Pittsburgh-area company to plead in Chinese electrodes case

AP News
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Posted: Feb 22, 2016 7:53 PM

PITTSBURGH (AP) — A company that supplies the steel industry has pleaded guilty to smuggling Chinese-made graphite electrodes into the United States.

An attorney for Ameri-Source International Inc. entered the plea on Monday before a federal judge, who immediately fined the company $250,000.

The fine is in addition to more than $2.1 million in restitution the company paid the government for importing the electrodes but lying about their size to avoid anti-dumping duties imposed by the U.S. Department of Commerce. The government sued the company in 2013 and settled that case last week when the company paid $3 million, which included the restitution but not the criminal fine imposed Monday.

According to the criminal charges, the company imported the electrodes, which are used to power electric arc steel furnaces, but lied about their size in April and June 2011 on shipments from Dalian, China.

The federal government charges a duty of nearly 160 percent on electrodes that are less than 16 inches in diameter to stop Chinese companies from dumping cheap smaller electrodes on the market.

Ameri-Source International, based in Bethel Park, just south of Pittsburgh, was falsely claiming the electrodes it imported were larger to avoid paying the duty, according to the criminal charges. There is no duty imposed on the larger electrodes.

The smuggling charges each carried up to a $500,000 fine and probation of one to five years. Under federal law, a company can be placed on probation and subject to additional sanctions if it violates the law again while on probation. But U.S. District Judge Joy Flowers Conti opted not to impose probation after defense attorney Tom Farrell told her the company was no longer in business.

During the hearing, Farrell had also told the judge that the civil settlement and criminal fine would punish Ameri-Source but enable the company to continue doing business. The U.S. Department of Justice unsealed the civil settlement, which involves three Ameri-Source-related companies, two of which continue to operate.

The companies' owner, Ajay Goel, declined to comment on the criminal case.

Assistant U.S. Attorney Leo Dillon told the judge that the smaller electrodes are used to keep melted scrap steel in its molten state. That process consumes the electrodes, so companies that recycle the molten steel are continually buying additional smaller electrodes, Dillon said.

The U.S. Department of Commerce issued an anti-dumping order after investigating claims filed in 2008 by two American companies, Superior Graphite Co., of Chicago, and SGL Carbon LLC, of Charlotte, North Carolina. The U.S. International Trade Administration investigated, and the Department of Commerce determined Chinese exporters were selling the smaller graphite electrodes at 133 percent to 159 percent less than normal value.

As a result, the government imposed a 159.64 percent duty on the smaller graphite electrodes to discourage American companies from buying the Chinese products.

Ameri-Source International dodged the duties on about $1.4 million worth of graphite electrodes it bought between December 2009 and March 2012. The restitution the company paid was based on anti-dumping duties it should have paid, Dillon said.