Canadian Steel Companies and Owner to Pay $19M to Settle False Claims Act Allegations Relating to Evaded Customs Duties

Two Canada-based steel companies, Farjess Inc. and Royal Canadian Steel Inc., along with their part-owner and president, Feroz Jessani, have agreed to pay $19 million to resolve allegations that they violated the False Claims Act by knowingly and improperly failing to pay duties owed on flat-rolled steel that was manufactured in Europe and Asia.

"Import duties serve an important role in protecting our national interests generally and the American steel industry in particular," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division. "The Department of Justice will zealously pursue anyone who fraudulently evades the duties owed on steel products imported into this country."

"Our border is the frontline of American industry. Approximately half of all U.S.-Canada land trade flows through our district." said U.S. Attorney Jerome F. Gorgon Jr. for the Eastern District of Michigan. "And we will continue to protect our businesses from foreign fraudsters,"

"This settlement underscores the United States' strong commitment to enforcing trade laws and maintaining the integrity of our supply chains. U.S. Customs and Border Protection is proud to have supported the Department of Justice in this cross-border investigation, ensuring that all duties owed to the government are collected and that fair competition is preserved," said Acting Director Jonathan Restivo of Center of Excellence and Expertise (CEE), Base Metals. "This case sends a clear message that CBP, in partnership with our federal counterparts, will continue to uphold the rule of law and protect the interests of American businesses and consumers."

"Since 1789, the United States has imposed tariffs and collected customs duties on imports to fund government operations, provide public services and protect American industry," said Acting Special Agent in Charge Jared Murphey of Homeland Security Investigations' Detroit field office. "This record-setting settlement underscores HSI's commitment to protecting American manufacturers and consumers from unfair trade practices and ensuring the integrity of our nation's economic policies."

To enter goods into the United States, an importer must declare, among other things, the country of origin of the goods, the value of the goods, whether the goods are subject to duties, and the amount of duties owed. U.S. Customs and Border Protection (CBP) collects applicable duties.

The settlement resolves allegations that, from May 2019 through January 2025, Farjess Inc., Royal Canadian Steel Inc., and Feroz Jessani avoided duties owed to the United States by knowingly misrepresenting to CBP that the country of origin of certain flat-rolled steel was Canada or the United States, when in fact they knew the true country of origin was China, Indonesia, Italy, Turkey, or Vietnam.

The settlement resolves a civil lawsuit filed by Shamsh Dhala, a broker who worked with Farjess Inc., under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and to share in a portion of the government's recovery. The lawsuit was filed in the Eastern District of Michigan and is captioned United States ex rel. Dhala v. Royal Canadian Steel Inc. et al., No. 2:23-cv-12097 (E.D. Mich.). As part of today's resolution, Mr. Dhala will receive approximately $3,610,000 of the settlement proceeds.

This year the Administration launched the Task Force to Eliminate Fraud and the National Fraud Enforcement Division to enhance the Administration's war on fraud, waste, and abuse in federal programs. When unscrupulous actors exploit these programs for their own financial gain, they defraud the government, harm the people these programs are designed to aid and protect, and undermine American businesses that play by the rules. The Civil Division's FCA enforcement plays a critical role in combatting such fraudulent schemes, recovering billions of dollars for the American taxpayers, and holding wrongdoers accountable. FCA matters will continue to be on the forefront of the battle against fraud, and the Civil Division's FCA work will support and advance the mission of the Task Force to Eliminate Fraud and the National Fraud Enforcement Division.

The Civil Division coordinated this action through the Department of Justice's Trade Fraud Task Force, a cross-agency law enforcement effort. The Task Force was created to leverage all of the Department's tools and authorities to prevent trade fraud that deprives the government of vital revenue, threatens critical domestic industries, undermines consumer confidence, and weakens national security. The Task Force is designed to pursue enforcement actions against parties who seek to evade tariffs and other duties, as well as smugglers who seek to import prohibited goods into the American economy. The Justice Department encourages whistleblowers to alert the government to credible allegations of fraud, including utilizing the qui tam provisions of the False Claims Act or through the Department's Corporate Whistleblower Program at [email protected] using the form available here.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department's Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney's Office for the Eastern District of Michigan, with assistance from U.S. Customs and Border Protection's Office of the Associate Chief Counsel, Homeland Security Investigations, and the Justice Department's Office of Foreign Litigation.

The matter was handled by Trial Attorney James Nealon and Assistant U.S. Attorney John Postulka for the Eastern District of Michigan.

The claims resolved by the settlement are allegations only and there has been no determination of liability.