Brookfield-based
Precision Cable Assemblies and
Global Engineered Products have paid a $10 million settlement following allegations that both companies failed to pay $4.2 million in customs duties on goods imported from China.
Ryan Schmus, chief executive officer of PCA and GEP, and
Richard Horky, president of PCA, have agreed to settle the allegations but no determination of liability has been made in this case, according to an announcement from the Department of Justice.
PCA sells wire harnesses, battery cables, and other wiring products while GEP sells power distribution products. Both companies import goods from China.
When a company imports goods into the United States, the importer is required to file entry documents with the Department of Homeland Security, Customs and Border Protection (CBP), including information about the value of the goods.
The importer must declare that the values reported are true to the best of its knowledge and belief. The amount of duties owed by the importer partially depends on the value of the goods and the applicable tariff rate.
The United States alleges that PCA and GEP submitted false commercial invoices to CBP that significantly undervalued the goods imported from China from 2016 through November 2021.
Two Chinese suppliers allegedly sent PCA and GEP invoices in electronic spreadsheet format with the full, actual price of the goods imported. PCA and GEP, however, falsified the invoices by altering the spreadsheets to reduce the prices, generally by 70%, and then provided those altered invoices to its customs broker, which, in turn, unknowingly submitted the false invoices to CBP.
GEP initially paid CBP approximately $4.2 million in duties lost from this undervaluation scheme. Both companies also paid another $6 million to the United States to fully resolve its liability for the alleged evasion of duties, including its potential liability under the False Claims Act.
The $10 million settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which allows private parties to file suit on behalf of the United States for false claims submitted to the government and share in a portion of the government’s recovery.
The lawsuit was filed by
Travis Grob, a former employee of PCA. Grob received $1.26 million for his part in filing the lawsuit.
