$10 Million in Customs Fraud Discovered in California

A major US customs fraud operation has been uncovered in California. Three firms imported at least $100 million worth of foreign goods, bypassing more than $10 million in customs duties.

U.S. Attorney for the Southern District of California Laura E. Duffy said in a release the defendants are accused of evading millions of dollars in import taxes when they brought Chinese-made apparel, Indian-produced cigarettes and other goods into the country through the Long Beach Port-of-Entry.

The Defendants

The defendents include San Diego Customs Brokers Association President Gerardo Chavez, Tecate Logistics LLC and International Trade Consultants LLC, British citizen Sunil Mirwani, and his company, M Trade Inc. The remaining defendants are employees and agents of customs brokers, wholesalers and transport companies alleged to have knowingly aided the conspiracy. Overall, there were a total of eight people charged. The defendants will have their first court Today in federal court in San Diego.

The Crime

The imported goods include over 90 container shipments of clothing from China, cigarettes from India and Germany, and packages of the Mexican cactus dish nopalitos.

The fraud was accomplished by generating paperwork and database entries that indicated the goods were not intended for sale in the US. By indicating that the goods were “en route” to another country, the goods were never properly taxed.

Instead of shipping the goods to other countries, the defendants would allegedly hire truck drivers to haul them to warehouses throughout Southern California.

The impact of customs fraud

U.S. Attorney for the Southern District of California Laura E. Duffy said in a release yesterday that, "The charges announced today underscores our commitment to ensure that no one exploits the import process for personal gain. Not only does such illegal conduct present a significant danger to the American people, but it deprives law abiding companies of a level playing field resulting in the potential loss of billions of dollars in revenue."

All the defendants were charged with conspiracy to defraud the United States, which carries a maximum penalty of five years in prison if convicted.

Some of the defendants were also accused of importing goods by means of false statements and obstruction of justice.

 

Comments

It is a shame that people continue to find ways to illegally import goods. And to think, LCB's involved! I only wished that CBP could hire several hundred more inspectors and auditors to help catch these morons.

Kind of reminds me of season two of The Wire.

It is nice to know that someone was on the ball.

This sort of fraud is nothing new. During my years as District Director in Seattle, I presided over a similar case as "administrative judge" involving warehouse fraud also in, you guessed it, San Diego. I am also the originator of the Regulatory Audit program, and I can say that the auditors don't seem to be interested anymore in warehouse inventory audits. Cat's away the crooks will play. 
 
Bob

Kudos Bob...the Reg Audit Program and Quarterly Warehouse Audits are great tools for the verification of Warehoused and In-Transit merchandise. There have been so many rapid changes within Customs over the past several years that they have forgotten their number one priority, "Protection of the Revenue". Doing Cargo Inspections, Warehouse Audits,and In-Bond verifications are not as glamorous nor do they garner the praise and appraisal rewards that do knocking down a load of narcotics, weapons, currency or other high profile media fare but all of these activities are the heart and soul (or should be) of a viable Customs enforcement strategy. During my days as a Customs Supervisor with I&C these activities seemed to have much more importance and you know, come to think of it, you actually had to know your job.

very important information

It's a shame to know that there are still people does an illegal importing. How ever there are still people who import goods in a legal way. Most garlic importer import there goods worldwide. They believed that vegetables is more effective in health when selling in the right way.

Cosidering the serious penalties it would be really stupid to try to fool the customs.

Such fraudsters should be punished with more severity then this, 5 years is such a short period of punishment.

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