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) Regulatory Audit Unit and investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Fai Po Jewellery (H.K.) Co., LTD, admitted [...]
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) Regulatory Audit Unit and investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).
Fai Po Jewellery (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 found that from early 2007 to late 2009, Fai Po enclosed false invoices in their direct shipments to U.S. purchaser S hopNBC 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 t hose who commit customs fraud accountable.”
The fraud was d etected 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.
Source: Diamond News
U.S. Customs and Border Protection is expected to publish in the near future amended guidelines on the late filing of petitions for mitigation of liquidated damages. CBP officials are continuing to discuss the changes with affected industry groups and no final draft has reportedly yet been approved. If the revised guidelines are approved as currently [...]
U.S. Customs and Border Protection is expected to publish in the near future amended guidelines on the late filing of petitions for mitigation of liquidated damages. CBP officials are continuing to discuss the changes with affected industry groups and no final draft has reportedly yet been approved. If the revised guidelines are approved as currently envisioned, however, there could be a significant increase in penalties for late petitions.
Under CBP’s regulations in 19 CFR Part 172, when there is a failure to meet the conditions of any bond posted with CBP or when a violation occurs that results in the assessment of a penalty secured by a customs bond, the principal (as well as the bond surety) is notified of any liability for liquidated damages or penalty incurred and a demand for payment is made. Affected parties can petition for remission or mitigation of a fine or penalty within 60 days from the date the claim was mailed. If a petition is filed after that time CBP may still mitigate the fine or penalty but not as much.
According to an informal document made available to industry groups by CBP, the current mitigation guidelines have not served to deter or reduce the number of late filed petitions. CBP is therefore planning to amend the guidelines to provide some limitations on the discretion of Fines, Penalties and Forfeitures officers to accept late petitions. Specifically, late petitions would not be accepted more than 180 days after one of the following dates.
- the date of mailing of the notice of claim to the bond principal or, in the case of a surety, the date of mailing of the first demand on the surety
- the date the petitioner previously submitted a petition and/or was offered mitigation in the same case and such mitigation amount was not paid within the prescribed period
- the date the claim was referred to the Office of Chief Counsel for collection action
- the date a sanctioning action against the principal was commenced
- the date of issuance of a notice to show cause against a surety
CBP states that it is also planning to change the calculation of the late petition mitigation amount added to the normal mitigation that would be offered. CBP would first determine the mitigated fine or penalty amount as though the petition had been timely filed (i.e., the base amount), as it does currently. CBP would then determine the additional mitigation amount by multiplying the full assessed amount of the claim (rather than the mitigated amount, as is currently the case) by 0.1% by the number of days the petition is late. This additional amount would be added to the base amount to reach the final mitigated fine or penalty amount to be offered. In no case would the additional amount be less than $400.
In the longer term, CBP intends to increase the mitigated amounts in the published liquidated damages guidelines, many of which have not changed in 30 years, to at least take inflation into account. For example, the mitigated amount of $100 for a late filed entry summary will rise. CBP says it will provide further information on this project as it progresses.
Source: Sandler, Travis & Rosenberg P.A.