9 Face Federal Smuggling Charges

The operator of a foreign trade zone in the City of Industry and eight others are facing federal charges for allegedly evading up to $4 million in import duties.

A two-year investigation by the U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations team led to the indictments issued July 21 on charges of smuggling, money laundering, and wire fraud. The eight importers indicted include Walnut resident Yu Ling Wang, 43, and Diamond Bar resident Xiaoqiong "Joan" Hou, 43.

Investigators said Monday that Wang remains at large and is still being sought.

The alleged scheme involved more than $12 million in imported clothing, mostly denim, according to an ICE statement.

The indictments accuse the nine defendants of taking part in a scheme to evade customs duties owed the U.S. government for nearly 200 import shipments that passed through Industry's free trade zone, which allows importers to move goods inland for storage, manufacturing, or other uses before paying taxes.

The operator of the foreign trade zone, 39-year-old Wei "Julia" Lai, allegedly charged importers a fee for diverting imports through Industry, where she allegedly falsified import documents by either low-balling the value of shipments or mis-classifying shipments, both with the purpose of evading taxes.

Investigators estimate the scheme evaded between $2 and $4 million in taxes to the U.S. government.

"Commercial smuggling schemes like this not only rob the government of vital revenues, they also penalize businesses that follow the rules and undermine our economy,” Claude Arnold, special agent in charge of ICE HSI in Los Angeles, said.

In one part of the scheme, investigators said, Lai classified denim shipments, which are taxed at 17 percent, as "woven pants," which are taxed at less than 3 percent.

Investigators also said defendants evaded taxes on some shipments entirely by claiming that they were in transit to other countries, while those products were found to be distributed domestically.

The indictments accuse Lai of accepting between $5,000 and $10,000 per shipment from importers, depending upon the amount of taxes evaded.

The indictments also claim that Lai set up a series of bank accounts, some in the names of relatives, to launder the illegal fees she was paid by importers.

A group of eight importers also face charges for allegedly creating shell import companies to bring goods into the foreign trade zone.

Investigators accuse 43-year-old Yu Ling Wang of Walnut coordinating the movement of shipments from China with five other defendants; and 43-year-old Xiaoqiong "Joan" Hou is accused of making illegal imports under the business name of Pacific Garment, Sealand, New Live, and Miracle Mountain.

A total of eight defendants from San Gabriel Valley cities face similar charges. Those defendants are:

• Joel Elder, 29, of Long Beach, Calif., an employee of a company called ITC Diligence who worked as an “on-site” consultant for Lai at the Industry Free FTZ;
• Jianying “Jonathan” Huang, 42, a Chinese national who owns and operates several China-based export companies;
• Xiaoqiong “Joan” Hou, 43, of Diamond Bar, Calif., a Chinese national who allegedly coordinated illegal shipments;
• Rebecca Ho, 39, of Alhambra, Calif., who allegedly brokered illegal shipments for commission;
• Yu Ling Wang, 43, of Walnut, Calif., who allegedly assisted in brokering illegal shipments for commission;
• Keen “Alven” Wai Choo, 40, of Rowland Heights, Calif., the owner of a company that allegedly received illegal shipments;
• Taylor “David” Wong, 49, of Arcadia, Calif., the owner of several shell import companies; and
• Tsu “Nick” Wei Lin, 41, of Arcadia, Calif., who operated a company that received illegal shipments.

Another suspect, Jianying "Jonathan" Huang, was also at large Monday, investigators said.

In addition to the smuggling, money laundering and wire fraud violations, the indictment also charges the defendants with conspiracy; entry of goods by means of false statements; relanding of goods; making false statements; and aiding and abetting.

If convicted, the defendants face a maximum penalty of two years in prison for the entry of goods charges and up to 20 years for each of the smuggling allegations.

The investigation involved ICE agents and investigators from U.S. Customs and Border Protection.

Investigation of the alleged smuggling scheme is ongoing, according to an ICE statement.

Read the full indictments below:

• Indictment 1
• Indictment 2