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Clothing Importer Gets Jail Time for Duty Evasion Scheme

Monday, October 28, 2013
Sandler, Travis & Rosenberg Trade Report

A Los Angeles-based businessman has been sentenced to 27 months in prison for his participation in a scheme to evade customs duties on more than $30 million in Chinese-made wearing apparel, according to a press release from the Office of the U.S. Attorney for the Southern District of California. The man will also be required to forfeit his interest in over $30,000 in cash, the contents of a Hong Kong-based bank account and an inventory of more than 220,000 pairs of blue jeans valued at more than $1 million. His company was sentenced to five years’ probation.

The press release states that according to the evidence presented at trial in June 2012, the man hired a group of San Diego-based businessmen and logistics professionals to initiate shipments of Chinese-made merchandise from ports in China to the port of Long Beach, Calif. When the goods arrived, the man and his conspirators would ensure that they were classified as in bond, a special customs classification meaning that they had to be shipped directly to Mexico. However, the man and his conspirators forged documents and falsified database entries, allowing them to send the merchandise to warehouses in the Los Angeles area and then sell it effectively tax-free throughout the U.S.

According to the press release, the L.A. businessman and his company are two of 11 defendants charged as part of a larger conspiracy to fraudulently import foreign-made textiles, cigarettes, snack foods and salmonella-infected produce. Several other defendants have pleaded guilty and been sentenced for their roles over the past year, including the former president of the San Diego Customs Brokers Association, who is currently serving a 37-month prison sentence.

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