Two whistleblowers will split a $1.48 million reward for their help uncovering fraud and false claims at CWD Holdings LLC, an aftermarket car and truck parts company based out of California. The whistleblowers, Jeffrey Hawk and Steven Hughes, filed separate cases under the qui tam provision of the False Claims Act but will share the whistleblower reward in CWD Holdings’ $8 million settlement with the U.S. government.
Hawk and Hughes, both employees of CWD Holdings, noticed that when the company imported certain brakes, they claimed at customs that the imported brake pads were unmounted when in reality, the brake pads were mounted. CWD Holdings made this claim to allegedly avoid a 2.5% tariff set on mounted brake pads under the Harmonized Tariff Schedule. Between 2007 and 2017, CWD Holdings allegedly avoided millions of dollars in tariffs by misrepresenting the goods to customs officers.
Under the False Claims Act, whistleblowers, or relators, are eligible to receive 15 to 30% of the total funds recovered by the government. In the CWD Holdings case, the relators will share the $1.8 million reward. CWD Holdings has agreed to pay the U.S. government to settle allegations in this case and to avoid a determination of liability. Successful qui tam settlements encourage more potential whistleblowers to step forward and report fraud at their companies.