California Apparel News

A well-known Los Angeles apparel executive has been accused of smuggling apparel from China in a scheme that had goods allegedly headed for Mexico ending up in U.S. stores including those of J.C. Penney Co. Inc.

Morton Forshpan, who ran B.U.M. Equipment for more than a decade before it went bankrupt in 1996, has been accused of illegally importing clothes and backpacks from China. The items were off-loaded at the Port of Long Beach, where documents showed they were to be transported by truck to Mexico.

Instead, the $3 million in goods loaded in eight containers were shipped to Laredo, Texas, and then shipped back to Los Angeles without crossing the border, government officials said.

In a civil complaint filed by the U.S. Attorney’s office in the U.S. District Court in Laredo, Forshspan is one of several people accused of taking part in a smuggling operation meant to skirt U.S. quotas and tariffs.

“When the goods got to Laredo, they were off-loaded from the containers that came by rail or truck,” said Assistant U.S. Attorney Andrew Bobb, who filed the civil complaint at the end of May. The charges are now coming to light after several parties agreed to pleabargain or pay fines or were dropped from the court case.

“Documents were filed with customs indicating that these goods had been exported to Mexico, but we discovered they had been, in fact, trucked back to Los Angeles,” Bobb said.

Apparel Solutions Inc., a company owned by Forshpan and Erwin Gilbert with offices in Malibu, Calif., and Los Angeles, is one of two parties still left in the complaint. Three months ago, the company’s attorney, Tonya Rodriquez of Akin Gump Strauss Hauer & Feld in Washington, D.C., filed a motion to dismiss, saying the charges were untrue. Rodriguez did not return numerous phone calls.

Mid-America Overseas Inc., an Illinoisbased company that shipped the goods on ocean carriers and is being accused of issuing two bills of lading instead of one, is still a party in the complaint, government officials said. Mid-America maintains it issued only one bill of lading and a forwarder cargo receipt that looks similar to a bill of lading, Bobb said. Calls to Mid-America’s attorney were not returned.

Pacific Connections of California Inc., an Ontario, Calif.–based seller of backpacks, travel bags and apparel that had ordered the goods from Apparel Solutions, agreed in mid- July to pay $625,000 to make up for lost customs duties, Bobb said. Pacific Connections neither admitted guilt nor that the allegations were unfounded.

According to the civil complaint, Pacific Connections placed an order with Apparel Solutions in March 1998 for eight containers of goods manufactured in China. Apparel Solutions, which is associated with a Hong Kong company called Trend Group Ltd., was to finance and arrange shipping of the order.

The U.S. Attorney’s office maintains that two bills of lading were issued for the freight. One said the goods were heading to Mexico. The other said they were going to Pacific Connections.

After the eight containers were unloaded at the Port of Long Beach, they were shipped to Laredo without passing through U.S. Customs. Goods bound for Mexico are allowed to enter U.S. ports without inspection or subjection to quotas and tariffs.

Once in Laredo, the shippers presented documents showing the merchandise had been shipped to Mexico. But the U.S. Attorney’s office maintains the goods never made it there. Instead, they were shipped back to Los Angeles and delivered to Pacific Connections, where many of the goods ended up in JCPenney stores, the complaint said.

In April 1998, Pacific Connections placed another order with Apparel Solutions for 33 containers of merchandise. Those goods arrived at the Port of Long Beach one month later and then traveled to Laredo, where U.S. Customs agents seized them. An investigation showed that false export documents had been filed for 20 of the 33 containers, Bobb said.

Neither Forshpan nor Gilbert was available for comment.

Forshpan is best remembered as the architect of Chauvin International, the parent company of B.U.M. Equipment, a once-successful brand of young men’s sportswear that later was carried by B.U.M. Equipment stores. What started out in 1986 as one simple cottonknit sweatshirt snowballed into a massive collection of more than 300 athletic-inspired knitwear items. The line was carried at T.J. Maxx, JCPenney and Robinsons-May stores.

By 1992, the popular clothing line had $175 million in sales.

The company began to lose ground in 1993, when sales dipped to $103 million and earnings tumbled to $864,000. In 1995, the company phased out its wholesale casual apparel business and later closed its outlet divisions. By 1996, the company was in bankruptcy court after filing for Chapter 11 reorganization.

In 1997, when B.U.M. emerged from bankruptcy, Forshpan was out of the picture. Today, the B.U.M. trademarks are held by SOS Management in Mendham, N.J. Wal- Mart Stores Inc. owns the Canadian license for B.U.M.

This is the second Los Angeles apparel smuggling case that has come to light in recent months.

Last May, the U.S. Attorney’s office in Los Angeles filed a complaint against three companies alleging that during a two-year period beginning in mid-2000, they had smuggled $418 million of goods in 5,000 containers past customs. The goods that were supposedly destined for Mexico ended up in Los Angeles stores.

The U.S. Attorney’s office said those operations were run out of the Hong Kong offices of Asian Charter Ltd., a company that provided financial backing to Panorama City, Calif.–based Key Delta International, Vernon, Calif.–based Friends Trucking (now Friend Global Logistics Inc.) and Rosemead, Calif.–based New East Inc.