Brookfield companies, owners pay $10M to resolve customs allegations
Milwaukee Federal Building & U.S. Courthouse
MILWAUKEE - Two Brookfield companies and their principal owners, Ryan Schmus and Richard Horky, paid more than $10 million to resolve federal allegations that they failed to pay customs duties on goods imported from China.
Precision Cable Assemblies (PCA) and Global Engineered Products (GEP) are both based in Brookfield. PCA sells wire harnesses, battery cables, and other wiring products. GEP sells power distribution products.
When a company imports goods into the U.S., it is required to file entry documents with the Department of Homeland Security, Customs and Border Protection – including information about the value of the goods. The importer must declare that the values reported are true to the best of its knowledge and belief. The amount of duties owed depends, in large part, on the value of the goods and the applicable tariff rate.
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The Department of Justice alleged that PCA and GEP submitted and caused the submission of false commercial invoices to customs officials that significantly undervalued the goods imported from China from 2016 through November 2021.
GEP initially paid approximately $4.2 million in duties lost from the undervaluation scheme, the DOJ said. Pursuant to a settlement agreement, the defendants paid another $6 million to the U.S. to fully resolve its liability for the alleged evasion of duties – including its potential liability under the False Claims Act.
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The settlement resolves a lawsuit filed under the "qui tam" or "whistleblower" provision of the False Claims Act, which permits private parties to file suit on behalf of the U.S. for false claims.
The claims resolved by the settlement are allegations only; there has been no determination of liability.