Tariff evading aluminum ruse ends with nearly $550 million settlement by local companies

A cluster of companies with ties to Newport Beach, Riverside, Fontana and Ontario have agreed to pay $549.5 million to settle a lawsuit that contends they broke trade law by failing to pay the proper fees when importing aluminum from China, the U.S. Department of Justice announced Wednesday, May 13.

From June 2011 through June 2013, Perfectus Aluminum Inc., Perfectus Aluminum Aquisitions LLC and four affiliated warehousing companies from made false statements in order to avoid paying duties on aluminum, according to the DOJ statement.

"Unscrupulous, corrupt, and anti-competitive practices against American manufacturers will not be tolerated," First Assistant U.S. Attorney Bill Essayli for the Central District of California said in the statement. "Law enforcement will use all legal means to protect American taxpayers, workers, and businesses."

Tariffs on aluminum that could be made into finished goods were instituted in 2010, after a government investigation found that aluminum had been imported into the U.S. at less than fair value, hurting the domestic aluminum industry.

As part of a ruse to avoid those tariffs, prosecutors say the companies imported 2 million aluminum pallets that they claimed already were finished goods.

But instead of using or selling those pallets, the companies instead melted them down and sold off the aluminum for use in other products, prosecutors said.

The government in court findings has alleged that Zhongtian Liu — the founder of a company in China that makes aluminum bars and tubes — also controlled Perfectus Aluminum. Disguising the aluminum parts by welding them into the shape of pallets was an effort by Liu to continue importing aluminum from China into the United States while avoiding the required duties, according to previous court filings.

The pallets were stacked high in four Southern California warehouses — high enough for a fire inspector to write a citation at a Fontana facility.

But the plan to melt and sell the aluminum apparently fell apart when a stock trader in China accused Liu’s company of fraudulent market practices. The company decided to take the aluminum out of the Southern California warehouses and ship it to Vietnam, and to melt it down in that country, according to court filings. Vietnamese aluminum was not subject to the same tariffs as aluminum from China.

But agents acting on tips saw the aluminum being trucked out of an Irvine warehouse to a shipping port. And an examination of the aluminum on site — aided by lab tests — showed it was the type of aluminum that would be subject to tariffs. That kicked off the government investigation that ended with the multi-million dollar settlement.

"Consistent with the goals of the Task Force to Eliminate Fraud, this settlement reflects our commitment to hold accountable those who commit fraud on the government by withholding duties that are owed on imported goods," Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division said in the written statement. "The Civil Division will continue to zealously pursue those who attempt to evade such duties and harm U.S. manufacturing jobs."

Staff writer Brian Rokos contributed to this report.

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This story was originally published May 13, 2026 at 4:05 PM.