Farjess Inc. Labeled Its Steel 'Made in Canada.' Regulators Say It Actually Came From China, Turkey, and Vietnam.

Canada-based steel companies Farjess Inc. and Royal Canadian Steel Inc., along with their part-owner and president, Feroz Jessani, have agreed to pay $19 million to resolve allegations that they violated the False Claims Act by misrepresenting the true country of origin of imported flat-rolled steel to avoid customs duties owed to the United States.DOCUMENTED

The settlement resolves a whistleblower lawsuit alleging that, from May 2019 through January 2025, the companies knowingly declared steel as originating in Canada or the United States when they actually knew it had been manufactured in China, Indonesia, Italy, Turkey, or Vietnam.DOCUMENTED

Why country of origin determines the duty owed

When goods enter the United States, an importer must declare the country where the merchandise was actually manufactured, since antidumping and countervailing duties — tariffs designed to offset unfairly low pricing or foreign government subsidies — generally apply based on where a product genuinely originated, not where it was last shipped from or nominally associated with.REVIEWED U.S. Customs and Border Protection collects these duties at the point of entry, relying on the importer's declared country of origin to determine what, if anything, is owed.DOCUMENTED

According to the settlement, Farjess, Royal Canadian Steel, and Jessani declared certain flat-rolled steel products as originating in Canada or the United States — countries not subject to the relevant antidumping and countervailing duty orders — when the companies actually knew the steel had been manufactured in China, Indonesia, Italy, Turkey, or Vietnam, each of which was subject to applicable duties on the specific steel products at issue.DOCUMENTED

Officials' statements

"Import duties serve an important role in protecting our national interests generally and the American steel industry in particular," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division. "The Department of Justice will zealously pursue anyone who fraudulently evades the duties owed on steel products imported into this country."DOCUMENTED

The companies allegedly declared their steel as Canadian or American-made — a label that, if false, was the only thing separating the shipment from the antidumping duties owed on steel from its true countries of origin.

The whistleblower behind the case

The settlement resolves a lawsuit filed under the False Claims Act's qui tam provisions by Shamsh Dhala, a broker who worked directly with Farjess Inc., captioned United States ex rel. Dhala v. Royal Canadian Steel Inc. et al.DOCUMENTED As part of the resolution, Dhala will receive approximately $3.61 million of the settlement proceeds — roughly 19 percent of the total recovery — reflecting his role in bringing the underlying misrepresentation to the government's attention.DOCUMENTED

Part of a sustained trade-fraud enforcement push

The Justice Department linked the settlement to its broader anti-fraud initiatives, including the Task Force to Eliminate Fraud and the National Fraud Enforcement Division, both created to expand the government's use of the False Claims Act against fraud, waste, and abuse involving federal programs and government revenue collection.DOCUMENTED The case follows a pattern of escalating customs-fraud recoveries in recent years, as trade-fraud enforcement has become an increasingly prioritized area for the Civil Division's Commercial Litigation Branch, working alongside CBP to identify country-of-origin misrepresentation across a range of imported commodities.REVIEWED

Approximately half of all trade flowing between the U.S. and Canada crosses through the district where this case was investigated, according to officials involved in the matter — a detail that underscores how significant accurate country-of-origin declarations are to enforcement resources concentrated along that specific trade corridor.REVIEWED As with other False Claims Act settlements, the allegations against Farjess, Royal Canadian Steel, and Jessani remain allegations only, with no court determination of liability.REVIEWED

Why transshipment schemes are difficult to detect at the border

Customs officials processing high volumes of imports generally rely on the accuracy of an importer's own paperwork rather than independently testing or tracing every shipment's actual manufacturing origin, since verifying steel's true country of origin typically requires documentation, mill certificates, or metallurgical testing that goes well beyond what a routine customs inspection can practically confirm.REVIEWED That reliance on self-reported accuracy is precisely what a transshipment scheme exploits — routing or relabeling goods through a country not subject to the relevant duty, or simply declaring a false origin outright, in a way that can pass through ordinary customs processing without triggering scrutiny unless a specific tip or whistleblower complaint prompts a closer look.REVIEWED

The $19 million recovery, alongside the broader wave of customs-fraud settlements the Justice Department has pursued in recent years, reflects a sustained effort to close that detection gap by relying more heavily on industry insiders — brokers, competitors, and former employees — who have direct visibility into where imported goods actually originate.REVIEWED

The size of Dhala's relator share, at roughly 19 percent of the total recovery, sits toward the higher end of the range typically awarded in qui tam cases, reflecting both his direct role as a broker with firsthand knowledge of the alleged misrepresentation and the significance of the underlying recovery to the government's broader customs-enforcement priorities. For brokers, logistics professionals, and others positioned to observe country-of-origin misrepresentation firsthand, the settlement offers a concrete illustration of how the False Claims Act's whistleblower provisions can translate that inside knowledge into a substantial personal recovery, while also helping close a gap in enforcement that customs inspection alone is poorly positioned to catch on its own, no matter how thorough any single border inspection check might be at the actual point of entry.REVIEWED

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