On May 12, 2026, the Department of Justice announced one of the largest customs fraud settlements in U.S. history. Perfectus Aluminum Inc., Perfectus Aluminum Acquisitions LLC, and four affiliated warehousing companies (“the Defendants”) agreed to pay $549.5 million to resolve False Claims Act (“FCA”) allegations that they knowingly evaded antidumping and countervailing duties on aluminum extrusions imported from China. 

The Scheme: Pallets That Weren’t Pallets 

The underlying conduct was relatively simple. According to the Settlement Agreement, between July 2011 and June 2014, the Defendants knowingly made false statements on CBP Form 7501 Entry Summaries, misrepresenting more than 2.2 million aluminum extrusions as finished merchandise not subject to antidumping and countervailing duties. The mechanism? The extrusions were spot-welded together to make them appear to be functional pallets — and there were no actual customers for these “pallets.” So, no merchandise was ever actually sold. 

Criminal Conviction Came First 

This civil settlement did not arise in a vacuum. In August 2021, a jury in the Central District of California convicted the Defendants of conspiracy to defraud the United States, wire fraud, and passing false or fraudulent documents through a customs house. Following sentencing, the defendants were ordered to pay restitution of approximately $1.83 billion to CBP. The May 2026 FCA settlement resolves the parallel civil litigation arising from the same conduct. Importantly, this civil resolution does not absolve the defendants from any criminal liability outlined in the sentencing order of the original investigation in the Central District of California, or civil liability as individuals who participated in the covered conduct. 

The False Claims Act as a Customs Enforcement Tool 

The Perfectus settlement demonstrates the full reach of the FCA as a civil enforcement mechanism in the trade context. Historically, trade fraud was enforced by CBP through administrative penalties or by the DOJ for criminal violations of US import and export regulations. The DOJ now treats misclassification, undervaluation, origin masking, and antidumping and countervailing duty evasion as potential FCA conduct, with treble damages and hefty civil penalties on the table. 

The DOJ’s Trade Fraud Task Force (“TFTF”), launched in August 2025, has made customs-related FCA actions a core priority to strengthen enforcement of the Tariff Act of 1930 and subsequent regulations. Given the extended statute of limitations period for FCA claims (six years after the alleged violation or three years after the government knew or should have known about the fraud, but no more than ten years after the violation), the typical five-year statute of limitations restriction on CBP investigations, under 19 U.S.C. § 1621, does not protect importers alleged of committing fraud. In other words, importers should not assume that fraudulent entries made more than five years ago are undiscoverable or incapable of leading to civil and criminal liability.  

Who Were the Relators – and Why It Matters 

The civil lawsuits were filed by relators Mike Rapport, Eric Shen, and the Aluminum Extruders Council under the FCA’s qui tam provisions. The Aluminum Extruders Council, a domestic trade association representing U.S. aluminum extrusion manufacturers, sued as a competitor harmed by the duty evasion. Their participation illustrates a key enforcement theme: competitors or private individuals with knowledge of your business can become whistleblowers and are so encouraged by the DOJ TFTF to share information exposing fraud. In FCA qui tam cases, relators are entitled to shares of up to 30% of any government recovery, and even those who participated in the underlying conduct may qualify for a share of the recovery (though their portion may be reduced or eliminated, depending on their culpability). In the present case, the relators’ share was set at 17.5% of settlement proceeds returned to US government agencies.  

What This Means for Importers 

The Perfectus settlement sends an unambiguous enforcement signal. The Trade Fraud Task Force is functioning as a coordinated hub deploying both civil and criminal tools in parallel, working closely with CBP, DHS, HSI, and private citizens. Companies importing goods, especially merchandise subject to antidumping or countervailing duties, should conduct rigorous compliance reviews – not just of current practices, but of historical entry classifications. The combination of treble damages exposure, qui tam whistleblower incentives, and coordinated civil-criminal enforcement has never been more concrete. 

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