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Former Broker Group Chief Gets 37 Months in Prison for Duty Evasion Scheme

Tuesday, July 09, 2013
Sandler, Travis & Rosenberg Trade Report

The Office of the U.S. Attorney for the Southern District of California announced July 1 that a San Diego businessman who once served as head of the regional customs brokers association, along with his company, have been sentenced for their roles in a conspiracy to evade customs duties. The man was sentenced to 37 months in prison and his corporation will serve five years of probation. The man was also ordered to forfeit the property where he maintained his corporate offices and could be ordered to pay millions of dollars in compensation to state and federal taxing authorities at a forthcoming restitution hearing.

According to a press release from the USA’s office, court documents show that the scheme at issue involved wholesalers in the U.S. procuring commercial shipments of Chinese-made apparel, Indian-made cigarettes and other goods and arranging for them to be shipped by ocean container to the Port of Long Beach, California. Before the goods entered the U.S., conspirators acting at the convicted man’s direction would prepare paperwork and database entries indicating that the goods were not intended to enter U.S. commerce but instead would be transshipped in-bond to another country, which “tricked Customs officials into believing that no customs duties were owed on the merchandise.” Then, instead of completing the in-bond transshipments, the conspirators would hire truck drivers to haul the shipments to warehouses throughout Southern California while they generated fraudulent paperwork to cover up the scheme.

According to court filings, the convicted man allowed others to use his customs broker license as the authority under which these shipments entered the U.S. While delegating much of the day-to-day operations to employees and contractors, he provided advice on how to best deceive federal officers and even volunteered to erase evidence from conspirators' computers. Over the course of the scheme, this man helped his clients evade at least $18 million in import taxes. In addition, the conspirators imported adulterated Mexican food products as well as produce infected with Salmonella agona, a disease-causing and potentially life-threatening bacteria.

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