News / LA importers jailed and firm hit with $11m fine for under-valuing goods

© Mirko Vitali

Two executives at a California-based wholesale clothing importer have been given custodial sentences and their company hit with a multi-million dollar fine for under-valuing goods by more than $50m, the first such case following changes to US trade rules under President Trump.

The US Department of Justice (DOJ) asserted that C’est Toi Jeans (CTJ) had avoided $8m in customs duties, as part of a wider scheme surrounding money laundering and failing to properly report on tax returns.

The court fined the company $11.5m and ordered it to pay some $15m in restitution, with CTJ president Si Oh Rhew and corporate officer Lance Rhew sentenced to 103 months and 84 months, respectively, with the former fined $8m and ordered to pay $19m in restitution.

“The defendants avoided customs duties and tariffs by purchasing garments from overseas manufacturers, including from China, but then submitted false information to US Customs and Border Protection, understating the true value of the items being imported,” said the DOJ.

“The indictment alleges the defendants sent 515 individual wire transfers, totalling $137m, to pay overseas suppliers for undervalued garments. Overall, CTJ imported goods that were undervalued by more than $51m, causing approximately $8.4m in unpaid tariffs and duties.”

Director of global customs at DSV Pete Mento wrote on LinkedIn: “Well, we finally have one – WOW – jail time for real,” after the verdict marked the culmination of a six-week trial.