Canadian Steel Companies and Owner to Pay $19M to Settle False Claims Act Allegations Relating to Evaded Customs Duties

By Patrick Rowan, Alex J. Brackett, John Padgett, Edwin O. Childs, Brett Barnett, Michael J. Podberesky, Abram J. Pafford, Jack White, Jason M. Vespoli, Sophie Marsh & John Sullivan on May 28, 2026

On May 20, 2026, the U.S. Department of Justice (DOJ) announced a settlement under the False Claims Act (FCA) with two Canada-based steel companies, Farjess Inc. and Royal Canadian Steel Inc., and their part-owner and president, Feroz Jessani, pursuant to which the companies and Jessani agreed to pay $19 million to resolve allegations that they knowingly and improperly misrepresented the country of origin and failed to pay duties owed on flat-rolled steel manufactured in Europe and Asia. The settlement underscores the government’s continued and aggressive use of the FCA to pursue Trump Administration policy priorities, including the active implementation of tariffs and customs duties, and reinforces the importance of accurate country-of-origin declarations when importing foreign materials and products.

Background: Import Duties and Country-of-Origin Requirements

To enter goods into the United States, an importer must declare, among other things, the country of origin and value of the goods, whether the goods are subject to duties, and the amount of duties owed. U.S. Customs and Border Protection (CBP) collects applicable duties based on these declarations. Import duties serve an important role in protecting national interests and American industry, as Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division emphasized in the announcement: “The Department of Justice will zealously pursue anyone who fraudulently evades the duties owed on steel products imported into this country.”

Alleged Duty-Related Misrepresentations

The settlement resolves allegations that, from May 2019 through January 2025, Farjess, Royal Canadian Stee, and Jessani avoided duties owed to the United States by knowingly misrepresenting the country of origin of certain flat-rolled steel as Canada or the United States, when the true country of origin was China, Indonesia, Italy, Turkey, or Vietnam. By misrepresenting the country of origin, the defendants allegedly evaded antidumping and countervailing duties, as well as Section 232 duties, that applied to steel products from those countries.

Whistleblower Origins and the Qui Tam Provisions of the FCA

The settlement resolves a civil lawsuit filed by Shamsh Dhala, a broker who worked with Farjess Inc., in behalf of the United States under the whistleblower provision of the FCA. The qui tam provisions allow private parties to file suit on behalf of the United States in connection with the submission of false claims and share in a portion of the government’s recovery. The initial qui tam claim was filed in the Eastern District of Michigan. See United States ex rel. Dhala v. Royal Canadian Steel Inc. et al., No. 2:23-cv-12097 (E.D. Mich.). As part of the resolution, Mr. Dhala will receive approximately $3,610,000 of the settlement proceeds, as well as legal fees.

DOJ described the settlement as “record-setting” and continues to encourage whistleblowers to alert the government to credible allegations of fraud, including under both the qui tam provisions of the FCA and the DOJ’s Corporate Whistleblower Program. Consistent with DOJ’s practice, the settlement agreement provides that the claims resolved by the settlement constituted only allegations, with no determination of liability.

Practical Implications for Importers, Federal Contractors, and Compliance Officers

This settlement carries several important implications for companies engaged in importing goods into the United States.

First, DOJ’s continued application of the FCA in connection with customs-related fraud signals that the government views the knowing submission of false country-of-origin declarations as a viable FCA theory of liability. Companies that import steel or other goods subject to antidumping, countervailing, or Section 232 duties should pay particular attention to the accuracy of their customs entries.

Second, the size of this settlement — $19 million — and DOJ’s description of it as “record-setting” indicate an escalation in enforcement intensity in this area. When viewed alongside the recent $549.5 million settlement with Perfectus Aluminum Inc. (and related companies) for similar customs-related allegations, DOJ is confirming that customs fraud enforcement through the FCA is a significant enforcement and policy priority.

Third, the whistleblower’s share of the recovery (approximately $3.61 million, or roughly 19% of the settlement) serves as a powerful reminder that employees, and agents, including brokers, logistics professionals, and other industry insiders, have been encouraged to disclose information about potential customs fraud. Companies should appreciate that employees, contractors, and business partners have financial incentives to file qui tam actions when they observe potentially fraudulent import practices.

Takeaways and Recommended Action Items

In light of this settlement and the broader enforcement environment, companies that import goods into the United States — or that rely on imported materials in connection with federal contracts or federally funded projects — should consider the following steps:

Companies should consider conducting an internal review of customs compliance programs, with particular attention to country-of-origin determinations and processes used to verify the accuracy of information submitted to CBP. In many cases, this review may need to extend to third-party customs brokers and other intermediaries involved in the import process.
Companies should ensure that their compliance programs include adequate training for employees and agents responsible for preparing and reviewing customs declarations. Personnel should understand that the submission of false information to CBP can give rise to potential criminal, civil, and administrative liability for both the company and individuals participating in such conduct.
Companies should evaluate whether their supply chain documentation is sufficient to support country-of-origin determinations made in connection with customs entries. Given the allegations in this case — which involved steel manufactured in multiple countries but declared as originating in Canada or the United States — companies should maintain robust records tracing the provenance of imported goods.
Companies should also review their whistleblower and internal reporting mechanisms to ensure that employees and business partners have accessible channels to report potential compliance concerns. DOJ’s continued encouragement of qui tam filings and the Corporate Whistleblower Program suggests that early identification and self-disclosure of potential issues may be preferable to waiting for a whistleblower to act.

Finally, in light of the current tariff environment, companies should monitor evolving duty requirements and ensure that their compliance programs are updated to reflect changes in applicable tariff rates and trade policies. The period covered by the alleged scheme in this case — May 2019 through January 2025 — spans multiple administrations and several shifts in trade policy, underscoring the need for ongoing vigilance.