A British Columbia woman's life was "destroyed" after the federal government wrongfully branded her a terrorist and ruined her multimillion-dollar business in its zeal to appear tough on crime, alleges a lawsuit filed in Washington state court.

Perienne de Jaray is suing the Canadian government for at least $21 million for what the court documents say was "extreme and outrageous conduct" that saw her lose her home, her health and her business after enduring years of baseless and aggressive investigations on both sides of the border.

"The only thing worse in this day and age than being labelled a terrorist is being wrongly labelled a terrorist," reads the complaint for damages, filed April 19 in Seattle.

"The label breeds fear and hatred across the world."

Also named in the civil action filed in U.S. District Court in Seattle are the Canada Border Services Agency, the Department of Foreign Affairs, Global Affairs Canada and several civil servants.

None of the allegations have been proven in court and the government has not filed a response.

John Babcock, a spokesman for Global Affairs, wrote in an email that the government is reviewing the details of the case before deciding its next steps.

Family business 'targeted'

De Jaray was the executive vice-president of Apex USA, a Washington state-based subsidiary of Apex Canada, which was started by her father. The companies provided electronic manufacturing services to clients around the world.

The court document alleges de Jaray and her father were targeted in 2009 by Canadian officials eager to prove that Canada could "robustly" enforce United States arms export restrictions. The enforcement would help Canadian defence companies earn trade exemptions, giving them access to lucrative American defence contracts, the documents claim.

A shipment from her father's B.C.-based company to China in late 2008 was wrongly declared to contain weapons-grade electronics and the Canadian government shared this information with the FBI, who began investigating de Jaray's company, the documents allege.

Operating on information later determined to be false, investigators raided the Canadian company's headquarters and de Jaray's father's home and reached out to the company's employees, clients and banks, says the complaint for damages.

Apex 'ruined'

The documents say Apex lost 93 per cent of its revenue from customers informed of the raid and many of its workers who were concerned about being linked to an organization under investigation for "terroristic" activities.

The company's banks also immediately called in its operating loans, forcing Apex Canada into receivership and leading to the shutdown of Apex USA, says the document.

"Apex was ruined as a result of the baseless investigation."

More than two years later, the Canadian government admitted that its investigation was based on falsified evidence and dropped criminal charges against de Jaray's father before paying him a reportedly very large settlement, the lawsuit says.

But the complaint claims Canada didn't share that information with the FBI, which continued its investigation into de Jaray for another two years.

Her lawsuit says Canada has never apologized for actions that destroyed her $30 million-a-year business and caused irreparable harm to de Jaray.

She is asking a U.S. jury to award a significant settlement.