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Financial Crimes
02/12/2014

Owners of online clothing business plead guilty in commercial fraud scheme

FRESNO, Calif. – A San Jose couple who operated an online clothing business pleaded guilty in federal court Wednesday to conspiring to defraud the U.S. government out of customs duties, following a probe by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Internal Revenue Service – Criminal Investigation.

Hoang Minh Nguyen and his wife, Dung Hanh Dao, both 33, admitted to conspiring to defraud the U.S. government, structuring cash transactions and money laundering. According to court documents, from November 2008 through January 2013, Nguyen and Dao owned an online clothing company that used several websites to sell imported Chinese apparel to customers in the United States. As part of their scheme, Nguyen and Dao declared the imported clothing as samples even though they would later sell it to customers. By declaring the clothing as samples, Nguyen and Dao were able to avoid paying customs duties.

With proceeds from their business, Nguyen and Dao sent significant amounts of cash to China via Western Union money transfers. They broke up the cash deposits to Western Union into amounts of $10,000 or less in an attempt to prevent Western Union from filing Currency Transaction Reports on those transfers, in violation of the Bank Secrecy Act. In addition, Nguyen and Dao laundered the proceeds of their business by purchasing properties in Patterson and San Jose with the proceeds from the business.

"Business owners who flout the law not only gain an unfair advantage over their competitors, but they rob the government of vital revenues and undermine our economy," said Ray Greenlee, assistant special agent in charge for HSI San Francisco. "As this case makes clear, unscrupulous importers who believe they can pump up their profits by defrauding the U.S. government will pay a high price in the end."

The case is being prosecuted by the U.S. Attorney’s Office for the Eastern District of California. Assistant U.S. Attorney Grant B. Rabenn is handling the case.

Both Nguyen and Dao are scheduled to be sentenced by Judge Lawrence J. O'Neill May 5. They face a maximum statutory penalty of five years in prison and a $250,000 fine for conspiracy, and a maximum statutory penalty of 20 years in prison and a $500,000 fine for money laundering conspiracy.