Centric Parts to Pay $8 Million in DOJ Settlement Update

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Source: Daily Breeze post

CARSON, Calif. – Centric Parts, a Carson-based auto-parts supplier, agreed to pay $8 million to settle two lawsuits that accused the corporation of falsifying documents to evade paying millions of dollars in customs to the United States, federal officials said Tuesday.

Centric Parts and its affiliates, which sell aftermarket brake and chassis components for passenger vehicles and trucks, imports brake pads into the United States, the Department of Justice said in a statement.

Centric Parts was responsible for submitting entry documents to Customs and Border Protection, including for the payment of customs duties owed on the brake pads. But allegedly it falsified tariff documents to evade paying millions of dollars to the United States.

The company issued the following statement: “This settlement represents an appropriate resolution of this situation, which did not involve anybody who worked for Centric Parts or any division of APC Automotive Technologies by the time it was brought to our attention. We have put a new process in place to ensure that a similar issue does not arise in the future, and we look forward to putting this behind us as we continue our strategic and operational transformation.”

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Centric Parts moving some operations to Texas

The settlement was signed by various parties in early July.

From 2007 to 2017, Centric Parts imported mounted brake pads – which have a 2.5 percent tariff – but was accused of falsely claiming that they were unmounted brake pads, which do not have a tariff.

When confronted in 2017, Centric Parts did not disclose documents to officials, the Department of Justice said.

Two former employees, Steven Hughes and Jeffrey Hawk, were whistleblowers in the case and filed the two lawsuits against Centric Parts on behalf of the government. They will receive a combined $1.5 million of the settlement, the Department of Justice said.

The remaining $5.5 million is restitution, according to the settlement agreement.

Centric Parts has filed for bankruptcy, but the court confirmed that the settlement debt must be paid by the reorganized company.

Last year, Centric Parts laid off nearly 300 employees at its Carson manufacturing facility as some of its operations were being moved to Texas. The company’s catalogs show 145,000 brake and chassis parts for nearly every passenger car or truck model since 1937.

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