San Diego Customs Assn. President Charged in Customs Conspiracy Ring

Gerardo Chavez, president of the San Diego Customs Association (SDCA), was among a group charged with conspiracy and fraud for a scheme to avoid customs duties on imported products. A total of eight individuals and three companies worked to bring in shipments worth at least $100 million, while avoiding more than $10 million in customs duties and taxes, according to the filing. Among other things, the group forged Transportation and Entry manifests, dodged Food and Drug Administration inspections, and tried to disguise shipments known to be infected with Salmonella, the federal charges say.

The charges were filed under seal July 23 in the U.S. District Court for the Southern District of California and made public July 25. Others charged in the scheme are Joel Varela Gonzalez, Carlos Medina, Enrique Perez Soltero, Sunil Mirwani, Rene Trahin, Elizabeth Sandoval, Juan Porter, International Trade Consultants, Tecate Logistics and M Trade Inc. The defendants were expected to be in federal court at 1:30 p.m. PDT July 26. Nobody answered the phone number listed for Chavez on the SDCA's website.

“Every day, U.S. Customs and Border Protection officials work to protect the U.S. and interdict fraudulent goods from entering the country," said David Aguilar, CBP's acting commissioner, in a press release from the Justice Department. “Joint efforts such as this are crucial to maintaining our nation’s economic security and competitiveness.”

The National Customs Brokers and Forwarders Association of America didn't return a request for comment.

Diversion Scheme

According to the filing, the group would purchase foreign-made goods and arrange for them to be shipped to the U.S., and upon arrival file customs paperwork saying the goods wouldn't remain in the U.S. and would be eventually exported to another country. Such goods that aren't intended to stay in the U.S. aren't subject to customs duties and are usually held in a bonded facility or foreign trade zone until they are exported.

Instead of exporting the goods, Chavez and the others would hire truck drivers to move the good to L.A. or elsewhere in the U.S., "effectively importing foreign-made goods duty-free," the filing said. Many shipments were diverted to warehouse controlled by M Trade, the charges say. The investigation uncovered more than 90 commercial shipments of fraudulently imported Chinese-made apparel, foreign made cigarettes and other goods. The charges appear to stem from an in-depth investigation, because the complaint filed by the U.S. Attorney-San Diego includes several extensive and detailed phone conversations as far back as December of 2011.

Summary of Charges

• Count 1: Conspiracy to Defraud the United States and to Commit Offenses against the United States, in violation of Title 18, United States Code, Section 371 (all defendants). Maximum Penalties: Five years in prison, three years= supervised release, a $250,000 fine and a $100 special assessment.
• Counts 2-4: Bringing in Goods by Means of False Statements, in violation of Title 18, United States Code, Section 542 (various defendants). Maximum Penalties: Two years in prison, one year of supervised release, a $250,000 fine and a $100 special assessment per count.
• Counts 5-56: Obstruction of Justice, in violation of Title 18, United States Code, Section 1519 (various defendants). Maximum Penalties: 20 years in prison, three years of supervised release, a $250,000 fine and a $100 special assessment per count.

Email documents@brokerpower.com for a copy of suit.