On January 12, 2015, a father and son pair of of executives pleaded guilty to charges in connection with their respective roles in a scheme to avoid antidumping duties. Gregory Magness, who was president of Superior Metal Powders, Inc., pleaded guilty to conspiracy to smuggle and conspiracy to commit money laundering before Chief U.S. District Judge William M. Skretny in the Western District of New York. The charges carry a maximum penalty of 10 years in prison and a $250,000 fine. Gregory Magness will also be responsible for $6.2 million in restitution. Mr. Magness’ son Justin, who served as vice-president of the company, pleaded guilty to aiding and abetting in the presentation of a false document to Customs and Border Protection (CBP) officers. The charge carries a maximum penalty of one year in prison and a $100,000 fine.
The company, Superior Metal Powders, Inc., was in the business of supplying specialty metal powder, including magnesium and magnesium reagent. Between 2003 and 2006, Superior Metal Powders had a contract to supply a substantial amount of pure magnesium powder which was eventually used to produce countermeasure flares for the United States Department of Defense. The company purchased the powder from convicted co-conspirator William Nehill, who imported the magnesium from China. At the time of the importations, there was an antidumping order with a 305.56% antidumping margin on the type of magnesium powder Superior Metal Powders was purchasing from Nehill.
In an effort to avoid the antidumping duty, Gregory Magness ordered Nehill to mix the pure magnesium with chunks of aluminum and falsely label the product as magnesium reagent, which only carried a duty of 5%. In 2004, Justin Magness aided Nehill in preparing false documents that were presented to CBP. CBP’s reliance on these false documents resulted in the drastically lower duty cost. The scheme ultimately resulted in a $6.2 million duty loss to the United States, which Gregory Magness will be responsible for as restitution. Gregory and Justin Magness’ sentencing is scheduled for May 13, 2015.
If you have questions about antidumping duties, please contact Frohsin & Barger at (205)-933-4006 ext. 5.