close
Share with your friends

U.S. officials allege Chinese company schemed to avoid $1.8 billion in anti-dumping duties on aluminum imports

Anti-dumping duties on aluminum imports

The U.S. Attorney’s office for central California issued a release announcing that a federal grand jury indictment (unsealed earlier this week) alleges a complex financial fraud scheme in which a Chinese company exported to the United States aluminum disguised as “pallets” to avoid customs duties of up to 400%, and then “sold” the purported pallets to related entities to fraudulently inflate the company’s revenues and deceive investors.

1000

Related content

According to the U.S. Attorney’s office release, a 53-page indictment alleges that the Chinese company, the company’s former president and chairman, and several individual and corporate co-defendants lied to U.S. Customs and Border Protection to avoid paying $1.8 billion in anti-dumping and countervailing duties (AD/CVD) that were imposed in 2011 on certain types of extruded aluminum imported into the United States from China. The aluminum sold to U.S.-based companies was simply aluminum extrusions that were spot-welded together to make them appear to be functional pallets (that is, finished goods not subject to the duties), and according to the indictment, there were no customers for the 2.2 million pallets imported by the controlled companies between 2011 and 2014, and no pallets were ever sold.

The aluminum was imported through the Ports of Los Angeles and Long Beach and then stockpiled at four large warehouses in southern California purchased for this purpose. Then, “bogus sales” of aluminum were made to other controlled companies in southern California to falsely inflate the value of the Chinese entity.

After the AD/CVD duties were put in place in 2011, the company’s annual reports created a false narrative that there was a robust demand for the aluminum pallets in the United States, according to the indictment. The defendants allegedly inflated the company’s sales volume and its volume of exports to the United States by engaging in transactions with certain controlled entities and then falsely claimed in the company’s annual reports that the aluminum was being sold to independent third parties—when it was actually being stockpiled by controlled entities in southern California. Because there was no such demand for the pallets, the indictment alleges that “defendants … would direct that aluminum melting facilities be built and acquired to be used to reconfigure the aluminum imported as pallets into a form with commercial value.”

 

For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
T: 267-256-2614
E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Managing Director
T: 202-533-3247
E: aahanchian@kpmg.com

Robert Waldrop
Principal
T: 212-954-8117
E: rwaldrop@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

 

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal