Rulings, remedies and court proceedings for customs and trade professionals

DOJ Asks Trade Court to Add 'Shell Company' as Defendant in Evasion Penalty Case

DOJ has asked the Court of International Trade permission to add AB MA Distribution Corporation as a defendant alongside Zhe "John" Liu and GL Paper Distribution in an amended complaint in a penalty case at the Court of International Trade. AB MA is allegedly a shell company through which Liu continued an illegal transshipment scheme to import Chinese-origin wire hangers through Malaysia, India and Thailand in order to evade antidumping and countervailing duties (see 2302070047) (United States v. Zhe "John" Liu, CIT # 22-00215).

Start A Trial

The government said that "justice requires" the addition of AB MA as a defendant, in its March 13 motion, and explains that the company was only added now "because the administrative penalty process against AB MA, which precedes filing a complaint in section 1592 action, has now been perfected." It is generally the court's policy to permit amendment with "extreme liberality," DOJ said, citing the Federal Circuit, and noting that the higher court has said that "a district court’s discretion to deny leave to amend a complaint is ‘severely restricted.’"

Liu is behind a multiyear fraud scheme involving several companies that he operated or was an agent of, including GL Paper and AB MA Distribution Corp, the government alleged when it originally brought the case in July (see 2207220042). Liu allegedly created the succession of companies to obscure his involvement in various transshipment schemes, DOJ has argued. Therefore, "because it is the company through which Mr. Liu continued the wire hanger transshipment scheme while continuing his modus operandi of concealing his identity," AB MA must be added, it said.