Comeuppance – Chinese Aluminum Billionaire Indicted in $1.8 Billion Tariff Evasion Scheme…

We previously outlined Mr. Zhongtian Liu [HERE] as part of the early 2018 explanation for how China was exploiting the NAFTA loophole as an end-run around tariffs.  Today the Central District of California U.S. Attorney announces his indictment.

LOS ANGELES– A federal grand jury indictment unsealed late Tuesday alleges a complex financial fraud scheme in which a Chinese company exported to the United States huge amounts of aluminum – disguised as “pallets” to avoid customs duties of up to 400 percent – and “sold” the purported pallets to related entities to fraudulently inflate the company’s revenues and deceive investors around the world.

The 53-page indictment alleges that China Zhongwang Holdings Limited, Asia’s largest aluminum extrusion company; Zhongtian Liu, the company’s former president and chairman; and several individual and corporate co-defendants lied to U.S. Customs and Border Protection to avoid paying the United States $1.8 billion in anti-dumping and countervailing duties (AD/CVD) that were imposed in 2011 on certain types of extruded aluminum imported into the United States from China.

The aluminum sold to United States-based companies controlled by Liu were simply aluminum extrusions that were spot-welded together to make them appear to be functional pallets, which would be finished goods not subject to the duties, according to the indictment. In reality, there were no customers for the 2.2 million pallets imported by the Liu-controlled companies between 2011 and 2014, and no pallets were ever sold. (read more)

Photograph of Mr. Liu Zhongtian’s aluminum stockpile hidden in Mexico.

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This entry was posted in Big Stupid Government, China, Conspiracy ?, Dept Of Justice, media bias, NAFTA, President Trump, Trade Deal, US Treasury, USA, USMCA. Bookmark the permalink.

51 Responses to Comeuppance – Chinese Aluminum Billionaire Indicted in $1.8 Billion Tariff Evasion Scheme…

  1. dc6aircraft says:

    That guy is gonna end up 6 feet down.

    Liked by 3 people

  2. Send them all to jail. If Mueller can indict a few dozen non-existent Russians for buying Facebook ads, we can surely indict a few hundred Chinese Communist party members for ripping us off for trillions of dollars over the past 30 years.

    Liked by 18 people

    • Carrie2 says:

      thegrand, in a prison where he can learn from the inmates and then confiscate whatever he has here, all of it, and if we could get Mexico to also confiscate all there and then if Mexico wants to sell it us to us it would have to be with a trade cost. Devious works for a time, but the more you think you are sooo smart to never get caught eventually does cause karma to get you.

      Liked by 3 people

  3. TheWanderingStar says:

    And where is Liu now? I’m thinking he’s on a slow boat back to China.

    Like

  4. felipe says:

    I’ve had previous experience with Nick Hanna before he took on his current role as U.S. Attorney for the C.D. Calif and have always been very impressed with him. Great to see the large number of high-profile cases he’s been effectively dealing with (the prior one of note was the Michael Avenatti indictment).

    Liked by 11 people

  5. The Boss says:

    Perhaps treble damages as an added bonus?

    Liked by 6 people

  6. Summer says:

    So, which CA politicians/officials are among these “several individual and corporate codefendants?”

    Liked by 4 people

  7. Re: Photo of storage lot in Mexico. Looks like the fabric ‘privacy covering’ on the fence got blown away by Hurricane MAGA.

    Liked by 9 people

  8. I wonder how much went to bribes for California politicians like Feinstein, Pelosi, Gov. Brown, etc. ?

    Liked by 12 people

    • Carrie2 says:

      Silent Entity, politicians can be hard to bring to justice. I do remember another Chinese in the legislature in CA was caught selling weapons and was captured by RICO! YEA! The question is is this Chinese man still here and has he been arrested? What kind of game is it as apparently much not sold. Why not? A company allowed to be on our soil but never ever really checked seems to be as you say bribing who in CA or even in Congress as El Chapo told us many in Congress were paid off by him in huge amounts, so this could be a real possibility and hope now investigations into these bribes as well. So sad so many are not trustworthy and in general are greedy and think they can never ever be caught.

      Liked by 2 people

    • grainofsalt2 says:

      I have a feeling that this will end up to nowhere since the indictment is from California court. Feinstein with a chicom driver or ex-driver, Pelosi, Nuisance, Moonbeam, and the rest of Dems live in CA.😏

      Liked by 3 people

  9. splat! says:

    indicted, not convicted. takes a trial to convict. none of the defendants have been arrested. . . .( tsk tsk wonder if one of them ever worked as a chauffeur?)

