Volume 49, Issue 2 - February 2014


Basco Pays More Than $1 Million in Anti-Dumping Settlement Agreement

The U.S. government is cracking down when it comes to antidumping and countervailing duties on aluminum extrusions from China. Basco Manufacturing Co. recently agreed to pay more than $1 million to resolve allegations that it violated the False Claims Act by submitting false customs declarations to avoid paying duties on aluminum extrusions from China that were at the time subject to combined antidumping and countervailing duties of more than 400 percent.

According to the Department of Justice, Basco consented to paying $1.1 million after being named as one of four companies to have allegedly engaged in an illegal practice known as transshipping to avoid paying required duties by shipping the aluminum extrusions manufactured by the Chinese company Tai Shan through Malaysia. In its lawsuit, the government alleges that the defendants knew the aluminum extrusions were merely repackaged in Malaysia and had not undergone any substantial transformation that would have justified the changing of the product’s country of origin from China to Malaysia.

“Companies that import products made abroad must comply with the law,” says Stuart F. Delery, the assistant attorney general for the Justice Department’s Civil Division, “including paying the import duties that protect manufacturers and producers from unfair competition. The Department of Justice is committed to enforcing the law against those who fail to pay the government money it is owed, just as it will enforce the law against those who falsely claim government funds.”

According to the DOJ, Basco and the other defendants named in the government’s lawsuit allegedly engaged in a scheme to avoid duties by shipping the aluminum extrusions manufactured by Tai Shan in the PRC through Malaysia–a practice called transshipping. The U.S. government alleges that Basco and the defendants knew that the aluminum extrusions were merely repackaged in Malaysia and did not undergo a substantial transformation that may have justified changing the product’s country of origin.

No Settlement Reached, Viracon Continues $1 Million Lawsuit
Viracon Inc. is moving forward with a lawsuit aimed at collecting the more than $1 million dollars the company alleges it is owed for the insulating glass units (IGUs) it specifically manufactured and delivered to two New York companies.

In papers filed jointly with the U.S. District Court for the Southern District of New York, attorneys for Viracon, of Owatonna, Minn., and the two Valhalla, N.Y.-based defendants, J&L Curtain Wall LLC and Cappelli Enterprises Inc. (CEI), say they were unable to reach a settlement during a 45-day stay period granted by the judge.

Viracon, which wants a jury trial to resolve the matter, is seeking “direct, actual and compensatory damages” for “an amount greater than $1,315,000 plus pre-verdict interest” for IGUs delivered to J&L on behalf of CEI without payment, according to documents filed in March 2013 by James S. Dobis, the company’s New York-based attorney.

Viracon alleges that it manufactured and delivered the IGUs ordered by J&L “on behalf of itself and/or Cappelli Enterprises” in 2009, according to court documents. J&L Curtain Wall and CEI concede that “Viracon delivered certain IGUs to J&L,” but denies that J&L was acting on its behalf. If true, responsibility for the bill would fall exclusively on J&L, which is no longer in business.

Neither Dobis nor Patrick M. Reilly, the White Plains, N.Y.-based attorney representing both defendants, could be reached for comment.

Viracon says it acted “in good faith” when it manufactured and/or delivered the IGUs to CEI “through its agent, J&L,” according to court records. Viracon accuses CEI of “illegally, unlawfully and/or unfairly benefited from the manufacture and/or receipt of the IGUs by accepting the IGUs and then failing to make the necessary payments.”

The plaintiff says the IGUs that CEI received were valued at more than $963,800, while the others Viracon specifically manufactured had a collective value of more than $97,000, according to court records.

Viracon alleges that J&L is now “insolvent and/or no longer actively engaged in business,” according to court papers.

A woman who answered the phone at J&L’s headquarters confirmed that the company was no longer in business.

Federal Judge Issues Default Judgment Against AAI
A federal judge has issued a default judgment against American Architecture Inc. (AAI) and ordered the seizure and sale of remaining company properties to help pay off the bankrupt company’s debts.

Judge Kenneth M. Karas of the U.S. District Court for the Southern District of New York issued the decree against AAI and Metalteck Inc. in the hopes of recovering the more than $11,000 the two companies owe workers in the form of benefits to eligible employees, retirees and their dependents. Aware of AAI’s earlier Chapter 11 bankruptcy petition, the Trustees of the District Council 9 Painting Industry Insurance and Annuity Funds filed suit on their behalf in June 2012.

Karas’s action from the bench was a result of both the Bensalem, Pa.-based AAI and Metalteck failing in “having appeared, answered or otherwise moved with respect to the complaint within the time allowed by law,” according to documents filed with the court.

AAI filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania, listing its 20 largest unsecured claims totaling approximately $3.9 million, according to court records. The company listed between 200 and 999 creditors, with estimated assets between $10 million and $50 million, and liabilities between $10 million and $50 million in its voluntary petition for bankruptcy signed by company president John Melching.

Several glass industry suppliers were among the company’s largest 20 creditors, court records show. They included Safti First, of San Francisco ($236,598.335); Pedricktown, N.J.-based J.E. Berkowitz LP ($117,106.88); OldcastleBuilding Envelope®’s Hauppauge, N.Y.-based office ($97,764.53); and Ellison Bronze Inc. of Falconer, N.Y. ($54,418.90), among others.

Judge Orders Bank to Comply with Dlubak Sale
federal judge has issued a decree compelling First Commonwealth Bank to comply with previously-agreed upon terms involving the sale of the bankrupt Dlubak Corp. to Grey Mountain Partners Fund II LP in September. Judge Jeffrey A. Deller of the U.S. Bankruptcy Court of the Western District of Pennsylvania issued a motion requiring First Commonwealth Bank to pay Grey Mountain Partners $101,355.55 in funds the bank received from Dlubak Corp. accounts immediately following the September 23 auction in Pittsburgh of the company’s non-real estate assets.

Grey Mountain Partners will pay the remainder of Dlubak Corp.’s unpaid employee obligations, totaling $20,993. Per terms of the judge’s decree, Grey Mountain Partners will be entitled to offset its total unpaid employee obligations paid of $45,347.67 against past due, current and future lease payments, according to court records.

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