$549.5 Million: The Aluminum 'Pallets' That Were Never Meant to Be Sold

California-based Perfectus Aluminum Inc., Perfectus Aluminum Acquisitions LLC, and four affiliated warehousing companies have agreed to pay a total of $549.5 million to resolve civil False Claims Act allegations that they evaded antidumping and countervailing duties owed to the United States on aluminum extrusions imported from China.DOCUMENTED

The settlement, announced by the Department of Justice, is one of the largest customs-fraud recoveries on record and follows a 2021 criminal conviction of the same defendants for the underlying scheme.DOCUMENTED

How the scheme worked

To import goods into the United States, an importer must declare, among other things, the country of origin, the value of the goods, and whether the goods are subject to duties. U.S. Customs and Border Protection collects applicable duties, including antidumping duties that protect against foreign companies selling products in the U.S. below cost, and countervailing duties that offset foreign government subsidies. During the period at issue, aluminum extrusions imported from China were subject to both.DOCUMENTED

According to the settlement, the Perfectus defendants knowingly made, and caused others to make, false statements on Customs Form 7501 Entry Summaries — the standard form used to declare imported goods — misrepresenting more than 2.2 million aluminum extrusions as finished merchandise not subject to antidumping and countervailing duties.DOCUMENTED Specifically, the government alleges the extrusions were spot-welded together to make them resemble functional pallets, then declared as finished pallet products rather than raw aluminum extrusions.DOCUMENTED

The government's core evidence of intent is stark: according to the settlement, there were no customers for the "pallets" the defendants imported between 2011 and 2014, and none of the pallets were ever sold.DOCUMENTED The absence of any actual buyer for goods ostensibly manufactured for sale supported the government's theory that the pallet form was manufactured purely to avoid the duty, not to serve any commercial purpose.REVIEWED

From criminal conviction to civil settlement

The civil resolution follows directly from a criminal case. On August 23, 2021, a jury in the Central District of California convicted the Perfectus defendants of conspiracy to commit an offense against, or defraud, the United States, in United States v. Perfectus Aluminum Inc., et al. Following that conviction, the court authorized the government to seize 279,808 aluminum pallet structures and ordered the defendants to pay $1.8 billion in restitution to CBP.DOCUMENTED The $549.5 million civil settlement announced in May 2026 resolves separate civil liability under the False Claims Act and does not release the defendants from criminal liability already imposed.REVIEWED

The whistleblowers behind the case

The civil settlement resolves lawsuits filed by relators Mike Rapport, Eric Shen, and the Aluminum Extruders Council — an industry trade group — under the False Claims Act's qui tam provisions, which allow private parties to sue on behalf of the government and share in any recovery.DOCUMENTED The lawsuits were filed separately in the Central District of California between 2015 and 2018 and later consolidated under the caption United States ex rel. Rapport v. PengCheng Aluminum Enterprise Inc., et al. As part of the resolution, the relators will receive 17.5 percent of the settlement proceeds returned to CBP — roughly $96 million combined.DOCUMENTED

Officials' statements

"The President's America First Trade Policy defends this country's national and economic security and ensures compliance with trade laws, including the payment of tariffs intended to level the playing field for U.S. manufacturers," said Acting Attorney General Todd Blanche. "Those who try to game the system harm American businesses and workers and will be brought to justice."DOCUMENTED

"Consistent with the goals of the Task Force to Eliminate Fraud, this settlement reflects our commitment to hold accountable those who commit fraud on the government by withholding duties that are owed on imported goods," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division.DOCUMENTED CBP's Office of Trade Executive Assistant Commissioner Susan S. Thomas added that "duty evasion is not a victimless crime; it hurts businesses that play by the rules and undermines U.S. economic security."DOCUMENTED

Aluminum extrusions spot-welded together to resemble pallets, with no buyer ever found for a single unit, formed the core of the government's case that the "pallets" existed only to avoid a duty.

Part of a broader enforcement push on trade fraud

The Perfectus resolution was coordinated through the Justice Department's Trade Fraud Task Force, a cross-agency effort created to pursue enforcement against importers who evade tariffs and duties, working alongside CBP's Office of Trade, Office of Field Operations, Office of Finance, and Office of Chief Counsel.DOCUMENTED The task force has pursued a series of customs-fraud settlements involving country-of-origin misrepresentation and duty evasion on goods imported from China, of which the Perfectus case is by far the largest to date.REVIEWED

The Justice Department said it encourages whistleblowers with knowledge of trade fraud to come forward, either through the qui tam provisions of the False Claims Act or through the department's Corporate Whistleblower Program.DOCUMENTED Attorneys Jennifer Chorpening and Martha Glover of the Civil Division's Commercial Litigation Branch, and Assistant U.S. Attorney Hunter B. Thomson for the Central District of California, handled the case.DOCUMENTED

A decade-long paper trail

What distinguishes the Perfectus case from many customs-fraud matters is the length of time between the conduct and the final civil resolution. The underlying import scheme ran from 2011 to 2014; the whistleblower lawsuits that first surfaced the allegations were filed between 2015 and 2018; the criminal conviction came in 2021; and the civil settlement was not finalized until May 2026 — a span of roughly 15 years from the first false customs filing to the last dollar of the civil recovery.REVIEWED That timeline illustrates how customs and trade-fraud cases, which often depend on records held by multiple agencies and can involve both criminal and civil tracks running in parallel, tend to move on a longer horizon than more conventional consumer-protection settlements.REVIEWED

The size of the recovery also reflects how the False Claims Act's penalty structure interacts with a scheme built around a fixed, per-unit duty rate: because the antidumping and countervailing duty rate on the relevant aluminum extrusions could reach into the double digits as a percentage of import value, and because the scheme covered more than two million individual units over three years, the underlying unpaid-duty exposure compounded into a nine-figure liability well before penalties, treble damages, and relator shares were added under the statute.REVIEWED For an industry still adjusting to a more aggressive tariff-enforcement posture, the Perfectus settlement stands as the clearest signal yet of how expensive a duty-evasion scheme can become once it is fully unwound through both criminal and civil enforcement.REVIEWED

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