CWD, a.k.a. Centric Parts, has agreed to pay $8 million to resolve allegations that it knowingly underpaid U.S. customs duties in violation of the False Claims Act and the Tariff Act. The alleged misconduct was brought to light in two whistleblower lawsuits. Steve Hughes, a former vice president of Centric Parts, and Jeffrey Hawk, also a former Centric employee, filed the complaints under the False Claims Act. The two whistleblowers will split a $1.48 million reward.
Headquartered in Carson, Centric Parts imports car parts, including aftermarket brake components. As part of the import process, the company is required to declare what type of parts it is importing and to pay the customs duties that apply. According to the whistleblowers, for over a decade, Centric Parts submitted false information to the U.S. Customs and Border Protection in order to avoid paying customs duties on certain brake pads.
According to the complaint, Centric regularly passed off mounted brake pads as unmounted ones on the customs documentation. While the unmounted version carries no tariff, mounted brake pads carry a 2.5 percent tariff. Thus, the company allegedly submitted false information in order to avoid paying millions of dollars in customs duties.
The alleged misconduct took place between 2007 and 2017. Whistleblower Steve Hughes went straight to Centric’s CEO when he found out the company had misclassified brake-pads in customs documentation. Allegedly, the former Centric VP told the company’s top executives that they should disclose the issue to the government. Instead of coming clean, the defendant retaliated against Hughes, who was eventually forced to resign. With Hughes out of the way, Centric likely continued to evade customs duties on a regular basis.
The whistleblower lawsuits that exposed Centric’s alleged misconduct were filed in Detroit and Los Angeles. According to the U.S. attorney for the Eastern District of Michigan, the case helped hold the defendant accountable “for its unlawful evasion of customs duties."
Whistleblowers like Hughes and Hawk, who report fraud against the U.S. government under the False Claims Act, can be eligible for rewards of up to 30 percent of any recoveries resulting from their information and assistance.
To find out how we can help you report fraud and collect your cash award, please contact our Orange County whistleblower litigation attorneys today: