Friday, July 27, 2012

Eight Arrested in Port, Customs Fraud Case

Eight people, including the president of the San Diego Customs Brokers Association, have been arrested on charges of running a $100 million fraud ring through the Port of Long Beach.

The eight individuals, as well as three trade companies, have been accused of scheming to import goods, much of it Chinese-made clothing and cigarettes from India, by falsely claiming the goods would not enter US commerce and were meant for trans-shipment to destinations in Mexico or other countries, according to the US Attorney’s Office.

And in making the false claims, the defendants were able to avoid more than $10 million in taxes and Customs duties, according to prosecutors, and therefore undercut the competition by selling their goods cheaper.

The imports included more than 90 shipments of Chinese-made clothing, prosecutors said, as well as tobacco and snack food.

The complaint, which was unsealed July 25, names San Diego Customs Brokers Association president Gerardo Chavez, 42, as the lead defendant in the case, saying that he used his employees to generate falsified paperwork to help orchestrate the scheme.

The defendants hired truck drivers to haul the shipments to warehouses and storage areas throughout Southern California, and then bring the goods back to the L.A. area for shipment throughout the US, according to prosecutors.

The 56-count indictment includes three counts of bringing in goods by means of false statements, 52 counts of obstruction of justice and one count of conspiracy to defraud the United States.

The seven other people charged are all agents and employees of customs brokers. Each resides within San Diego County or Tijuana, except one person, whose home address is listed as Los Angeles.
The three companies implicated in the scheme are Tecate, California-based International Trade Consultants and Tecate Logistics LLC, as well as Los Angeles-based M Trade Inc.