Articles Tagged with customs fraud

A customs broker used cigars to run a $500,000 fraud. Customs brokers are supposed to help importers to make sure they pay the right amount of tariffs on imports and that the paperwork is correct. Alberto Rodriguez, 65, has admitted to the fraudulent scheme. The Court is deciding how much time he will spend in federal prison for mail fraud. According to Rodriguez’s guilty plea, two companies wanted to import large cigars. So they went to customs broker Rodriguez. A customs broker, among other things, will make sure the appropriate duties and taxes get paid. Rodriguez created documents, including Customs forms called “Entry Summaries,” which included lies about how many large cigars the companies would be importing and the Federal Tobacco Excise Tax owed. It’s these documents that went through the mail and made this a mail fraud case.

Though it occurred out of Rodriguez’s business in New York, the case went through federal court in the Southern District of Florida. He used the mails to send fraudulent statements to U.S. Customs and Border Patrol in Miami. Meanwhile, the invoices Rodriguez sent to the two companies reflected the actual amount of cigars imported and excise tax owed. That’s the amount the companies sent Rodriguez. After he paid Customs and Border Patrol the taxes according to the false information he’d put on the documents he sent Customs, he had turned a fraudulent profit.

To cover his scheme, Rodriguez changed invoices and bank records, then fed those documents to Alcohol and Tobacco Tax and Trade Bureau agents. Rodriguez made $503,681.15 before his scheme was discovered.

A Chinese scientist was sentenced to 121 months in a federal prison for conspiring to steal samples of a variety of rice seeds from a Kansas biopharmaceutical research facility. Weiqiang Zhang, 51, a Chinese national, and U.S. legal permanent resident residing in Manhattan, Kansas, was sentenced by U.S. District Court Judge Carlos Murguia in the District of Kansas. Zhang was convicted onone count of conspiracy to steal trade secrets, one count of conspiracy to commit interstate transportation of stolen property and one count of interstate transportation of stolen property.

Evidence at trial established that Zhang worked as a rice breeder for Ventria Bioscience in Junction City, Kansas.  Ventria develops genetically programmed rice to express recombinant human proteins, which are then extracted for use in the therapeutic and medical fields.  Zhang has a master’s degree in agriculture from Shengyang Agricultural University in China and a doctorate from Louisiana State University.

According to trial evidence, Zhang acquired without authorization hundreds of rice seeds produced by Ventria and stored them at his residence in Manhattan.  The rice seeds have a wide variety of health research applications and were developed to produce either human serum albumin, contained in blood, or lactoferrin, an iron-binding protein found, for example, in human milk.  Ventria spent millions of dollars and years of research developing its seeds and cost-effective methods to extract the proteins, which are used to develop life-saving products for global markets. Ventria used locked doors with magnetic card readers to restrict access to the temperature-controlled environment where the seeds were stored and processed.

pure-collection-300x200Pure Collection, a UK fashion retailer, committed customs fraud resulting in the evasion of routine tax duties. A case that was first brought to the attention of authorities in 2014, has finally reached a 900K settlement thanks to the False Claims Act and one brave whistleblower.

Former Employee Blows the Whistle

Andrew Patrick, a former employee of the luxury retailer, blew the whistle on a practice giving the company an unfair advantage over other retailers. The simple practice of “splitting” large packages being shipped to the US into multiple, smaller packages, avoids triggering customs duties. Patrick says he was specifically trained to do this and alleges this was a commonplace company policy between 2010 and 2017.

fraud-300x188A Civil War Era Law Puts Customs Fraud in The Spotlight

The False Claims Act is shining a light on customs fraud and reshaping lawsuits around the country. Whistleblower attorneys are expecting to see an uptick in the customs fraud cases they handle related to importing goods, according to the Wall Street Journal.

Last year, a U.S. appeals-court ruling made room for more whistleblower lawsuits related to the Civil War-era law known as the False Claims Act. The Supreme Court backed the appeals court, agreeing it has broader implications.



