Man Sentenced for NAFTA Scheme to Avoid AD Duties on Hangers
Analysts at the U.S. Customs and Border Protection’s trade fraud targeting unit, responding to a complaint filed through e-Allegations, CBP’s online trade violation reporting system, uncovered a transshipment scheme to avoid paying antidumping duties on imported steel-wire hangers from China.
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The e-Allegations filing resulted in the sentencing of a Tijuana, Mexico businessman to 70 months in federal prison. Arturo Huizar-Velazquez was also ordered to pay more than $3 million in restitution to the U.S. government and to forfeit more than $4 million in proceeds gained through the scheme.
Hangers Shipped from China to U.S., Sent to Mexico, then Back to U.S.
At the time of his guilty plea, Huizar-Valazquez, who owns Proveedoras de Limpiaduria de Tijuana and Huizar Cleaner de Mexico, admitted he purchased steel wire garment hangers from Chinese companies and had them shipped to the U.S. without marking the country of origin.
After the hangers arrived in Long Beach, CA, Huizar-Valazquez arranged for them to be shipped to Tijuana, Mexico, where they were falsely labeled as "Made in Mexico," before being shipped back to the U.S. through the Otay Mesa port of entry. The scheme allowed Huizar to exploit the North American Free Trade Agreement (NAFTA) and avoid paying duty on the hangers.
Transshipment Scheme Identified in December 2009
CBP’s targeting unit, which specializes in the detection of evasion of AD and countervailing duty laws, identified the transshipment scheme in December 2009 after analyzing a commercial allegation. Analysts pursued the lead, piecing together information about a Mexican manufacturer who appeared to be involved in the alleged illegal scheme.
CBP targeting analysts requested enforcement action by the port of Otay Mesa. Port officials and CBP import specialists then worked with U.S. Immigration and Customs Enforcement and the Department of Justice to build the case for prosecution.
(A co-defendant in the case, Jesus De La Torre-Escobar, of Tijuana, Mexico, and one of Huizar-Velazquez's employees, pleaded guilty in January to one criminal count for making false statements to import goods. At the time of his plea, he admitted to having falsely told CBP officers the garment hangers were manufactured in Mexico. De La Torre-Escobar was sentenced to 365 days of time served in May and ordered to pay restitution of more than $3 million to the U.S. government.)
CBP press release is available here.
ICE press release is available here.