A federal grand jury has indicted two Bay Area businessmen, a Chinese national, two local companies and a Chinese company with an elaborate scheme to evade more than $109 million in custom duties and international money laundering.
In an indictment unsealed Thursday, prosecutors said Xin Mian Pan of San Francisco, who owns Uni-Tile and Marble operating out of San Jose and Hayward and Uni-Stone and Cabinet in San Francisco, working with Hua Liang Xie of South San Francisco and Jinhua Wang, a Chinese national and owner of the China-based Shenzhen Top & Profit International Forwarding Co. Ltd., with fraudulently evading payment of anti-dumping duties, countervailing duties, and other duties imposed on quartz surface products, wooden cabinets and vanities and ceramic tiles manufactured in the People’s Republic of China and imported into the U.S.
Pan was arrested Wednesday and made his initial appearance in federal district court in San Francisco the next day when the indictment was unsealed.
The indictment accused the three men and their companies with conspiracy, conspiracy to commit wire fraud, wire fraud, smuggling and entry of goods by means of false statements, according to the U.S. Attorney’s Office for Northern California. Pan and his two companies also were charged with international money laundering.
“Defendants are charged with evading customs duties intended to protect U.S. manufacturers and American jobs,” said U.S. Attorney Craig H. Missakian in a statement. “The alleged scheme cheated the United States out of hundreds of millions of dollars in customs duties and harmed honest businesses that play by the rules. Companies that think they can beat the system should be on notice that they will be investigated and held accountable.”
“Evading tariffs and customs duties is not a paperwork violation,” said Deputy Assistant Attorney General Brenna Jenny for the Justice Department’s Civil Division.
According to the indictment, the U.S. Department of Commerce imposes duties, including anti-dumping duties and countervailing duties, on certain foreign imports. Antidumping duties provide relief to U.S. industries that had been, or were threatened with, material injury caused by imported goods sold in the U.S. market at prices that were shown to be less than fair market value, prosecutors said.
Countervailing duties (CVD) gave similar relief to domestic industries that had been, or were threatened with, material injury caused by imported goods that had been found to have received significant foreign government subsidies and could therefore be sold at lower prices than similar goods produced in the United States.
“These unfair trade practices historically cause significant harm to U.S. manufacturers, resulting in large-scale layoffs of employees and the demise of many U.S.-based manufacturing industries,” Missakian’s Office said in a press release.
From 2018 to 2020, the Department of Commerce determined that quartz surface products, wooden cabinets and vanities, and ceramic tiles manufactured in China were being sold in the United States at less than fair market value, prosecutors said. In response, the U.S. government imposed customs fees of 341% on quartz surface products imported from China, 252% on wooden cabinets and vanities imported from China, and a combination rate of 690% on ceramic tiles imported from China.
The indictment alleges that beginning in September 2018 and continuing through August 2023, the defendants devised a scheme to avoid paying the customs duties. to increase the profitability of Pan’s companies and to enrich Pan. Pan’s companies – Uni-Tile & Marble and Uni-Stone & Cabinet – imported kitchen products such as quartz surface products, wooden cabinets and vanities, and ceramic tiles that were subject to the high customs fees, then used “several techniques to avoid paying duties, including the transshipment of goods through Malaysia, the use of shell companies, and misclassifying imported products.”
Wang and his Top & Profit firm allegedly facilitated Pan’s efforts to avoid paying the fees by sending goods manufactured in China to Malaysia, re-exporting those goods from Malaysia to the Port of Oakland, and falsely claiming to Customs and Border Protection that the goods had been manufactured in Malaysia.
In total, prosecutors said that Pan, Uni-Tile & Marble, Uni-Stone & Cabinet, and their co-conspirators allegedly imported approximately 520 shipments as part of the scheme, which allowed Pan’s companies to avoid paying more than $109 million in duties owed to the United States.
Further, the U.S. has simultaneously issued an approximately $222.5 million pre-penalty notice to Uni-Tile & Marble and Pan, for making fraudulent statements about imported products.
