The Justice Department has reached a $549.5 million civil settlement with Perfectus Aluminum Inc., Perfectus Aluminum Acquisitions LLC and four affiliated warehousing companies, resolving False Claims Act allegations that the companies evaded antidumping and countervailing duties on Chinese aluminum extrusions by disguising the goods as finished “pallets.”
The settlement, announced May 12, is one of the largest recent customs-fraud resolutions under the FCA and highlights DOJ’s continued use of whistleblower suits, criminal customs statutes and interagency coordination with Customs and Border Protection to police tariff and trade-remedy evasion.
The Perfectus matter is also notable because prosecutors tied the U.S. import structure to Zhongtian Liu, the former president and chairman of China Zhongwang Holdings Ltd., once described by DOJ as Asia’s largest aluminum extrusion manufacturer.
Earlier DOJ filings and releases alleged that the relevant U.S. companies were controlled by Liu and used to receive and warehouse Chinese aluminum after AD/CVD duties were imposed in 2011.
According to DOJ, the Perfectus defendants knowingly avoided duties on more than 2.2 million aluminum extrusions imported from China between July 2011 and June 2014. The companies allegedly represented the merchandise on Customs Form 7501 entry summaries as finished pallets not subject to AD/CVD duties. In reality, DOJ said, the pallets were simply aluminum extrusions spot-welded together to appear functional. There were no actual customers for the pallets, and none were ever sold.
The government alleged the supposed sales were part of a broader related-party structure. In its 2019 indictment, DOJ said aluminum was sold to U.S.-based companies controlled by Liu, then stockpiled in Southern California warehouses. Prosecutors alleged that the transactions helped create a false narrative of U.S. demand for the pallets and inflated China Zhongwang’s reported sales volume and export activity.
The corporate defendants include Perfectus Aluminium Inc.; Perfectus Aluminium Acquisitions LLC; Scuderia Development LLC, owner of a Riverside warehouse; 1001 Doubleday LLC, owner of an Ontario warehouse; Von Karman–Main Street LLC, owner of an Irvine warehouse; and 10681 Production Avenue LLC, owner of a Fontana warehouse.
Perfectus Aluminium Acquisitions was formed in 2014 as a subsidiary of Perfectus Aluminium to oversee companies that received aluminum pallets shipped to the United States after duties were imposed on Chinese aluminum, according to DOJ.
The civil case follows a criminal prosecution in the Central District of California. In August 2021, a jury convicted the six corporate defendants of conspiracy, wire fraud and passing false and fraudulent papers through a customhouse.
The two Perfectus aluminum companies were also convicted on international promotional money laundering counts. In April 2022, U.S. District Judge R. Gary Klausner sentenced the companies to five years of probation and ordered $1.83 billion in restitution.
The Perfectus case is the latest chapter in the rise and fall of a debt-fueled Chinese aluminum conglomerate. Zhongwang had grown rapidly during China’s property boom, expanded into aerospace, marine and vehicle applications, pursued offshore acquisitions, and later entered bankruptcy restructuring with liabilities of roughly Rmb459.8 billion, or about $64 billion, against assets of about Rmb202 billion.
Zhongwang’s U.S. expansion had already drawn Washington’s scrutiny before the Perfectus case came to a head. In 2017, Zhongwang USA’s planned $1.1 billion acquisition of Aleris Corp., a U.S. aluminum products maker, collapsed after CFIUS raised national-security concerns.
The underlying trade-remedy orders remain active. Commerce published the antidumping duty order on aluminum extrusions from China in May 2011, and a 2026 administrative-review notice states that the order continues to cover aluminum extrusions from China. Commerce’s 2026 notice also states that the China-wide antidumping rate remained 86.01 percent for that review because the China-wide entity was not under review.
The civil settlement resolves consolidated qui tam suits filed by Mike Rapport, Eric Shen and the Aluminum Extruders Council. DOJ said the relator share will be 17.5 percent of the settlement proceeds returned to CBP. The FCA’s qui tam provisions allow private parties to sue on behalf of the United States and share in recoveries when the government obtains a judgment or settlement.
"Now, the defendants have agreed to a "consent judgment" of $549.5 million. But a consent judgment is simply a piece of paper where they admit they owe the money.," notes Washington qui tam attorney Johnathan Tycko.
"Notably, in the settlement agreement, the defendants are not agreeing to actually pay that money," says Tyco. "My hunch is that the defendants are insolvent, and will never pay any or much of the $549.5 million. And so, while it sounds like a huge settlement, in reality it might not mean much in terms of actual dollars paid to the government.
The case is a warning that AD/CVD exposure can generate liability well beyond ordinary customs penalties. Product description, end-use characterization, related-party sales, country-of-origin declarations and entry-summary representations can become FCA issues when they affect duty liability.
The Perfectus settlement shows how CBP entry data, whistleblower allegations, criminal customs statutes and FCA theories can converge years after importation, particularly where the alleged evasion concerns trade-remedy duties imposed to protect domestic industries.
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Practioner Perspectives:
Morgan Lewis: DOJ Announces Major FCA Settlement Relating to Evaded Customs Duties
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