The $1.8 Billion Aluminum Fraud That Settled for $549M

A federal jury convicted six Perfectus Aluminum shell companies in 2021 of spot-welding 2.2 million aluminum extrusions⧉ into fake pallets to dodge duties on Chinese aluminum -- a scheme the Justice Department's civil complaint alleges⧉ deprived Customs and Border Protection of more than $3 billion.▸ A court ordered the companies to pay $1.84 billion in restitution the next year. In 2024, a federal appeals court vacated that order and sent it back for reconsideration -- and it has not been reissued since. What the Justice Department actually collected, in a civil settlement finalized this May⧉ by selling off the seized warehouses and the unsold pallets themselves, is $549.5 million -- less than a third of the restitution figure and a fraction of what prosecutors say the fraud actually cost.

Antidumping and countervailing duties are tariffs Commerce imposes specifically when a foreign producer sells into the U.S. below cost or with a government subsidy -- a tool meant to offset the price advantage, not just collect revenue.▸ Commerce imposed such duties on aluminum extrusions from China in May 2011⧉, after the U.S. International Trade Commission found the imports were materially injuring domestic manufacturers. China Zhongwang Holdings, which the government's own court filings describe as the largest aluminum extrusion company in Asia⧉, responded by tack-welding its extrusions together so they resembled pallets -- a finished-goods form the duties weren't written to reach.

Between 2011 and 2014, Perfectus Aluminum, acting as Zhongwang's U.S. buyer, imported 2.2 million of these pallets⧉, paid for with money Zhongwang itself funneled through Hong Kong shell companies.▸ There were no customers. Prosecutors say the pallets existed only to get the metal past customs; the plan, once they'd cleared the border, was to melt them back down.

On August 23, 2021⧉, a jury in the Central District of California convicted the Perfectus companies and four affiliated warehouse operators of conspiracy, wire fraud, and passing false documents through a customhouse.▸ The court then ordered them, jointly and severally, to pay $1,836,244,745 in restitution⧉ to CBP -- a debt meant to make the government whole for duties it was never paid. It didn't hold. On July 31, 2024⧉, the Ninth Circuit affirmed the convictions but vacated the restitution order and remanded the case to the district court, which -- as of the docket's last recorded filing -- had not reissued one.

With the criminal restitution track stalled on remand, DOJ closed the case's civil side separately, resolving three qui tam whistleblower suits⧉ filed starting in 2015 -- one by former sales contact Mike Rapport, one by former warehouse-company executive Eric Shen, and one by the Aluminum Extruders Council, the trade group for domestic aluminum producers.▸ The settlement, finalized May 12, 2026⧉, totals $549,594,030: $349,594,030 from selling the four warehouses the companies used to store the aluminum, and $200,000,000 from selling the 279,808 pallets⧉ CBP had seized and still held. That is the entire recovery -- built from the same physical assets that, under an October 2025 side agreement⧉, had originally been earmarked to pay down the (now-vacated) restitution order instead.

The settlement resolves civil claims only against the corporate shells -- Perfectus Aluminum and its warehouse affiliates -- and explicitly reserves "any liability of individuals"⧉, as well as the criminal restitution and forfeiture obligations from the underlying case.▸ Zhongtian Liu, the Zhongwang chairman the original indictment names as directing the scheme, and the executives who ran it day to day, were never parties to this agreement. Neither was Zhongwang itself. Whatever the government still intends to collect from them -- on the vacated restitution order or otherwise -- remains an open question with no date attached.

The Trade Fraud Task Force⧉, the DOJ-DHS unit that opened in August 2025 to prosecute customs fraud, announced on July 14, 2026 that it had surpassed $1 billion in recoveries and charged losses in under a year.▸ Perfectus Aluminum's $549.5 million settlement, finalized two months earlier, accounts for roughly 55% of that total by itself -- more than every other case DOJ named in the same announcement combined. The Aluminum Extruders Council⧉, whose 170-plus U.S. member facilities across 36 states compete against the kind of underpriced imports the 2011 duty order was meant to stop, filed its own qui tam suit against Zhongwang in 2018 -- one of the three whistleblower claims that eventually forced the settlement.