exempt from the 2011 AD/CVD Orders.

• Defendants used three “test shipments” before substantially increasing shipment volume. Between June 30, 2011 and July 21, 2011, defendants caused brokers to submit Forms 7501 for the importation of up to 1,530 aluminum pallets that “falsely claimed” the pallets were not subject to applicable duties. Thereafter, defendants were alleged to have caused brokers to submit a total of 18 Forms 7501 containing misrepresentations.
• Shell companies were allegedly used to obscure the Chinese origin of the aluminum products.
• Shipment volumes increased dramatically between September 2011 and June 2014, eventually reaching more than 16,000 aluminum pallets in a single shipment.
• Prior to the 2011 AD/CVD Orders, the Perfectus Defendants had not imported aluminum extrusions in pallet form. While defendants publicly maintained that exports to the United States had increased in response to market demand, “there were no customers for these pallets.”
• Defendants allegedly stockpiled imported pallets in warehouses specifically purchased for the purpose.

Taken together, the allegations reflect several indicators DOJ and CBP may associate with tariff evasion schemes, including sudden shifts in import patterns, questionable product classifications, and inventory accumulation that is unsupported by commercial demand.

The whistleblower aspect of this case also highlights the interconnectedness of supply chains when it comes to customs compliance. Employees, competitors, customs brokers, freight forwarders or other logistics providers, warehouse operators, and other partners have visibility into operations and—now more than ever—incentive to report.

SIGNIFICANCE OF TASK FORCE INVOLVEMENT

The settlement further demonstrates that tariff enforcement now sits squarely within DOJ’s broader anti-fraud enforcement framework. Customs compliance is something to be taken seriously, as the government is signaling that tariff evasion, origin manipulation, deceptive valuation, gamesmanship in applying antidumping and countervailing duty orders, and false assertions of transformation are akin to financial misconduct and procurement fraud when it comes to enforcement.

DOJ’s press release specifically referenced both its cross-agency Trade Fraud Task Force and the administration’s Task Force to Eliminate Fraud, stating that the resolution was “[c]onsistent with the goals of the” latter initiative.

DOJ launched the Trade Fraud Task Force in August 2025 to coordinate tariff-related investigations. At the same time, DOJ emphasized the importance of whistleblower reporting and signaled increased support for FCA whistleblowers giving light to trade, tariff, and customs fraud by corporations.

Separately, the Task Force to Eliminate Fraud—established by executive order in March 2026—directed agencies to strengthen anti-fraud coordination across federal programs administered through state and local partners. Although broader in scope, the initiative reflects the administration’s continued emphasis on civil fraud enforcement tools, including the FCA.

This settlement therefore provides another clear indication that DOJ intends to continue using the FCA aggressively in the customs and tariff fraud context, and that trade-related enforcement will remain coordinated across agencies.

KEY TAKEAWAYS

• Tariff evasion and customs fraud remain high-priority enforcement areas for DOJ and CBP and are being highlighted as in alignment with DOJ’s new Task Force to Eliminate Fraud.
• DOJ continues to strengthen cross-agency partnerships in trade fraud investigations, including through specialized task forces focused on customs and tariff enforcement.
• Companies face overlapping civil, administrative, and criminal exposure arising from alleged tariff noncompliance. DOJ appears willing to leverage existing criminal investigations and prior enforcement actions to support parallel or follow-on FCA cases.
• The substantial relator recovery in this matter reinforces the significant financial incentives for whistleblowers to report suspected customs and tariff misconduct.
• DOJ frames tariff evasion as analogous to procurement and financial fraud; to the extent they do not do so already, companies may benefit from elevating customs compliance beyond operational teams and incorporating it into enterprise risk management, internal audit, and whistleblower-response frameworks.

Morgan Lewis’s comprehensive two-volume treatise is frequently cited by federal and state courts as an authority on the False Claims Act. Find out more about our FCA practice and the book.