    Liked by 7 people

  10. tonyE says:

    Next thing you know… empty aluminum and steel containers shipped to the US and trucked to some place where they get dismantled…

    I have to admit these people are pretty creative…

    Liked by 2 people

    • bkrg2 says:

      Agreed. There is a almost always a creative work-around for these tariffs, until they get caught…
      Congrats to whatever agency caught them. Nice to see someone in goverment actually doing thier job.

      Liked by 6 people

      • Rob says:

        “2.2 million pallets imported by the Liu-controlled companies between 2011 and 2014”

        Looks like they operated for 3 years without being noticed, so I wouldn’t give the government too much credit.

        Liked by 1 person

        • emet says:

          CBP can reliquidate the entries to collect duty, but often the surety amount is set very low (maybe 5%, the port director sets it) so the recovery will not be much. The bond/surety amount should be 100% at least, on all Chinese imports. I do not know how these entries got by review (paperless?), but all entries of Chinese products should have Import Specialist review. And definitely watch for jumps in imports subject to ad/cv, coming from Vietnam etc. I don’t know if Customs still has ISET (Import Specialist Enforcement Team), but they need to watch for this.

          Liked by 5 people

          • You appear to have significant knowledge in this field. Please continue as I am quite ignorant regarding shipping

            Like

            • emet says:

              Well, I have a certain familiarity with these things. And as for Liu getting away with it for a long time, there could be many reasons. For example , if his firm was a CTPAT member (Customs Trade Partnership Against Terrorism), his shipments would have been exempt from inspection and delay (yep, bad idea that program), It could also be that the fraud was discovered, but ICE declined. Not unusual. In fact the most significant Customs fraud case ever was Chun Yu Zhao vs US, and it took three years for ICE to accept the case. Another problem is that officers are tasked eith STRAT examinations, which is basically looking at the same low risk importers over and over to generate bogus stats. So, we don’t have the story. But it does not look good.

              Liked by 4 people

          • Cathy M. says:

            If I recall correctly, CBP has only 90 days to reliquidate an entry.
            But the U.S. might be able to recover a significant amount of the duties that are owed though criminal penalties upon criminal conviction (or plea deal).

            Liked by 1 person

            • emet says:

              Duties owed (going back years) are collected under 19usc1592d. See US vs Horizon Products. Interesting case (negligence, not fraud) Entries receive final liquidation in 314 calendar days (unless this has changed recently). I think since August 2016 Customs now gives itself 90 days to detect duty evasion and notify the importer. Why would Customs limit their authority and ability to recover revenue? Dunno. But I don’t think the IRS gives up after 90 days

              Liked by 2 people

              • Cathy M. says:

                Yeah, I know these are 1592s cases & investigate a few of them criminally in US District Court & the USCIT.
                Thanks for the updated info (Horizon case.) I’m a little rusty on the 1592s. That ruling came out after I reached mandatory retirement in 2010.

                And ICE/HSI turning down these cases really roils my backside. I was a former USCS Special Agent/ Resident Agent in Charge then forced into ICE.

                Liked by 1 person

                • Cathy M. says:

                  My bad. You’re correct.
                  I meant it was 90 days to unset an entry (not reliquidate) years ago. (The rules/policies have changed since).

                  Like

              • Cathy M. says:

                Oh, the Port Director for my last AOR did give just 90 days (way back when 🙂

                Liked by 1 person

        • Cathy M. says:

          It’s not surprising that it took 3 years to notice when you consider-

          Each year, more than 11 million maritime containers arrive at our seaports. At land borders, another 11 million arrive by truck and 2.7 million by rail.

          Per day that’s:
          78,137 truck, rail, and sea containers
          $6.5 billion worth of imported products
          &
          90,959 entries of merchandise at our air, land, and sea ports of entry (which would consist of substantially more entry documents to analyze).

          Both ICE/HSI & CBP enforce these laws.
          CBP’s
          Entry Specialists, Import Specialists & Officers (don’t know how many CBP have in those positions but not enough of them)

          ICE/HSI Special Agents (who, btw, enforce double the number of laws & with about half of the S/As than the FBI.
          ICE/HSI has approx 6,000 Special Agents who are assigned to HQs, 26 Special Agent in Charge offices in major cities, 185 other field offices throughout the U.S. & in 46 countries.

