Allied Stone Inc. and Its President Agree to Pay $12.4 Million to Settle FCA Claims Relating to Evaded Customs Duties

Allied Stone Inc. and Its President Agree to Pay $12.4 Million to Settle FCA Claims Relating to Evaded Customs Duties

On August 19, Allied Stone Inc., an Oklahoma corporation headquartered in Dallas, Texas, and its president, Jia “Jerry” Lim, agreed to pay a total of $12.4 million to settle the government’s False Claims Act (FCA) allegations that Allied knowingly evaded, or conspired to evade, antidumping and countervailing duties owed to the United States on quartz surface products imported from the People’s Republic of China between September 29, 2018, and February 7, 2023.

To import goods into the United States, the importer must declare, among other things, the country of origin of the goods, the value of the goods, whether the goods are subject to duties, and the amount of duties owed. The US Customs and Border Protection (CBP) is the agency responsible for collecting applicable duties. Such duties include antidumping and countervailing duties assessed by the US Department of Commerce. Antidumping duties are meant to protect against foreign companies “dumping” products on US markets at prices below cost, and countervailing duties are meant to offset foreign government subsidies on products. Quartz surface products from China are subject to both antidumping and countervailing duties.

The US Department of Justice (DOJ) alleged that Allied and Lim misrepresented, caused to be misrepresented, or conspired in the misrepresentation of Chinese quartz surface products as other merchandise to have them be subject to lesser duties, such as duties for marble or crystallized glass. This allegedly allowed Allied and Lim to avoid the applicable antidumping and countervailing duties on Chinese quartz surface products. Moreover, Allied and Lim allegedly failed to declare and pay, and failed to ensure manufacturers and third-party entities were declaring or paying applicable antidumping and countervailing duties owed to the United States. According to the DOJ, during the applicable time period, the Chinese quartz surface products were falsely represented as merchandise originating from locations other than China or as merchandise subject to lesser duties.

Under the settlement agreement, Allied agreed to pay $12,300,000, and Lim agreed to pay $105,000, which includes nearly $2.2 million as the relator’s share. The defendants also agreed to pay approximately $288,000 to the relator in satisfaction of attorneys’ fees, expenses, and costs incurred by the relator. As is customary in a civil settlement of this kind, the defendants did not admit the truth of the government’s allegations or that they are liable.

You can read the DOJ’s press release here and the settlement agreement here.

Federal Judge Trebles CVS PBM Overbilling Judgment and Awards Penalties Totaling Almost $290 Million

In a previous post, we reported that a court out of the Philadelphia-based Eastern District of Pennsylvania found that CVS Caremark Corporation, a pharmacy benefits manager (PBM) for CVS, overbilled Medicare Part D-sponsored drugs by $95 million in violation of the FCA. After an eight-day bench trial, the court concluded that Caremark knowingly submitted false claims by failing to accurately report the prices it “actually paid” for Medicare Part D drugs while inflating these prices through a sophisticated scheme involving generic effective rate (GER) guarantees with the pharmacies. This scheme allowed Caremark to benefit from a hidden “spread” or profit because the GER guarantees allowed Caremark to report inflated drug prices by offsetting overpayments on Medicare Part D drugs with underpayments on commercial drugs. At the time, the court awarded $95 million in damages but deferred ruling on whether to treble those damages and award penalties.

Now, after additional briefing, the court decided to treble Caremark’s damages and award civil penalties. This resulted in a damages award of $285 million and a $5 million penalty. In awarding penalties, the court considered the seriousness of Caremark’s misconduct, particularly its efforts to conceal the scheme to earn its hidden spread from industry partners. In considering whether trebling Caremark’s damages would be constitutionally excessive, the court concluded that it would not under the circumstances, in part, because “the evidence at trial made clear that the fraud was financially motivated, not the result of some innocent or mistaken belief.”

The case is US ex rel. Sarah Behnke v. CVS Caremark Corp. et al., No. 2:14-cv-00824 (E.D. P.A.).

Jury Convicts Georgia Man for $16 Million COVID-19 Unemployment Scheme

Despite the end of the pandemic, the DOJ is still pursuing cases involving COVID-19 unemployment insurance fraud. On August 15, the DOJ reported that a jury convicted Malcom Jeffrey of Georgia with conspiracy to commit mail fraud for his role in a scheme to defraud the Georgia Department of Labor (GaDOL) out of millions of dollars of COVID-19 unemployment insurance (UI) benefits.

