May 21, 2026
Two recent settlements announced by the Department of Justice underscore the government’s aggressive stance on customs fraud enforcement. Farjess Inc. and Royal Canadian Steel, Inc. and Perfectus Aluminum, Inc. have agreed to pay $19M and $549.5M, respectively, to settle allegations of evading customs duties.
Canada-based Farjess Inc. and Royal Canadian Steel Inc. (“Farjess Entities”) will pay $19 million to resolve allegations that they violated the False Claims Act (FCA) by knowingly failing to pay required duties on flat-rolled steel imports. They did this by falsifying the steel’s country of origin.
According to the DOJ, between May 2019 and January 2025, the Farjess Entities misrepresented the country of origin of certain steel products to U.S. Customs and Border Protection (CBP). The Farjess Entities claimed the steel originated from Canada or the United States. In reality, it was from China, Indonesia, Italy, Turkey, and Vietnam. These misstatements allowed the companies to avoid higher duties imposed on certain foreign steel imports.
This type of conduct falls squarely within our prior forecast of the government’s 2026 FCA enforcement priorities. Importers are legally required to provide accurate information regarding origin, value, and duty liability. False declarations not only deprive the government of revenue but also distort fair competition in the domestic market. In 2023, a whistleblower brought the case in the Eastern District of Michigan under the qui tam provisions of the False Claims Act. As his whistleblower award, the relator received approximately $3.61 million of the government’s recovery.
A second, much larger settlement involved Perfectus Aluminum Inc. and its related entities. Perfectus agreed to pay $549.5 million to resolve FCA allegations tied to aluminum imports from China. The settlement resolved three separate whistleblower lawsuits filed in the Central District of California and later consolidated. This case is especially notable because one of the cases was filed by the Aluminum Extruders Council, a consortium of Perfectus’s competitors. We discussed the value of competitor whistleblowers in our prior blog post.
Between July 2011 and June 2014, Perfectus allegedly misrepresented over 2.2 million aluminum extrusions as “finished pallets.” This allowed them to evade antidumping and countervailing duties. In reality, the “pallets” were simply aluminum extrusions spot-welded together to give the appearance of finished goods. However, the aluminum extrusions had no legitimate commercial market or actual sales.
Antidumping and countervailing duties are specifically designed to protect U.S. industries from unfair pricing practices and foreign government subsidies. By falsely classifying the goods, the defendants avoided significant financial obligations and gained an unfair competitive advantage.
Both settlements illustrate how the False Claims Act serves as a powerful tool for addressing customs fraud. The FCA imposes liability on individuals and companies that knowingly submit false claims for payment or avoid paying money owed to the government. In the import context, this includes false statements related to duties, classification, and country of origin.
Whistleblowers play a critical role in these enforcement actions. In both cases, private parties initiated litigation under the FCA’s qui tam provisions, enabling the government to recover substantial sums while incentivizing insiders to report fraudulent conduct.
These cases highlight several important compliance lessons. First, accurate reporting to CBP is essential. Misstatements regarding the country of origin or product classification can trigger FCA liability and significant penalties. Second, duty evasion schemes—whether through falsified origin claims or manipulated product descriptions—are a major enforcement priority. Third, internal compliance programs and audit mechanisms are critical to identifying and correcting potential issues before they escalate into enforcement actions.
Finally, the scale of these settlements demonstrates that customs fraud is not treated as a minor regulatory issue but as a serious form of financial misconduct. With coordinated efforts by the Department of Justice, CBP, and interagency task forces, enforcement activity in this area is expected to remain strong, particularly where misconduct undermines domestic industries and government revenue.