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Joe Klamar / AFP/Getty Images
Containers wait to to shipped on Long Beach harbor, California, on April 26. Three firms have been charged with fraudulently processing container shipments that contained clothing from China, cigarettes from India and Germany and packages of the Mexican cactus dish nopalitos through the port.
SAN DIEGO -- Prosecutors have charged three California companies with seeking to avoid paying $10 million in customs fees by bringing containers of food and other items to port and claiming they were destined for other countries, then selling the goods in the United States.
The criminal complaint unsealed by federal prosecutors in San Diego on Wednesday named eight people, including the president of the San Diego Customs Brokers Association, who are accused of being part of the scheme.
Goods in over 90 fraudulently processed container shipments included clothing from China, cigarettes from India and Germany and packages of the Mexican cactus dish nopalitos, officials with the U.S. Attorney's Office said.
It amounted to at least $100 million in products and $10 million in lost customs duties, they said. The complaint says the companies "facilitated" about $500 million in trade between the United States and other countries over the last five years.
The investigation "pulled back the curtain on a potentially costly fraud scheme operating in one of the world's busiest commercial centers," U.S. Immigration and Customs Enforcement Director John Morton told United Press International.
Cheaper prices
Because the goods were reported as simply passing through the Long Beach Port on their way to other countries, they were exempt from U.S. customs fees, prosecutors said.
The defendants "could sell more goods at cheaper prices and for greater profits than their law-abiding competitors, including domestic American manufacturers of these same products," the complaint read.
The charges were brought against International Trade Consultants LLC and Tecate Logistics, based in Tecate, Calif., about 35 miles east of San Diego and immediately north of the Mexican border. The third company, M Trade Inc., is based in Los Angeles.
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Among the eight people charged -- including the owners or operators of the companies -- some lived in southern California and some were in Tijuana, Mexico.
Local business leader among those charged
One of the accused, Gerardo Chavez, is president of the San Diego Customs Brokers Association and the owner of Tecate Logistics and International Trade Consultants, prosecutors said.
Calls to M Trade and International Trade Consultants were not answered, and an employee at Tecate Logistics declined to comment. The defendants will have their first court appearance on Thursday in federal court in San Diego.
Messages left for the Customs Brokers Association late Wednesday evening were not immediately returned.
Local news coverage from NBC affiliate NBC 7 San Diego
All the defendants were charged with conspiracy to defraud the United States, which carries a maximum penalty of five years in prison if convicted.
Some of the defendants were also accused of importing goods by means of false statements and obstruction of justice.
Reuters and The Associated Press contributed to this report.
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"Security guards detain an activist from women's rights group Femen as she protests against the visit of the head of the Russian Orthodox Church, Patriarch Kirill (right), to Ukraine, at Borispol airport near the capital Kiev on Thursday."
At 7:36 AM today, that was the caption and photo on this news story about Customs Duty. There is nothing in the text about this photo. What gives, MSNBC?
I guess there is still a lot of "MS" in NBC still.
it's the computer's fault Robert.
Anyhow, nice catch. Too bad the other probable 10% of 500 mils slipped thru. Government did its job here. Hopefully the crooks do some time in jail.
Government did its job here. Temporarily. If the Republicans have their way, these regulations will go by the wayside.
This kind of thing happens somewhere at most US ports daily. Another thing is, illegal diversion, within the interior of the US. Been going on for years and Authorities seem to know, or do, little about it. Generally always done through "brokers".
Let me guess how this is going to play out;
Government spends $100,000 in legal fees, prosecutors and defendants go to court, guilty verdicts, restitution is $5,000,000 total (among all defendants).
If they are found guilty all fees (legal, research, police, confinement, etc) should be paid back, the restitution should be for the full amount, interest should be paid on the $10 million, and each convicted defendant should be fined, jailed, or both.
Now how many people believe that the (if found) guilty will not profit from this?
More likely Weed.
These containers were labeled as being in transit to other countries so would probably not have been checked by Customs. The red flag should have been who in other countries would want to eat Nopales (Cactus) by the container load.
Good luck catching these guys in Mexico.
NBC (and the rest of the mainstream media) should do to wealthy, white-collar criminals what they routinely do to poor, blue-collar criminals: NAME THEM!
They need to seize every one of these businesses as criminal enterprises and auction them off to the highest bidder. The money from the sale of the businesses can then be used to pay the customs duty that was illegally avoided and the costs of incarcerating these criminals. Anything left over can be used to help pay down the debt. Maybe when the government starts taking actions like this the people that own these businesses and hire these scumbags will pay more attention to what is going on in the companies. It will also send a message to business owners that if you play this kind of game you are not just risking a fine or maybe a short prison sentence, but losing everything you have.
Jail time plus a hefty fine and make it HURT!
Shut those companies down permanently. The US shouldn't be importing cigarettes from anywhere, nor should we be importing clothing from China.
Lie, cheat, or steal, it's all good to maximize profit. Greed is good.
Damn all this corporate oversight, If we would just get rid of inspectors and regulators these companies would behave. Don't do anything to them and they will pay what they are supposed to...Trust me, Vote Nitt Mitt on Nov!
Take the assets of those found guilty. Houses, cars, investments. The government should sell the companies and keep the profits to pay for monitoring.
