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Distributors Accuse Chinese Firm of Fraud

(CN) - A Chinese motorcycle company faked emissions results to duck compliance with the Clean Air Act, two of its distributors say. Zongshen Industrial Group also mislabeled the bikes it exported with engines larger than 50cc because engines larger than that must be emissions-tested before they can be sold in the United States, the dealers say in Portland, Ore., Federal Court.

Plaintiffs Rubicon Global Ventures and Z Motors, both Oregon companies, say they invested $500,000 and opened a retail store to sell Zongshen bikes, but U.S. Customs seized one of the shipments because it contained large engines that did not have certificates of emissions compliance.

The plaintiffs say Zongshen purposely mislabeled the shipment as containing smaller engines to duck the required emissions tests.

Zongshen also provided false documentation to the federal government, stating that the engines passed emissions tests at TET Labs in Texas, according to the complaint. Zongshen then used the phony documents to avoid testing its models the following year by claiming that engines had not changed from 2004, the distributors say. They say Zongshen attached decals to the bikes to show compliance with the Clean Air Act, though the bikes were never tested.

The plaintiffs seek treble damages and punitive damages, alleging lost profits, lost investment, fraud and RICO violations. They are represented in by Peggy Sue Foraker.

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