Anchorage, Alaska - A Hong Kong-based jewelry exporter pleaded guilty Friday to customs fraud charges and faces nearly $2 million in fines and restitution in a scheme discovered by U.S. Customs and Border Protection's (CBP) officers and import specialists working in Anchorage Alaska. CBP's Regulatory Audit Unit confirmed and expanded initial findings which were then investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).
"This case is an excellent example of the exceptional skill level and commodity expertise of our CBP officers and import specialists. Detecting and prosecuting fraudulent commercial importations are crucial to protecting consumers as well as the economy of the United States," said Brian J. Humphrey, Director, Field Operations San Francisco.
Fai Po Jewelry (H.K.) Co., LTD, admitted to intentionally submitting false invoices to the government in connection with the importation of merchandise in order to avoid paying more than $1 million in customs duties. The company was also ordered to pay an $800,000 criminal fine and restitution of $1,017,737. Additionally, the company was ordered to pay the cost of the investigation in the amount of $144,324 and was placed on three years' probation.
HSI special agents working with CBP officers and import specialists found that from early 2007 to late 2009, Fai Po enclosed false invoices in their direct shipments to U.S. purchaser ShopNBC while sending the actual full value invoice to the purchaser by email. Fai Po advised the purchaser to ignore the invoice enclosed in the shipment because it was there only to avoid customs clearance issues.
Since Fai Po was acting as both the exporter and importer, the company was responsible for customs duties, not the U.S. purchaser. The purchaser paid the higher amount listed on the true invoice, while Fai Po declared to the government the lower value on the fraudulent invoice. The purchaser was not aware of Fai Po's scheme and didn't receive any benefit from it.
"A few deliberate pen strokes on a customs declaration form amounted to the theft of more than $1 million from the American people," said Brad Bench, special agent in charge of HSI Seattle, who oversees investigations in Alaska. "The defendant apparently believed its actions would go unnoticed, but it didn't count on CBP's ability to detect this anomaly or HSI's commitment to holding those who commit customs fraud accountable."
The fraud was detected by CBP when an audit revealed a discrepancy between the actual value of the gold jewelry shipment and what was stated on the fraudulent invoices.
Under the terms of probation, Fai Po is required to appoint a responsible corporate officer who will be required to prepare and submit quarterly reports to the U.S. Probation Office to ensure that no similar conduct occurs in the future.
U.S. Customs and Border Protection (CBP) is the unified border agency within the Department of Homeland Security charged with the management, control, and protection of our Nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.