Tire Importers Face Criminal Charges for AD/CVD Evasion; DOJ Seeks $21 Million Penalty

A federal grand jury in Houston indicted eight for criminal wire fraud and entry of goods by means of false statements for allegedly evading antidumping and countervailing duties by undervaluation and falsely declaring exporters with lower rates, the Department of Justice said in a Dec. 15 news release.

The criminal indictments, unsealed by the Southern Texas U.S. District Court on Dec. 15, come days after a separate civil complaint filed at the Court of International Trade that seeks $20,947,592.97 in penalties for customs fraud and $5,627,804.33 in unpaid duties for the same scheme by the same eight people, as well as six other defendants and the Houston-based company Winland International, which does business as Super Tire. The Section 1582 penalty case alternatively seeks $12,462,459.96 in penalties and $2,169,569.48 in unpaid duties for gross negligence.

According to the Dec. 11 civil complaint, Winland imported goods subject to AD/CV duties on passenger vehicles on passenger vehicle and light truck tires from China. But rather than pay the high China-wide rate applicable to the exporters of the tires, it worked with a network of agents and companies in China to falsely declare that the goods were exported by companies with lower individual rates. Winland also obtained from them invoices that falsely declared lower purchase prices, resulting in underpayment of AD/CV duties.

Zheng “Miranda” Zhou of Missouri City, Texas, owner and vice president of Winland, negotiated and executed agreements with Chinese tire manufacturers to obtain the falsified documents, the complaint said. Kun “Bruce” Liu of Sugar Land, Texas, vice president of Winland, worked with Winland’s office manager, Liang “Leon” Yu, to file the false documentation with CBP. Law enforcement arrested Zhou and Liu on Dec. 14, DOJ said. Yu is not named in the criminal case.

Also facing criminal charges are Qinghua “Shirley” Song of Jurupa Valley, California, as well as Chinese residents Yue “Joanna” Peng, Li “Cathy” Chen, Xin “Devin” Zhang, Shaohui “Jasper” Jia, and Deng “David” Yongqiang. “They are all considered fugitives and warrants remain outstanding for their arrests,” DOJ said.

Song operated a Chinese tire manufacturer, QSI, that had been granted a lower individual AD duty rate by the Commerce Department, and agreed to allow Winland to falsely name QSI as the exporter on entry documentation in exchange for compensation. Devin Zhang and Jia worked as agents for Winland to obtain falsified documentation that allowed Winland to claim lower AD duty rates. Peng, Chen and Yongqiang were employees of Winland’s Chinese tire suppliers that provided falsified documentation that allowed Winland to falsely claim lower AD rates than the applicable China-wide rate.

The civil complaint additionally names Winland as a company, Winland’s office manager Jia, of Sugar Land, Texas, as well as Xiaozhen “Jenny” Zhang, Di “Terry” Wang, Liang “Leon” Yu, Lin “Leo” Zhang, Jinbing “David” Wang, and Minglian “Bill” Li, all Chinese residents except Wang, who lives in New Jersey. All except Jia are employees of Chinese companies that provided false documentation to justify lower AD rates or undervalue the tires.

Overall, the value of the imported tires covered by the criminal charges “allegedly exceeded $20.9 million and resulted in the deprivation to the United States of more than $6.5 million in import duties,” DOJ said.

The criminal investigation was led by the Houston division of the Trade/Revenue Interdiction and Enforcement Team, “an inter-agency law enforcement task force with the primary mission of identifying, interdicting and prosecuting international trade fraud.” It collaborated with CBP’s Automotive and Aerospace Center of Excellence and Expertise and U.S. Citizenship and Immigration Services, DOJ said.

Email ITTNews@warren-news.com for a copy of the civil complaint.