Those assets are probably in offshore accounts.
I'd imagine the other 500 million they'd done over the last 5 years had also avoided import taxes. I'd make them prove they paid all appropriate taxes on it all.
Those damn federal regulations getting in the way of a guy making an honest $10million... /sarc
How was my attempt at being a right wing nut job?
Pretty poor.
But your attempt at being a left wing nut job pretending to spoof a right wing nut job is spot on
just another reason why we can not trust a business to do the right thing! Greed is running Rampant and they can not police themselves because they have not a Conscience
You're confusing the business with the people running the business.
International Trade Consultants LLC and Tecate Logistics did not come up with this scam, the owners and operators of them did. Whether or not they have a Conscience is still up in the air.
I see small fines or a slap on the wrist coming for these companies. If our government had brains they would go after all the unpaid customs fees plus fines. This is another example of big business at its best.
So companies are owned by the rich. This is another instance of the rich stealing from this country. Adding that at least, if not more, the rich funneling money to off shore banks in the range of $32 trillion dollars to not pay taxes... wow... no wonder this country is in such bad shape... funny that a good portion of these 'criminal' rich are connected to the banks and the government as well as trade type companies.
I'd check their back taxes to see how far back they've been avoiding taxes. You can't make a presidential candidate show his but you can PROVEN thieves.
That is why stuff cost so much more in the United States. The government takes a cut.
Robbie. No that is why you have a job instead of out on the street.
Are they in jail yet,and if not why not.
I'll bet exlax ETCH-A-SKETCH would have figured out a sneakier way to beat the government! He knows all about sending our jobs to other countries, so he probably knows how to sneak the products back into the U.S. So he can make money COMING & GOING! What an ECONOMIST! We're lucky to have thieves like him! That's why we're SO POPULAR WORLDWIDE! DON'T BET ON IT!
Vote 100% STRAIGHT DEMOCRATIC and let's rid our selves of the corrupt Republican corporate political puppets ONCE & FOREVER! If we can get rid of them, we can CONTROL CAPITALISTIC GREED which has MADE SLAVES OF THE 99% American People!
That's right! Because there are no democrats that are corrupt, and certainly none in the 1%
But if you only vote 100% STRAIGHT DEMOCRATIC I do wonder where that leaves the GAY DEMOCRATIC...
Bet none of the containers was checked for invasive pests, or contraband as Rontron suggested. Do you think US Customs service might learn from this issue and check all the other ports and forwarders for the same scam? Nope LOL
What really yanks my chain is all of these containers should have been isolated in a separate holding area, with a gate and a guard. Access to a boat, but no access out..
Well, darn it, we can't shoot these tax cheats.
Ah, yes, how great it is that companies should self-regulate and government should get out of businesses way. Capitalism is good.
Lunatics.
Anything to JACK up the price!!! And why aren't we growing own food? Why and how can it come in here cheaper from other countries who use God KNOWS what poisons to grow it? Why do we get chickens from Mexico and Grapes from South America? Nothing makes sense anymore in this Government-@!$%#ed up country and now world, thanks to the CIA!
Ms. Starkey -
I encourage you to grow your own food. It will satisfy you much more than what you get at the supermarket, and we will hear less from you on Newsvine.
All of you snarky critics are eagerly blaming 'business' for such conduct, as if ALL businesses (and business men) are crooks and avid supporters of the far right political wing. For all you know, some of the people running the companies at hand are buddies of Obama.
Instead of equating 'business' with far right wing politics, how about admitting you DON'T know all the facts and nuances of any particluar situation. Neither the liberal people and causes nor the conservative ones are "god's anointed", purely motivated beyond reproach. Unions or free market 'right to work' types, both have good points, both can (and do) abuse their position. In other words, the world is full of shades of gray, it is not an absolute left/right or black/white place. The only thing zealots are absolutely right about is their collective belief that they are right.
I can be as facetious and snarky as most people in commenting, but I try to reserve my mockery to those who are really mockable...
You can't generalize about individuals but you can about which party stands for or against what you believe. I think we all know which party promotes removing rules and regulations on businesses, advocates tax cuts on the wealthiest and paying for it by removing middle class, "loopholes" like employer health plans being exempt from taxes, votes down tax cuts that don't also apply to the richest, 95% signed a pledge to abide by the agenda of a corporate lobbyist and wants to cut spending on social programs 120 billion but increase military spending by 260 billion.
seriously, customs are told the goods are going elsewhere and they just go with that???
They probably emptied the containers and sent the empties to another country. When a single ship can have 10's of thousands of containers it wouldn't be easy tracking individual containers.
As long as Republican law makers get their "cut", a slap on the wrist (or hand shake) will be about all these white collar professionals will be facing in ways of "punishment". Words of the late Leona Helmsley come to mind: "Only little people pay taxes". Romney would give out one of his famous unmotivated sheepish giggles and agree.
Salvation army is even worse about black marketing donated items from UN ,UNICEF,Corp. and private donated-and some of the Calif.Sal. army is run by Mexican mafia and won't allow anyone but Mexicans to eat AND they force starving people to pray for them-I am UN and when I checked about my families donations because of infiltrations to our products,my life was threatened by the Sal army employees ,and not so much as one single person had one of our cell phones or gas cards.