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San Diego customs broker accused of $10M fraud for ducking import fees on textiles, cigarettes
SAN DIEGO (AP) A customs broker orchestrated a scheme that brought at least $100 million worth of Chinese textiles, Indian cigarettes and other goods to the United States without paying more than $10 million in tariffs and other fees, according to a federal complaint unsealed Wednesday.
Gerardo Chavez, 42, is president of the San Diego Customs Brokers Association, a trade group that represents 45 brokers doing business on California's border with Mexico. The complaint says his companies "facilitated" about $500 million in trade between the United States and other countries over the last five years.
Chavez and two other defendants were taken into custody Wednesday, according to U.S. Immigration and Enforcement. Five other defendants were at-large.
Under the scheme, Chavez and two of his companies named in the complaint Tecate Trade Logistics LLC and International Trade Consultants LLC allegedly took Asian goods that arrived at the Long Beach port and filed documents that said they were destined for Mexico, exempting them from fees. The complaint says goods were sent to Southern California warehouses and sold in the United States, undercutting competitors.
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.
Investigators discovered more than 90 fraudulent shipments, according to the complaint. In one, a clothing shipment from China was unloaded at a San Diego warehouse in December 2011, and U.S. Customs and Border Protection was falsely told four months later that the merchandise ended up in Mexico.
Chavez, of Spring Valley, was charged with conspiracy to defraud the U.S. government, entry of goods by false statements and obstruction of justice. No one answered the phone at his office.