A San Gabriel Valley man was ordered Monday to spend two years behind bars for scheming to avoid the payment of federal excise taxes on duty-free cigarettes that should have been sent abroad but instead were diverted to local stores.

Yong “David” Lu, 54, was also ordered by U.S. District Judge Manuel Real to pay $251,650 in restitution and serve three years of supervised release following his release from prison. The Arcadia man was ordered to surrender Nov. 27 to begin serving his sentence.

Lu — who pleaded guilty in Los Angeles federal court of conspiring to defraud the United States– and a co-defendant were part of a wider investigation into cigarette diversion schemes. During February raids on homes, storage lockers and vehicles in San Gabriel, Arcadia, Rosemead and Monterey Park, authorities seized more than two million contraband cigarettes and more than $45,000 in cash, prosecutors said.

When foreign cigarettes are imported into the United States and stored in a tobacco export warehouse, the government does not impose excise taxes if they are to be exported or consumed outside the U.S. Lu purchased the cigarettes under the pretense that they would be exported on ships docked in the Port of Los Angeles.

However, the cigarettes were not delivered to cargo vessels but were instead diverted into the local retail market. Co-defendant Wenzhu Guo, 54, of Monterey Park, was sentenced to 30 months in federal prison for his role in the scheme.

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