The Department of Justice reports that a U.S. company has been fined $4 million, ordered to pay $6.4 million in restitution, and placed on probation for five years for undervaluing imported garments to avoid paying customs duties and for doing business with someone linked to a Mexican drug cartel. The company will also be required to create and maintain an anti-money laundering compliance and ethics program and submit to review by a third-party monitor who will report to the court on an annual basis.

Further, one of the company’s executives has pleaded guilty in relation to this scheme and is expected to be sentenced in the coming months.

According to a press release, the company imported clothing from China and submitted fraudulent invoices to U.S. Customs and Border Protection that undervalued the shipments, allowing the company to avoid paying the full amounts of tariffs owed on the imports. At the executive’s direction, Chinese suppliers would prepare two invoices for the clothing: a true invoice that reflected the actual price paid for the goods and a fraudulent one that reflected an understated price. The company submitted the latter to CBP and customs brokers to reduce the tariffs owed while maintaining the former in its accounting records.

The press release states that the company also illegally conducted business with an individual listed as a specially-designated narcotics trafficker in violation of the Kingpin Act.

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