Whistleblowers Share $8 Million False Claims Act Settlement of Unpaid Import Duties Allegations
Two whistleblowers receive $1.48 million as part of a recent settlement to resolve False Claims Act allegations between a vehicle parts supplier and the government. The False Claims Act allows private parties to sue on behalf of the U.S. government and receive a portion of the financial recovery from the claims. Whistleblowers are eligible to collect anywhere from 15% to 30% of the recovery, including from settlements.
In this case, the whistleblowers Jeffrey Hawk and Steven Hughes were former employees of the defendant, CWD Holdings LLC, and it’s subsidiaries. The company supplies frameworks and breaks for passenger vehicles and trucks. Hawk and Hughes each filed separate qui tam lawsuits on behalf of the U.S. government that alleged defendants knowingly avoided specific customs duties on brake pads imported into the U.S. Unmounted brake pads are generally not subject to an import tariff, while mounted brake pads are subject to a 2.5% tariff per the Harmonized Tariff Schedule. The claims alleged that CWD Holdings LLC and its subsidiaries falsely reported the brake pads as unmounted, thus avoiding this fee. CWD Holdings agreed to pay $8 million to settle the allegations covering from 2007 to 2017 with no determination of liability.
“CWD Holdings avoided millions of dollars in customs duties by misrepresenting the nature of the imported goods to U.S. Customs,” said U.S. Attorney Matthew Schneider for the Eastern District of Michigan in a press release on the settlement. “With this lawsuit and the accompanying resolution, CWD Holdings is being held to account for its unlawful evasion of customs duties.”