A Los Angeles Fashion District company is accused of operating a scheme that ducked more than $10 million in customs duties, and a second “Black Market Peso Exchange” scheme in which more than $17 million in alleged narcotics proceeds was not reported, it was announced Thursday.

The schemes are outlined in a 49-page indictment filed late Wednesday, the latest case resulting from an operation in September 2014 when law enforcement authorities executed dozens of search warrants as part of an investigation into money laundering and other crimes at Fashion District businesses.

During one of those searches at a downtown condominium linked to the defendants in this case, authorities seized more than $38.3 million in cash, according to the U.S. Attorney’s Office.

The defendants named in the indictment are:

— C’est Toi Jeans Inc., an importer of apparel from countries such as China, and exporter of clothing to customers in Mexico, Central America and South America;

— Si Oh Rhew, 67, of La Canada Flintridge, president of CTJ and 75% owner of the company; and

— Lance Rhew, 33, a son of Si Oh Rhew, a resident of downtown Los Angeles, a CTJ corporate officer and owner of another company called GLLR Inc., which did business as CTJ.

The indictment filed in Los Angeles federal court contains charges of conspiracy; entry of goods falsely classified; entry of goods by means of false statements; passing false and fraudulent papers through customhouse; international promotional money laundering; failure to file reports of $10,000 currency transactions; and aiding, assisting, and procuring the filing of a false tax return.

The first scheme outlined in the indictment allegedly involves the avoidance of customs duties and tariffs by purchasing garments from overseas manufacturers, including from China, but then submitting false information to U.S. Customs and Border Protection that understated the true value of the items being imported in the U.S.

As a result, the import duties owed on the shipments were lowered. The indictment alleges that the defendants sent 515 individual wire transfers totaling $137,156,726 to pay overseas suppliers for undervalued garments. Overall, according to the indictment, CTJ imported goods that were undervalued by more than $62 million, causing $10,269,068 in unpaid tariffs and duties that should have been paid to CBP.

Some of this conduct occurred prior to authorities executing search warrants at CTJ and GLLR in 2014, but the indictment alleges that undervaluation resumed in 2018 and lasted until at least July 2020, federal prosecutors said.

In the second scheme, the Rhews used CTJ “to receive large amounts of bulk United States currency, including from narcotics proceeds, as payment for outstanding merchandise orders from customers in Mexico and elsewhere,” according to the indictment.

CTJ allegedly accepted large cash payments of up to $70,000 even after the law enforcement action targeted their businesses in 2014. The defendants failed to file currency transaction reports, which are required for any transaction involving more than $10,000 in cash, and they concealed the cash receipts from an accountant who prepared their taxes, which led the Rhews to fraudulently omit more than $17.6 million in gross sales from tax returns filed with the IRS, the indictment alleges.

The court will issue summons directing the three defendants to appear for arraignments in Los Angeles federal court on Feb. 4.

If convicted of the charges in the indictment, the Rhews would each face potential sentences of decades in federal prison, and CTJ could face fines of as much as $100 million, prosecutors said.

Leave a comment

Your email address will not be published. Required fields are marked *