          Liked by 2 people

      • Baby Hurley says:

        The government probably came up with the scheme in the first place…they have to bust themselves every once in awhile for plausible deniability.😡

        Liked by 1 person

  11. sarasotosfan says:

    While China is using North Korea to fire rockets into the sea, we find a Chinese billionaire who avoided a couple of billion in tariffs. Rockets into the sea vs a tariff collection. Check.

    Liked by 2 people

  12. Alex Pazzo says:

    China can only compete by cheating, and they’re damn good at it….but no one was ever watching them before

    Liked by 6 people

    • Bert Darrell says:

      If the Chinese can purchase/rent US Representatives, senators and miscellaneous state department personnel why wouldn’t they also buy/rent port personnel? Don’t they run some major ports in America and other parts of the world? They outbid all competitors to gain control and then smuggle in and out whatever they want.

      Liked by 8 people

    • Robert Smith says:

      Just ask a professor how adept Chinese students are at cheating. This is not to say that there aren’t some impressive Chinese students, but they can operate like a pack.

      Liked by 3 people

      • Peoria Jones says:

        I recently had an experience with this. Don’t get me started. For real. If I went off on this here, it wouldn’t be appropriate. I AM ANGRY.

        Like

        • Robert Smith says:

          Here’s what a french professor did in a financial engineering class.

          A Chinese student brought up his paper after she went over the test in class. He said that she must have made a mistake in grading his test because he wrote the correct work. She apologized and said she marks the papers *very* carefully, but stay after class and she’ll take a look.

          After class, she took a quick look and asked for him to come to her office so she could get her glasses on. When she got to the office she put on her glasses and said that she doesn’t know how she could have missed that. And the Chinese student grunted.

          She said just let me check it against the photocopy of the tests before I marked them and then we can determine what went on. BUSTED!

          Told by the professor to my brother in law after the semester was over.

          Like

  13. History Teaches says:

    This is just a tiny tip of the iceberg with China.

    Their entire world view is based on doing ‘whatever it takes’ to gain their objectives. Ravishing the planet regardless of laws, civility, decency or moral imperatives is a pragmatic means to their ends.

    The pre-communist world view had hints of this totalitarian mindset, but was balanced by a strain of introspective individuality.

    There is a lot of aesthetic and contemplative value in Taoist tradition, but it peaked centuries ago. Confucianism was more pedestrian and collectively oriented, but tried to maintain a civil state based on ethical values.

    What exists now is a perversion of their foundational philosophy. They failed to adapt and evolve and essentially are trapped in an ideology that only recognizes victory or defeat.

    Isolation obviously had played a large role in the still paranoid way they view the rest of the world, but the extreme polarized distrust of ‘the other’ is very similar to the Islamic world view.

    Interesting how all the babbling about ‘globalism’ is always afraid to confront the hostility implicit from those two ideologies.

    The only way to defuse the radical confrontational approach is by beating them at their own game. Strength and power are all they respect. Playing nice and groveling for compromise and acceptance has constantly failed.

    Liked by 9 people

  14. MfM says:

    This was for evasion that happened between 2011 and 2014. So even before Trump’s tariffs he worked at doing a work around the tariffs.

    He tried to use NAFTA in ways that were illegal. This shows very clearly why NAFTA is such a lousy idea.

    Liked by 3 people

  15. wendy forward says:

    Really nice post History.

    Liked by 1 person

  16. mr.piddles says:

    Hardball. None of this would have EVER HAPPENED without VSGPDJT and his Trade Tiger Team. EVER.

    Liked by 3 people

  17. SHV says:

    IMO, this is a small fraction of the illegal Aluminum dumping by China into the US market. Total Worldwide “raw” Aluminum is 60 million metric tons; China produces 33 million, 55% of total. (US production 0.890 million) That Chinese Aluminum is going somewhere???

    Liked by 1 person

  18. deplorable says:

    If this occurred in 2011 then these must have been Obama tariffs. I don’t recall hearing the uni-party or mainstream media or Chamber of Commerce whining about Obama tariffs like they are about Trump administration tariffs.

    Like

  19. Caius Lowell says:

    Never trust a commie — never ever trust a commie…

    Liked by 1 person

  20. syninlv says:

    This sounds like the same type of scam run in Utah by the Kingston’s. FLDS group up here, said they were producing ‘Biofule’ from recycled restaurant oil. They had ‘buyers’ that were shell companies… So nothing was ever actually produced. But they took 500 million in federal tax credits. It makes me wonder how rampant this type of corporate fraud exists.

    Like

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