$100 Million Customs Fraud Scheme Uncovered; Complaint Charges Eight Individuals and Three Corporations for their Involvement
A complaint charging eight individuals and three corporations for their roles in a $100 million customs fraud ring was unsealed today, according to the U.S. Food and Drug Administration (FDA) Office of Criminal Investigations.
According to the complaint, the defendants would purchase large quantities of foreign-made goods, including apparel made in China and cigarettes made in India, and import them into the United States without paying import taxes or customs duties. The defendants would create paperwork and database entries that would indicate the shipments would not enter U.S. commerce and would be transshipped “in-bond” to another country.
Instead, the defendants would arrange for the shipments to arrive by ocean container to the Port of Long Beach, Calif., where truck drivers hired by the defendants would transport the goods to warehouses located throughout Southern California. Eventually, the goods would be shipped to locations across the United States.
By avoiding import taxes and customs duties, the defendants were then able to sell more merchandise at lower prices, ultimately generating greater profits than their competitors. The government has already identified nearly 100 commercial shipments of goods that were illegally imported by the defendants, FDA said. In total, the shipments were valued at more than $100 million and resulted in $10 million in lost customs duties, taxes and other revenue.
“The FDA-Office of Criminal Investigations is fully committed to investigating and supporting the prosecution of those who may endanger the public’s health and safety by importing unsafe and potentially life-threatening products,” said Lisa Malinowski, Acting Special Agent in Charge, FDA’s Office of Criminal Investigations, Los Angeles Field Office.
The case is being investigated by the Department of Homeland Security (DHS), Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service (IRS), FDA, and various other federal agencies.
“This investigation pulled back the curtain on a potentially costly fraud scheme operating in one of the world’s busiest commercial centers,” said ICE Director John Morton. “Instead, HSI, aided by our law enforcement partners, exposed and dismantled this criminal ring and now those responsible will be held accountable.”