There have been developments in the US trade, customs law/false claims act, antitrust and securities cases against Chinese companies.


Attached is the Commerce Department Notice just issued December 6, 2012 stating that the new cash deposit for the Aluminum Extrusions from China countervailing duty case is 137%.  PUBLISHED TIMKEN NOTICE


The Commerce Department has just issued the quantity and value questionnaire to Chinese exporters that want to participate in the antidumping investigation on Silica Bricks from China.  The response requires Chinese exporters to report their sales of Chinese silica bricks to the United States from April 1, 2012 through September 30, 2012.  The response is due at the Commerce Department by December 26, 2012. 

If a Chinese silican brick exporter does not file the response to the questionnaire by December 26, it will be shut out of the US market for a minimum of two and a half years with the highest dumping rate from the date of the Commerce Department’s antidumping preliminary determination.  Attached is a copy  of the quantity and value questionnaire.  If anyone has questions about the case, please feel free to contact me.  SILICA BRICKS QV 

CUSTOMS–FALSE CLAIMS ACT–$45 Million Dollar Settlement in Violet Pigment Case

On December 17, 2012, the US Department of Justice announced a $45 million dollar payment from Japan-based Toyo Ink SC Holdings Co. Ltd. and various affiliated entities (collectively, Toyo Ink)  to settle allegations that they violated the False Claims Act by knowingly failing to pay antidumping and countervailing duties on imports of violet pigment from China.

As the Department of Justice states in the attached announcement, 45 MILLION SETTLEMENT FCA CASE, the government alleged that Toyo Ink knowingly misrepresented, or caused to be misrepresented, the country of origin on documents presented to U.S. Customs and Border Protection to avoid paying duties, particularly antidumping and countervailing duties, on imports of the colorant carbazole violet pigment number 23 (CVP-23) between April 2002 and March 2010.  Although Toyo Ink’s CVP-23 from the PRC and India underwent a finishing process in Japan and Mexico before it was imported into the United States, the government alleged that this process was insufficient to constitute a substantial transformation to render these countries as the countries of origin. 

The announcement further states:

“Importers seeking access to United States markets must comply with the law, including the payment of customs duties meant to protect domestic companies from unfair competition abroad,” said Stuart F. Delery,Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “This settlement demonstrates that the Department of Justice will zealously guard the public fisc – taking action not only against those who fraudulently obtain government funds, but also against those who inappropriately avoid paying money owed to the United States.”

“Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina, stated that, “Fair and lawful trade requires importers to truthfully identify their products and pay the appropriate duties.  Our office will vigorously investigate and prosecute importers who make false representations and claims designed to avoid the payment of lawful import duties.”

“The allegations resolved by today’s settlement were initially alleged in a whistleblower lawsuit filed under the False Claims Act by John Dickson, president of a domestic producer of CVP-23. Under the False Claims Act, private citizens can sue on behalf of the United States and share in any recovery.” “Mr.Dickson will receive more than $7,875,000 as his share of the government’s recovery.” 

“The False Claims Act suit was filed in the U.S. District Court for the Western District of North Carolina, and is captioned United States ex rel. Dickson v. Toyo Ink Manufacturing Co., Ltd., et al., No. 09-CV- 438 (W.D.N.C.).”


Attached is a brief the Justice Department filed against two executives in the Au Optronics Taiwan LCD Cartel Case.  DENY BAIL FOR TAIWAN INDIVIDUALS In the case, two Taiwan Chinese executives were convicted and sentenced to three years in Federal Prison.  The two executives tried to persuade the Court to give them bail and stop them from going to jail this November.

The Justice Department opposed their motion for bail and said they should directly go to prison, because parts of the cartel activity took place in the United States and directly affected US consumers.  The brief is interesting reading to show how foreign defendants have a difficult time arguing that the criminal activities took place in foreign countries and, therefore, they should get out of the case.

The brief illustrates the long reach of the US law and how it can apply to citizens in foreign countries.


On December 12, 2012, billion-dollar international hedge fund US Company Tiger Asia Management LLC pled guilty to civil and criminal charges of insider trading of Chinese bank stocks on the Hong Kong exchange in New Jersey federal court Wednesday, agreeing to pay a combined $60 million in disgorgement and penalties for using insider information to short Chinese bank stocks.

Tiger Asia founder Sung Kook “Bill” Hwang, 48, pled guilty to one criminal count of wire fraud on behalf of the company, according to the U.S. Department of Justice. U.S. District Judge Stanley R. Chesler sentenced the company to one year of probation and ordered Tiger Asia to forfeit $16 million in criminal proceeds.

The company also agreed to settle insider trading charges in a parallel action brought by the U.S. Securities and Exchange Commission, agreeing to pay $44 million in disgorgement and penalties, according to the SEC.  “Hwang today learned the painful lesson that illegal trading offshore is not off-limits from U.S. law enforcement, and tomorrow’s would-be securities law violators would be well-advised to heed this warning,” said Robert Khuzami, director of the SEC’s Division of Enforcement.

The criminal and civil complaints alleged that Tiger Asia used non-public information from investment bankers to short-sell stock in three Chinese bank stocks traded on the Hong Kong Stock Exchange, according to the government.

Attached is a copy of the SEC complaint that was filed on December 12, 2012.  TIGER ASIA COMPLAINT 


On December 11, 2012, the Securities and Exchange Commission (“SEC”) filed a complaint against Huakang/David Zhou and Warner Investments for multiple securities violations, including fraud.  Zhou and Warner Investments acted as an advisor to over 20 Chinese companies that used a reverse merger to go public.  These Chinese  include China Yingxia International and American Nano Silicon Technologies, which, in turn, have been convicted of fraud.

In paragraph 3 of the Complaint, the SEC states’ “From at least 2007 through 2010, Defendants engaged in varied misconduct involving some of the same clients, ranging from nondisclosure of certain holdings and transactions to outright fraud in violation of federal securities laws.”  Attached is a copy of that SEC complaint. SEC ZHOU WARNER

If you have any questions about these cases or about, the trade, customs/false claims act, antitrust or securities law in general, please feel free to contact me.

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