NEW YORK — Attorneys representing the United States have commenced a forfeiture action on aluminium pallets seized from warehouses operated by Perfectus Aluminum Inc, claiming the nearly 300,000 pallets seized are part of a long-alleged transshipment scheme by China Zhongwang Holdings Ltd.
The complaint offers further insight into the reported scheme, in which Zhongwang allegedly used proxy companies to move Chinese aluminium extrusions - tagged with a deceptive classification - into the United States and avoid paying approximately $1.5 billion in tariffs.
“At least one of the purposes of the scheme was to artificially inflate China Zhongwang’s revenues, thereby increasing its stock price and [Zhongwang founder] Zhongtian Liu’s personal wealth... Another purpose of the scheme was to allow Zhongtian Liu to transfer substantial assets, in the form of aluminium, out of China,” according to the complaint, filed by assistant US attorney Steven Welk with the US District Court for central California on February 7.
“Between 2011 and at least 2014, Zhongtian Liu used Perfectus to illegally import more than 2.1 million bogus pallets from China into the United States,” the complaint states.
The US detained some 279,808 aluminium pallets in 2017, according to the filing. Of those, 144,064 were seized in a series of raids on September 14 - roughly a year after hundreds of Perfectus shipping containers were held as part of “an ongoing criminal investigation,” Welk said at the time.
The 279,808 pallets are in the custody of the US Department of Homeland Security, Customs and Border Protection, where they will remain until the court action is concluded, the attorneys wrote.
The US argued that Zhongwang submitted false forms to US Customs to avoid the anti-dumping and countervailing duties on aluminium extrusions. Perfectus then stored its stockpile in at least four warehouses, allegedly with the intention “to melt the bogus pallets and repurpose the aluminium as aluminium billet or other aluminium products, which would then be sold in the United States market,” the complaint claims.
Late last month, Perfectus filed a new lawsuit against the US government, alleging that the government owes the company $3 million in fees.
A spokesman for Perfectus declined American Metal Market’s request for comment on the government’s latest filing, noting that the company plans to respond with its own legal filing.