Billions of fake cigarettes contained in packages mimicking American made cigarettes are being sent into the United States illegally from China and they contain dangerous chemicals including lead, asbestos and other life threatening checmicals. Asbestos is a known carcinogen responsible for mesothelioma and other life-threatening respiratory diseases.The majority of illegal cigarettes come from Asia, predominantly out of Yunxiao County in China. Production of fake cigarettes  during the past decade, making China the world leader in counterfeit cigarettes. Criminal groups are flooding the country with tobacco through sea and air cargo, along with passenger luggage. As cigarette prices continue to rise, more and more smokers are expected to turn to cheap, illegally imported cigarettesCounterfeit Cigarettes a Global ProblemIn the U.S. alone, one ring smuggled a billion fake cigarettes into Los Angeles and New Jersey. While a pack of fake Marlboros costs 20 cents to make in China, in the U.S. it can fetch up to 20 times that amount, even when sold at cut rates. 99 percent of the U.S. counterfeit cigarette market is supplied by China.

Whistleblowers aware of products illegally brought into the United States may collect a percentage of what the Government collects under The False Claims Act (FCA).


The White House announcement of new trade tariffs on products from China including washing machines and solar energy cells may result in efforts to evade those tariffs in ways recently seen in furniture, honey and steel products from China. In those instances, duties imposed by the United States for “dumping” products into the US market at low prices, resulted in a series of schemes by Chinese product manufacturers to evade the tariffs and duties imposed. These schemes including “trans shipping” products to other no tariff  nations such as Taiwan and Malaysia and re-labeling the products to hide the true countries of origin in order to evade our tariffs. In the case of Chinese steel, one manufacturer shipped the steel to Mexico where a factory had been built in a mountain hideaway and where the steel was reformed into new  products, re-labeled and trucked into the United States evading the customs tariffs.

This summer, Customs and Border Protection (CBP) officials engaged in investigations and prosecutions to collect millions of dollars in unpaid anti-dumping penalties after it was revealed that Chinese companies hid the source of exports to the United States by shipping through other countries. In addition, there has been a spike in whistleblower cases filed under the False Claims Act (FCA) resulting in investigations and settlements through the Department of Justice and United States Attorneys Offices in which the customs schemes were the bases for the cases.  The investigations and whistleblower cases revealed a clear pattern of shipments from China through Thailand to evade duties on various products including wire hangers and other products.

In addition, honey originating in China has been shipped to a second tariff free countries, where the pollen has been removed to make it more difficult to determine the country of origin. Then the barrels are re-marked shipped to the United States from the second country in order to evade the dumping tariffs.In one case, contaminated Chinese honey contaminated with chloramphenicol and other illegal antibiotics, which are dangerous to humans, was shipped to  Canada and then to a warehouse in Houston Texas where it was sold to Jelly maker J.M. Smuckers and national baker Sara Lee. Before the FDA learned that the Chinese honey was tainted, Smuckers had sold 12,040 cases to Ritz Carlton Hotels. Over the past 18 months, the U.S. imported 208 million pounds of honey, 60 percent from Asian countries including the laundering points for Chinese honey including 45 million pounds from India alone.

Furniture merchant, turned whistleblower Kelly Renee Wells of Alabama, will receive nearly two million dollars for revealing revealed that larger retailers were evading import tariffs on furniture made in China by misclassifying the bedroom furniture as living room or hall furniture in order to evade “dumping” duties. One of the companies she sued, Bassett Mirrors, Inc.  just settled the claims against it for $10.5 Million. Last year, its co-defendant Z Gallerie of California settled its case for $15 million. Federal prosecutors intervened in the cases against Bassett and Z Gallerie but have not intervened in the two co-defendants left, Neiman Marcus and Macy’s. Ms. Wells was the source of information for both companies that settled.

Ms. Wells Attorney, Page Pate, says that he intends on pursuing Macy’s on his own for whistleblower Wells. The duties imposed by the U.S. Commerce Department are designed to protect domestic manufacturers from Chinese manufacturers who were dumping wooden bedroom furniture into the U.S. market. The case is part of a much larger picture involving extensive tariff evasion concerning Chinese goods including the dumping of honey some of this is adulterated by sweeteners and antibiotics not approved by the FDA. Thousands of barrels of fake honey is being transshipped from China through Taiwan and other countries with false documents in order to evade dumping duties.

The Department of Justice stated in its announcement of the settlement against Z Gallerie in April 2016 that it resolved allegations that Z Gallerie evaded antidumping duties on wood bedroom furniture imported from China from 2007-1014 by misclassifying or conspiring with others to misclassify the imported furniture as pieces intended for non-bedroom use on documents presented to Customs and Border Protection.