Alleged Apparel-Smuggling Ring Indicted
Nine people who imported mostly denim jeans from China were indicted by a grand jury for using a Los Angeles–area foreign-trade zone (FTZ) to allegedly avoid paying millions of dollars in import duties on approximately 200 shipments of goods.
Two indictments, filed July 21 in U.S. District Court in Los Angeles, involved more than $12 million in apparel destined for U.S. stores, according to U.S. officials. The charges resulting from the indictments include smuggling, money laundering and wire-fraud violations.
U.S. Immigration and Customs Enforcement agents involved in the investigation estimate the defendants allegedly avoided paying approximately $2 million to $4 million in duties.“This was a two-year federal investigation between ICE [Immigration and Customs Enforcement] and CBP [Customs and Border Protection],” said Perry Woo, assistant special agent in charge of Immigration and Customs Enforcement’s Homeland Security Investigations.
The investigation started after CBP inspectors found some abnormal imports coming through the area. According to the indictments, the key figure in the scheme was Wei “Julie” Lai, 39, owner of a FTZ company in the City of Industry, Calif. Her company was known as California 3rd Party Logistics and Industry Free Trade Zone, doing business as Industry Free Trade Zone.Court documents allege that Lai charged importers $5,000 to $10,000 a shipment to divert merchandise through her FTZ warehouse.
The indictments detail various schemes used to get around paying full duty on imported clothing. Those included filing fraudulent paperwork with Customs and Border Protection to undervalue merchandise or misclassifying merchandise to get a lower tariff. For example, blue jeans, which have a 16.8 percent tariff, were described as woven pants, which carry a 2.8 percent tariff, court papers allege.
In some cases, importers said the merchandise was entering the United States for transshipment to another country, such as Mexico. Instead, the clothes made their way to store shelves in the United States and paid no duty at all.
The other defendants in the indictments are
* Joel Elder, 29, of Long Beach, Calif., an employee of a company called ITC Diligence, who worked as a consultant for Lai at Industry Free Trade Zone
* Jianying “Jonathan” Huang, 42, a Chinese national who owns and operates several China-based export companies
* Xiaoqiong “Joan” Hou, 43, of Diamond Bar, Calif., a Chinese national who allegedly coordinated illegal shipment
* Rebecca Ho, 39, of Alhambra, Calif., who allegedly brokered illegal shipments for commission
* Yuling Wang, 43, of Walnut, Calif., who allegedly assisted in brokering illegal shipments for commission
* Keen “Alven” Wai Choo, 40, of Rowland Heights, Calif., the owner of a company that allegedly received illegal shipments
* Taylor “David” Wong, 49, of Arcadia, Calif., the owner of several shell import companies
* Tsu “Nick” Wei Lin, 41, of Arcadia, Calif., who operated a company that received illegal shipments
All of the defendants were criminally charged, and seven of them appeared in federal court earlier this month. The seven who appeared in court are free on bond pending further court proceedings. Two defendants, Huang and Wang, remain at large.In addition to the smuggling, money laundering and wire-fraud violations, the indictments also charge 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.
Government officials said the investigation into the commercial smuggling scheme is ongoing, and they don’t rule out further arrests.—Deborah Belgum
