A Carson car parts seller and its affiliates agreed to pay $8 million to the United States to resolve allegations that they violated federal law by knowingly underpaying customs duties owed on imported brake pads, the U.S. Attorney’s Office announced Wednesday.
Centric Parts and its entities sell aftermarket brake and chassis components for passenger vehicles and trucks. The company imported brake parts into the United States and was responsible for the submission of entry documents to U.S. Customs and Border Protection and the payment of any customs duties owed on those products.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
The government alleged that, from 2007-17, Centric Parts falsely claimed on entry documents that mounted brake pads, which carry a 2.5% tariff, were unmounted brake pads, which require no tariff. The United States further alleged that when confronted with the misclassifications in 2017, company officials decided to conceal and not disclose the past false entry documents to Customs.
As a result of Centric Parts’ alleged omissions and false statements regarding its imported products, the company knowingly evaded millions of dollars of customs duties it owed to the United States, prosecutors said.
The settlement resolves two lawsuits filed by former employees pursuant to the qui tam provisions of the False Claims Act. These provisions permit private parties to sue on behalf of the government when a defendant knowingly avoids an obligation to pay money to the government, and to share in any recovery. The two whistleblowers, Steven Hughes and Jeffrey Hawk, will receive a total of $1.48 million as their share of the settlement, according to the U.S. Attorney’s Office.
Although Centric Parts has filed for bankruptcy protection, the bankruptcy court entered an order confirming the company’s plan of reorganization that explicitly provides the settlement debt is non-dischargeable and will be paid by the reorganized company.