Hoyer Law Group, PLLC, is pleased to announce an $8 million settlement of a lawsuit brought on behalf of its whistleblower client Jeffrey S. Hawk against CWD Holdings, LLC (CWD), and other defendants. David L. Haron had the privilege to be lead counsel for Mr. Hawk.
CWD, a California-based company, is one of the largest distributors of aftermarket brake and chassis parts in North America. Mr. Hawk alleged that CWD violated the False Claims Act by importing brake components from China without paying tariffs required by the Harmonized Tariff Schedule.
On July 7, 2017, Mr. Hawk, then a Controller for Qualis, a CWD subsidiary and affiliate of Centric Parts, filed a lawsuit in the Eastern District of Michigan captioned United States ex rel. Jeffrey S. Hawk v. CWD Holdings, LLC, No. 17-cv-12225-BAF (E.D. Mich. 2017), under the qui tam provisions of the False Claims Act, 31 U.S.C. § 3730(b). Mr. Hawk’s complaint alleged that CWD concealed a decade-long tariff misclassification of imported brake pads from U.S. Customs and Border Protection (CBP).
The alleged scheme resulted in CWD’s nonpayment of a 2.5% tariff on those imported brake pads, resulting in the improper avoidance of millions of dollars in import duties. In April 2017, CWD officers allegedly concealed the past misclassification to CBP when confronted with the misclassification.
The False Claims Act allows whistleblowers like Mr. Hawk to share in the government’s recovery. In this case, Mr. Hawk and another whistleblower will receive an award of approximately $1.5 million.
Mr. Hawk, who worked as a financial professional in the automotive industry for nearly 35 years and has extensive experience with international trade, alleged he immediately brought the misclassification issue to the attention of Centric. After Centric officials ignored his recommendation to report the misclassification to CBP, Hawk knew he had to turn to the U.S. government for help.
When our operation was preparing to import finished brake pad sets into the U.S. for the first time in 2017, I reached out to our parent organization for guidance on what we could expect in terms of inbound freight and duty charges. The example provided suggested that there was no duty on imported brake pads, which didn’t seem correct. After a brief investigation, I concluded that the proper duty rate was 2.5%, and immediately suggested to Centric’s CFO and Director of Operations that they needed to calculate the underpayment, and report it to CBP, and to ownership. Once I learned that CWD did not follow my recommended course of action to pay the tariff properly, I had no choice but to file on behalf of the U.S. government. I am pleased that because of my actions, the government recovered $8 million that rightfully belongs to the U.S. taxpayers.Whistleblower Client Jeffrey Hawk
Mr. Hawk risked his career to shine a light on the fraudulent conduct of his employers. His brave decision to come forward allowed for a remedy for all American taxpayers. Hoyer Law Group is also deeply grateful for the hard work of Assistant U.S. Attorneys Caroline Burgunder and John Spaccarotella from the Eastern District of Michigan on the case.