Massachusetts Wire Manufacturer Pays $1 Million Over Alleged Military Testing Failures
WASHINGTON – Judd Wire Inc., a Massachusetts-based manufacturer, has agreed to pay $1,014,000 to resolve allegations that it violated the False Claims Act by failing to perform required tests on wire and cable products used by the U.S. Navy, the Justice Department announced today.
The settlement resolves allegations that from September 2011 to August 2021, Judd Wire produced wire and cable products used by the United States but failed to perform all tests required by each of the 29 wire and cable specifications covered by the settlement. The company is based in Turners Falls, Massachusetts.
“It is essential to the safety and operational capabilities of the military that suppliers comply with applicable product specifications,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “When suppliers fail to comply with required specifications, they can mitigate the consequences by making timely self-disclosures, cooperating with investigations, and taking prompt remedial measures.”
In connection with the settlement, the United States acknowledged that Judd Wire took significant steps entitling it to credit for cooperating with the government. The company voluntarily disclosed the testing lapses to the United States, cooperated with the investigation, and implemented remedial measures.
“The performance of safety tests of military equipment is a critically important part of taking care of our Sailors and Marines and the gear their lives and missions depend on,” said General Counsel of the Department of the Navy David W. Denton Jr. “When contractors fail to do so they need to be held accountable.”
The claims resolved by the settlement are allegations only and there has been no determination of liability.
Packaging Company and CEO Pay $7.3 Million for Evading Customs Duties on Chinese-Made Bags
NEWARK, N.J. – A New York-based packaging supplier and its chief executive officer have agreed to pay $7.3 million to resolve allegations that they evaded antidumping duties by falsely representing the country of origin of imported bags, federal officials announced today.
New York Packaging II LLC, doing business as Redi-Bag USA, and CEO Jeffrey Rabiea agreed to the settlement to resolve allegations that they violated the False Claims Act by misrepresenting on customs entry forms the country of origin of polyethylene retail carrier bags, thereby evading duties owed to the United States.
“Companies that benefit from access to U.S. markets must follow U.S. law, including by paying import duties that protect American manufacturers and workers from unfair foreign competition,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Justice Department will hold accountable those who evade duties owed to the United States.”
During the relevant time period, polyethylene retail carrier bags from China were subject to antidumping duties of up to 77.57% on their value. The settlement resolves allegations that Redi-Bag USA and Rabiea knew the bags they imported were manufactured in China and transshipped through Hong Kong, but misrepresented on customs forms that the country of origin was Hong Kong.
The government further alleged that the company and its CEO concealed the true country of origin by hiding information from their customs broker and U.S. Customs and Border Protection, directing employees to cover up “Made in China” markings, and canceling orders after learning they would be inspected by customs authorities.
“Antidumping duties help protect American taxpayers, workers, and businesses,” said U.S. Attorney Robert Frazer for the District of New Jersey. “This settlement agreement shows that our Office will continue to vigorously investigate and pursue allegations that businesses are evading those duties through unlawful conduct.”
“CBP ensures that all companies comply with U.S. customs and trade laws,” said CBP Commissioner Rodney S. Scott. “With this settlement, we are protecting the integrity of our nation’s borders and holding those who attempt to evade customs duties accountable.”
The settlement resolves a civil lawsuit filed by John Maierhoffer, a former contracted sales representative for Redi-Bag USA, under the whistleblower provision of the False Claims Act. Maierhoffer will receive approximately $1,332,250 of the settlement proceeds.
Chinese-Owned Company Agrees to Pay $11.7 Million Over Fraudulent Pandemic Loan
WASHINGTON – A Chinese-owned aircraft engine manufacturer has agreed to pay more than $11.7 million to resolve allegations that it falsely obtained a Paycheck Protection Program loan for which it was not eligible, the Justice Department announced today.
Continental Aerospace Technologies Inc., which designs and manufactures aircraft engines and parts, will pay $11,772,680.14 to settle claims that it violated the False Claims Act by submitting false claims to obtain the pandemic relief loan.
“PPP loans were intended to help small businesses in the United States,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Department remains committed to pursuing those who violated the requirements of this taxpayer funded program.”
Congress created the PPP in March 2020 to provide emergency financial assistance to Americans suffering from the economic effects of the COVID-19 pandemic. Under the program, eligible businesses could receive forgivable loans guaranteed by the Small Business Administration. Regulations provided various eligibility requirements, including limitations on the number of individuals the borrower and its affiliated entities employed.
At the time it applied for its PPP loan, Continental was part of a large multinational corporation partially owned by Aviation Industry Corporation of China, which is wholly owned by the State-Owned Assets Supervision and Administration Commission of the State Council, an arm of the People’s Republic of China.
The United States alleged that Continental was not eligible for the loan because it was affiliated with other companies in the United States and China, and together with its affiliates across the globe, employed more individuals than permitted by SBA’s size standard for its industry. The government also contended that Continental was not eligible because it was ultimately owned by a government entity in violation of SBA rules.
“PPP loans were meant to help small American businesses survive the economic turmoil caused by the pandemic. Continental, however, was part of a large Chinese-owned corporation and allegedly provided false information to the SBA to obtain taxpayer funds to which it was not entitled,” said First Assistant U.S. Attorney Brad Schimel for the Eastern District of Wisconsin.
The civil settlement includes the resolution of claims brought under the whistleblower provisions of the False Claims Act. The lawsuits were filed by GNGH2 Inc. in the Eastern District of Wisconsin and Andrew McCarley in the Southern District of Alabama. GNGH2 Inc. will receive $1,765,902.02 in connection with the settlement.
“The SBA is committed to rooting out every dollar of PPP fraud,” said SBA General Counsel Wendell Davis. “Alongside the Department of Justice Civil Fraud Section, U.S. Attorney’s Offices in the Eastern District of Wisconsin and Southern District of Alabama, and our other law enforcement partners, the agency will aggressively pursue bad actors to hold them accountable and recover pandemic relief funds improperly obtained from the program.”
The claims resolved by the settlement are allegations only. There has been no determination of liability.
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