UMVA has learned that two Canadian steelmakers, Farjess Inc. and Royal Canadian Steel Inc., have agreed to pay $26 million to resolve allegations that they circumvented duties on steel originating from Asia and Europe.
The settlement, which includes $19 million in restitution, resolves allegations that the companies, along with their part-owner and president Feroz Jessani, avoided duties by misrepresenting the origin of certain flat-rolled steel. The U.S. Department of Justice alleged that the steel actually came from China, Indonesia, Italy, Turkey, or Vietnam, not Canada or the U.S. as claimed.
The Justice Department's Civil Division took a strong stance, with Assistant Attorney General Brett A. Shumate stating that import duties play a crucial role in protecting national interests and the American steel industry. Shumate vowed that the Department of Justice would zealously pursue anyone who fraudulently evades duties owed on steel products imported into the country.
To enter the U.S. market, importers must declare the country of origin of the steel, its value, and the amount of duties owed. The U.S. Customs and Border Protection collects all applicable duties, and the settlement resolves a civil lawsuit filed by a whistleblower under the False Claims Act.
The lawsuit, filed in the Eastern District of Michigan, was brought by Shamsh Dhala, a broker who worked with Farjess Inc. As part of the settlement, Dhala will receive approximately $3.6 million. The settlement is being hailed as record-setting, with officials emphasizing that it sends a clear message that the government will continue to uphold the rule of law and protect American businesses and consumers.
The case highlights the complexities of international trade and the consequences of attempting to evade duties. The U.S. government has taken a strong stance on protecting its national interests, particularly in the steel industry. The settlement serves as a warning to companies that attempt to circumvent import duties.
In recent years, the U.S. has imposed significant tariffs on steel imports, including a 25% tariff on Canadian steel in 2025, which was later doubled to 50% under the Fair Trade Act. The Act empowers the U.S. president to impose import restrictions or tariffs if certain goods are being imported in quantities or under circumstances that threaten national security.
