The Department of Justice (DOJ) recently announced that Allied Stone Inc., a Dallas, Texas-based supplier of countertop and cabinetry products, agreed to pay $12.4 million settlement to resolve whistleblower allegations that it violated the False Claims Act by shirking duties owed to the United States on imported products. The allegations were brought forward by relator Melinda Hemphill under the qui tam whistleblower provision of the False Claims Act. Hemphill will receive approximately $2,170,875 of the settlement proceeds for her contribution.
“This settlement reflects our commitment to hold accountable those who evade or conspire to evade duties owed on imported goods, including antidumping and countervailing duties that level the playing field for American manufacturers,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Department of Justice will zealously pursue those who seek an unfair advantage in U.S. markets by evading or conspiring with others to evade duties owed.”
According to the DOJ allegations, Allied Stone and its president knowingly violated the False Claims Act by evading duties on quartz surface products that were imported from the People’s Republic of China (China) between 2018 and 2023. The United States also alleged that Allied Stone misrepresented Chinese quartz surface products as other merchandise subject to lesser duties, such as marble or crystallized glass, to fraudulently avoid relevant antidumping and countervailing duties.
“This case demonstrates that the United States Attorney’s Office for the Northern District of Texas and its partners will use every tool available to ensure compliance with our nation’s trade policy, including customs, duties, and tariffs on foreign imports meant to level the playing field,” said Acting U.S. Attorney Nancy E. Larson for the Northern District of Texas. “This settlement sends a message that U.S. companies cannot turn a blind eye to the evasion of customs duties.”
Whistleblowers like Ms. Hemphill are one of the strongest of these tools. The False Claims Act’s qui tam whistleblower provisions enable private citizens and private parties to file lawsuits on behalf of the government if they know of an individual or company defrauding the government. Qui tam whistleblowers are eligible to receive between 15% and 30% of the government’s recovery.
During FY 2024, settlements and judgments under the False Claims Act exceeded $2.9 billion, and over $2.4 billion of the recoveries stemmed from qui tam whistleblower lawsuits. Furthermore, according to the DOJ, a record 979 qui tam lawsuits were filed in FY 2024.
However, in September 2024, a district judge in Florida ruled that the False Claims Act’s qui tam provisions were unconstitutional. The U.S. federal government is urging the U.S. Court of Appeals for the Eleventh Circuit to reverse that decision, stating in a brief that “other than the district court here, every court to have addressed the constitutionality of the False Claims Act’s qui tam provisions has upheld them.”
The National Whistleblower Center has issued an Action Alert allowing whistleblower supporters to write their members of Congress, urging them to protect and strengthen the False Claims Act.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.
