The U.S. and Hong Kong governments will split more than $20 million among each other after a probe found what is believed to be the largest commercial fraud scheme ever uncovered on the West Coast, with apparel going through the ports of Los Angeles and Long Beach, U.S. Immigration and Customs Enforcement officials announced Tuesday.
The investigation was spearheaded by ICE’s Homeland Security Investigations and is the culmination of a probe originally launched by the former U.S. Customs Service, way back in 2000. The probe delved into a multinational criminal organization responsible for smuggling hundreds of millions of dollars’ worth of Chinese-made wearing apparel into the U.S. through the ports of Los Angeles and Long Beach, officials stated.
“This payout has been a long time coming, but it’s a testament to the perseverance of the personnel on two continents who were involved in dismantling this scheme,” stated Joseph Macias, special agent in charge for HSI Los Angeles. “Commercial smuggling is a multi-billion dollar global industry that robs governments of vital revenues and undermines our economy.”
The investigation revealed that more than 7,000 shipping containers of apparel worth over $600 million was being illegally imported into the U.S.
“To avoid import duties and quotas, the organization’s operatives—based in China, Hong Kong and the U.S.—provided documents to customs brokers falsely stating the Chinese-made garments were being sold to companies in Mexico, when, in fact, they were being delivered to buyers throughout the U.S.,” a release stated.
The loss of customs revenues alone was estimated at more than $60 million, according to investigators.
Authorities were able to interdict more than 200 shipping containers of clothing and seize a 100,000-square-foot warehouse in the city of Commerce and other business and residential locations in Los Angeles and Laredo, Texas. In addition, two dozen bank accounts in the U.S. and Hong Kong were either seized or frozen through restraining orders by investigators.
So far, five people have been federally charged in connection with the case, including the owner of a Los Angeles-area trucking company, officials stated.
The 53-year-old owner of Friends Global Logistics trucking company, Armando Salcedo, pleaded guilty in 2008 to making false customs declarations and smuggling, according to officials.
Salcedo was handed down an 18-month prison term and forfeited nearly $5 million in personal property and other assets to the federal government, including his Downey residence and the Commerce warehouse.
The other four defendants remain at large and are considered fugitives, officials stated.