Particularly, Jeffrey and his co-conspirators allegedly caused more than approximately 7,000 fraudulent UI claims to be filed with the GaDOL, resulting in more than $16 million in stolen benefits. As part of the alleged scheme, Jeffrey and his co-conspirators fabricated lists of purported employees using personally identifiable information from hundreds of identity theft victims and filed fraudulent UI claims on the GaDOL website under his defunct business, Down N Dirty Transportation LLC. Jeffrey opened an account on the GaDOL’s website for the defunct business, allowing thousands of claims to be submitted through the account and for the fraudulent UI benefits to be disbursed. The stolen UI funds were then distributed to Jeffrey and his co-conspirators via prepaid debit cards mailed to various locations within the Cordele, Georgia, area.

Sentencing has not been scheduled. Jeffrey faces a maximum penalty of 20 years in prison.

Read the DOJ’s press release here.

Lab Co-Founder Sentenced to Three Years for $36 Million COVID-19 Test Fraud

On August 19, US District Judge Rodolfo A. Ruiz II of the Miami-based Southern District of Florida sentenced Enrique Perez-Paris to three years in prison for his role in submitting $36 million in unnecessary COVID-19 and genetic testing claims to health care benefit programs.

According to the government, Perez-Paris and his co-defendants were owners of Innovative Genomics LLC, an independent laboratory. From November 2019 to June 2023, the defendants and others allegedly submitted claims for medically unnecessary and non-reimbursable COVID-19 testing. The defendants also allegedly paid illegal kickbacks and bribes to patient recruiters who arranged for health care providers to refer the tests to Innovative Genomics. Additionally, the defendants allegedly caused the Health Resources and Services Administration COVID-19 Uninsured Program to be improperly billed for tests for Medicare beneficiaries. The defendants allegedly further billed for tests that the US Food and Drug Administration had not approved for emergency-use authorization.

The government charged Perez-Paris and his co-defendants with conspiracy to commit health care fraud and wire fraud, three counts of health care fraud, and conspiracy to commit money laundering. Perez-Paris pleaded guilty to one count of conspiracy to commit health care fraud and wire fraud. At sentencing, he was ordered to pay over $25 million in restitution.

You can read the government’s press release announcing the charges against Perez-Paris and his co-defendants here. The judgment reflecting the guilty plea and sentence is available in the court docket United States v. Perez-Paris, 1:24-cr-20155-RAR (S.D. Fla. Aug. 20, 2025), ECF No. 445.

North Carolina Company Enters Into NPA for Fraudulently Enrolling Medicare Beneficiaries in Identity Theft

On August 20, the DOJ announced that Troy Health, Inc., a North Carolina-based provider of Medicare Advantage, Medicare Part D, and Dual Eligible Special Needs Plans, entered into a non-prosecution agreement (NPA) to resolve a criminal investigation into a health care fraud and identity theft scheme involving the use of artificial intelligence (AI) and automation software to illegally obtain Medicare beneficiary information and fraudulently enroll beneficiaries into its Medicare Advantage plans.

In the NPA, Troy admitted that from October 2020 through December 2022, it defrauded Medicare by enrolling beneficiaries in Troy’s Medicare Advantage plans without their knowledge or consent. As part of the scheme, Troy’s territory managers used proprietary software to access pharmacy records and customer lists containing sensitive personal information. Troy then used that information to make unsolicited sales calls to potential beneficiaries. During those sales calls, Troy’s sales personnel provided false and misleading information to Medicare beneficiaries, such as by representing that Troy’s Medicare Advantage plan was being offered as a supplement to their existing health care plans rather than as a new plan.

Moreover, Troy used an AI-based health care management platform that it developed, Troy.ai, and made the platform available to participating pharmacies. Troy marketed Troy.ai as a product that would leverage data and machine learning to lower the cost of care and improve health outcomes. Troy misused the platform to obtain new enrollments, however, by offering pharmacies kickbacks for enrollment referrals submitted through Troy.ai.

In the NPA, Troy also admitted that it used information obtained from the customer lists to enroll beneficiaries in Troy’s Medicare Advantage plan without their consent. At its height, during the Medicare Advantage open enrollment period between January 1, 2022, and March 31, 2022, Troy enrolled over 2,700 new Medicare Advantage members, many through automatic or batch enrollments. Some employees even manually entered fraudulent enrollments through the Centers for Medicare and Medicaid Services website. Such conduct was promoted by Troy’s management, as, in 2021, executives announced an “aggressive but achievable” plan to triple Troy’s enrollment during the 2022 open enrollment period.

As part of the NPA, Troy agreed to pay a criminal penalty of $1,430,008.

Read the DOJ’s press release here.