FTZ Owner, 8 Others Indicted for Illegally Importing Chinese Apparel
U.S. Immigration and Customs Enforcement announces that the operator of a Los Angeles-area foreign trade zone (FTZ) and eight other individuals have been indicted for illegally importing nearly 200 shipments of Chinese-made apparel, mostly denim, into the U.S. to avoid an estimated $2 to $4 million in import duties.
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Avoided Duties by Undervaluing, Misclassifying, Transshipping Apparel
The indictments describe several ways in which the defendants allegedly avoided paying some or all of the duty on clothing shipments dating back to August 2009. Their methods included filing fraudulent paperwork with CBP that grossly undervalued the purchase price of the imported apparel. Another tactic involved misclassification of merchandise. In one example noted in the indictment, jeans were described as "woven pants," which are taxed at a rate of less than 3% compared to a duty of nearly 17% levied on denim versions.
In some instances, the defendants avoided paying duty altogether by falsely claiming apparel was entering the U.S. for transshipment to other countries when, in fact, the merchandise was being distributed domestically.
FTZ Owner Led Scheme to Divert Merchandise Using Shell Importers
According to the indictments, one of the key figures in the scheme was Wei "Julia" Lai, owner of a customs bonded and licensed FTZ based in California, known as the Industry Free Trade Zone. It is alleged Lai charged importers, several of whom are named in the indictment, from $5,000 to $10,000 a shipment to divert merchandise through the Industry Free FTZ. Lai's fee depended on how much she saved the importers in duties. The indictment claims Lai used a series of "straw" bank accounts to launder proceeds from the illegal activities.
The remaining eight defendants include a loose-knit group of importers who attempted to use shell import companies to shield themselves from law enforcement detection during the scheme: Chinese nationals Jianying "Jonathan" Huang and Xiaoqiong "Joan" Hou; and Joel Elder, Rebecca Ho, Yuling Wang, Keen "Alven" Wai Choo, Taylor "David" Wong, and Tsu "Nick" Wei Lin of California.
Defendants Face 2-20 Yr Sentences Per Charge for Smuggling, Wire Fraud, Etc.
In addition to the smuggling, money laundering and wire fraud violations, the indictment also charges the defendants with conspiracy; entry of goods by means of false statements; relanding of goods; making false statements; and aiding and abetting.
The penalties for those violations range from a maximum term of two years in prison for the counts involving the entry of goods by false statements to up to 20 years in prison for each of the smuggling allegations.
(Press release dated 07/2511)