$100 Million Import Fraud Uncovered

The U.S. Justice Department (DOJ) and the U.S. Food and Drug Administration (FDA) reported criminal complaints have been filed against eight (8) individuals and three (3) corporations for illegally importing goods and evading duties and taxes.  One of the defendants in this case is the President of the San Diego Customs Brokers Association and is a licensed customs broker.

According to the complaint, the defendants’ scheme focused on purchasing large, commercial quantities of  foreign-made goods and importing them without paying import taxes or A Customs duties.  As alleged in the charging documents, wholesalers in the United States would procure commercial shipments of ,  among other things,  Chinese-made apparel and Indian-made cigarettes, and arrange for them to be shipped by ocean container to the Port of Long Beach, California.  Before the goods entered the United States, the defendants generated paperwork and database entries indicating that the goods were not intended to enter the commerce of the United States, but instead would be transshipped “in-bond” to another country, such as Mexico.  After the false paperwork was was created, the goods would be diverted back to Los Angeles and other destinations  for further shipment throughout the United States.   Since they had not paid duties and taxes, the conspirators could then sell the merchandise at lower prices resulting in greater profits.

In the complaint the defendants are also alleged to have imported produce infected with Salmonella Agona, (Salmonella), an infectious and potentially life-threatening pathogen.  After one shipment of nopal cactus (also called prickly pear) tested positive for Salmonella, defendants are alleged to have changed the grower’s information on documents for subsequent shipments to avoid FDA inspections.  Other defendants conspired to import mislabeled snack foods that contained a prohibited dye.

More than 90 commercial shipments  worth at least $100 million and resulted in more than $10 million in lost Customs duties, taxes and other revenue have been identified.  The case is being investigated by the Department of Homeland Security, Immigration and Customs Enforcement Homeland Security Investigations, United States Customs and Border Protection,  the Internal Revenue Service,  the Food and Drug Administration and the Alcohol and Tobacco Tax and Trade Bureau.

More information about the complaint at DOJ Press Release on Import Fraud