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Six California companies have been convicted of scheming to avoid payment of nearly $2 billion in customs’ duties approximately two years after being indicted.
On Monday, a federal jury found six businesses guilty of participating in a conspiracy to defraud the U.S. and Custom Border Protection to avoid paying large sums in customs duties.
According to the Department of Justice (DOJ), the companies attempted to avoid payments via a wire-and-customs fraud scheme where aluminum – disguised as “pallets” to avoid $1.8 billion in customs duties – was exported to the United States and were “sold” to “fraudulently inflate a China-based company’s revenues and deceive investors worldwide.”
A statement from the DOJ explained “The jury found the following two aluminum businesses and four warehousing companies – all of which were related to one another – guilty of one count of conspiracy, nine counts of wire fraud and seven counts of passing false and fraudulent papers through a customhouse:
- Perfectus Aluminium Inc., an Ontario-based business;
- Perfectus Aluminium Acquisitions LLC, a subsidiary of Perfectus Aluminium formed in 2014 to oversee several companies that received aluminum pallets shipped to the United States after duties were imposed on Chinese aluminum in 2011;
- Scuderia Development LLC, which owns a warehouse in Riverside;
- 1001 Doubleday LLC, which owns a warehouse in Ontario;
- Von Karman – Main Street LLC, which owns a warehouse in Irvine;
- 10681 Production Avenue LLC, which owns a warehouse in Fontana.
The two Perfectus companies also were found guilty of seven additional counts of international promotional money laundering.”
The Aluminum Extruders Council (AEC) released a statement after news of the convictions. “The Aluminum Extruders Council applauds the Department of Commerce for their work in this matter, Customs and Border Protection for their diligence in uncovering the aluminum, and the Department of Justice for their prosecution in this case. This should be a warning sign to others intending to violate our trade orders. You will be discovered and prosecuted,” says Jeff Henderson, president and CEO of AEC.
In 2019, China Zhongwang Holdings Ltd.’s former president and Chinese billionaire, Zhongtian Liu, and several co-defendants, including affiliate company Perfectus Aluminum, were alleged to have lied to U.S. Customs and Border Protection to avoid paying $1.8 billion in anti-dumping and countervailing duties (AD/CVD) to the U.S.
The AD/CVD orders were imposed by the U.S. in 2011 on certain types of extruded aluminum imported into the country from China. The aluminum sold to U.S.-based companies controlled by Liu were extrusions that were spot-welded together to appear as functional pallets. The DOJ states that there were no customers for the 2.2 million pallets imported by the Liu-controlled companies between 2011 and 2014, and none were ever sold.
Because of the lack of demand, defendants Liu and China Zhongwang arranged for aluminum melting facilities to be built to reconfigure the aluminum pallets into a form with commercial value.
According to court records, All post-trial motions are due by August 27, replies are due by September 3 and the court has set a sentencing date of December 13 at 10 a.m.
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This is encouraging news … what had long been suspected, and maybe even accepted in certain circles, has now been exposed and a day of reckoning achieved. We’ll done AEC and thank you.