Customs broker charged with using “in-bond” cover to avoid import duties
by Peter Quinter, guest columnist
In a criminal complaint unsealed on July 25, 2012, the US Attorney’s Office for the Southern District of California in San Diego announced that it had charged eight people and three companies with conspiracy and customs fraud. Among those arrested was Gerardo Chavez, president of the San Diego Customs Brokers Association, and owner of a customs brokerage company, Tecate Logistics, LLC.
According to the press release from the US Department of Justice, the customs broker and his employees conspired with various individuals and companies to enter merchandise into the United States “in bond” to avoid paying customs duties, then forged official US Customs and Border Protection (CBP) stamps to attempt to establish that the shipments were transported into Mexico. In reality, the shipments never left the US, but were distributed to various customers throughout California. The imported merchandise was worth over $100 million, and the unpaid duties on the imported cigarettes, apparel, and food products was about $10 million.
Criminal Complaint Case No. 3:12-mj-02756-KSC alleged violations of 18 U.S.C. 371 (conspiracy to defraud the United States), which provides for a maximum penalty of five years in prison and a $250,000 fine; 18 U.S.C. 542 (entry of goods by means of false statements to CBP), which provides for a maximum penalty of two years in prison and a $250,000 fine; and 18 U.S.C. 1519 (obstruction of justice), which provides for a maximum penalty of 20 years in prison and a $250,000 fine per count. The case was investigated by CBP, US Immigration and Customs Enforcement (ICE), and the Office of Criminal Investigations of the US Food and Drug Administration (FDA).
Procedurally, the criminal complaint was filed, under seal, on July 23, 2012. Arrest warrants were issued that day. Mr. Chavez and others were arrested on July 26, 2012, and have made their initial appearance before Magistrate Judge Crawford. Some of the individuals charged with crimes remain at large as fugitives.
This shocking case is of great interest to those of us in the logistics business, any owner of a customs broker business, any employee of a customs broker, and anyone who handles in-bond merchandise. I shall continue to report regularly on developments in this case. I also remind readers that a criminal complaint is merely an allegation.
Please call or email me with any questions or comments at [email protected] or (954) 270-1864.
Copyright © 2012 GrayRobinson
About Peter Quinter
Long-time Datamyne Blog contributor Peter Quinter is a Shareholder in GrayRobinson’s Miami and Ft. Lauderdale offices and Chair of the Customs & International Trade Law Group. Mr. Quinter principally represents persons and companies involved in international trade and transportation. He is editor of the GrayRobinson Customs and International Law Blog. Quinter is widely recognized for his expertise in international and trade law: He was appointed by US Secretary of Commerce to the Florida District Export Council; Florida Trend magazine recognizes Quinter among its “Legal Elite” in the area of International Law; Florida Super Lawyer magazine includes him in the top 5% of Florida; and he is recognized in “Best Lawyers in America” in the area of FDA Law.
The opinions expressed in this article are those of its author and do not purport to reflect the opinions or views or Descartes Datamyne. In addition, this article is for general information purposes only and it’s not intended to provide legal advice or opinions of any kind and my not be used for professional or commercial purposes. No one should act, or refrain from acting, based solely on this article without first seeking appropriate legal or other professional advice.
Date posted: August 24, 2012