Feds Seek $290M Over Customs Violations

WASHINGTON – The U.S. Justice Department filed a civil fraud lawsuit against a Hayward, Calif.-based importer alleging evasion of customs duties.

The suit, filed late last month at the U.S. Court of International Trade in New York, seeks to recover $67.9 million in unpaid customs duties on merchandise imported by Uni-Tile & Marble Inc. and its chief executive officer, Xin Mian Pan, from the People’s Republic of China.

The government is also seeking $222.5 million in fraud penalties from the defendants.

The government alleges that, from September 2018 to August 2023, the defendants fraudulently transshipped, undervalued, and misdirected merchandise via a scheme that involved five shell companies – with two of the companies set up with stolen identities.

As a result of this alleged conduct, the defendants made materially false statements and omissions to U.S. Customs and Border Protection (CBP) in 503 declared shipments of imported merchandise or “entries” of wooden cabinets and vanities, quartz surface products, ceramic tile, and other merchandise that deprived the United States of duties.

In December of last year, the U.S. Attorney’s Office for the Northern District of California announced criminal conspiracy charges, as well as wire fraud, smuggling, and international money laundering against Pan, Uni-Tile and several others involved in the defendants’ ongoing system to evade custom duties and violate U.S. trade and finance laws.

The criminal indictment alleges that Pan and his co-defendants devised a plan to avoid paying the combination rate on quartz-surface products and other customs duties to increase the profitability of Pan’s companies. He controlled several companies that imported kitchen products subject to the combination rate.

The conspirators utilized several techniques to avoid paying duties, including the transshipment of goods through Malaysia, the use of shell companies, and misclassifying imported products in 503 declared shipments of imported merchandize.

In the new civil complaint, the government seeks to enforce CBP’s demand that defendants pay additional duties and penalties because the conduct alleged against them in the criminal case also violated 19U.S.C. 1592(a), which is a provision of the Tariff Act of 1930.

To combat trade fraud, including avoidance of import duties, the Justice Department created a Trade Fraud Task Force that partners with CBP and other law enforcement agencies to ensure compliance with United States trade laws.

Acting Executive Director Salvatore Ingrassia of Cargo and Conveyance Security, Office of Field Operations for CPB, says, “These civil penalties demonstrate that attempts to undermine our economy and American businesses carry serious consequences.”