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Financial Crimes
02/05/2013

San Jose owners of online clothing business arrested on multiple fraud and money laundering charges

FRESNO, Calif. — Two owners of an online clothing business, along with one of their relatives, were arrested Tuesday and charged with conspiracy to defraud the United States of customs duties, mail fraud, structuring of cash transactions and money laundering.

Hoang Minh Nguyen, 32, Dung Hang Dao, 32, and Nga Thien Nguyen, 37, all of San Jose, were charged in a 23-count indictment returned by a federal grand jury last month. This case is the result of an extensive investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service – Criminal Investigation (IRS-CI) and the Central California Financial Crimes Task Force.

According to court documents, between November 2008 and January 2013, Hoang Nguyen and Dao owned and operated several companies based in Patterson and San Jose that imported clothing and merchandise from China. When the companies received orders from customers, the two owners placed those orders with suppliers in China and had the goods sent directly to the United States. They declared the goods as samples, even though they intended to sell them to customers at retail value, thereby defrauding the United States of customs duties owed on the imported goods. The indictment alleges the companies collected more than $3 million in revenues from customers throughout the United States.

With the proceeds from their businesses, Hoang Nguyen and Dao sent significant amounts of cash to China via Western Union money transfers, breaking up the cash deposits into amounts of $10,000 or less in an attempt to prevent Western Union from filing reports on those currency transactions.

The indictment also alleges that Nga Thien Nguyen opened a bank account with Citibank Jan. 5, 2012, allowing her brother Hoang Minh Nguyen to access the account so that he could deposit more than $215,000 in cash. He would then break up the cash deposits into amounts of $10,000 or less in an attempt to prevent the bank from filing the currency transaction reports on those actions, in violation of the Bank Secrecy Act.

"Commercial smuggling schemes like this not only rob the government of vital revenues, they also undermine the economy and penalize businesses that follow the rules," said Mike Prado, resident agent in charge of HSI Fresno. "We will not allow unscrupulous importers who break the law to get rich at America's expense."

"IRS-CI is committed to unraveling complex financial transactions involving structuring and money laundering schemes where individuals attempt to conceal the true sources of their money," said IRS Special Agent in Charge Jose M. Martinez. "Structuring financial transactions to avoid currency reporting requirements is a criminal violation of federal law under the Bank Secrecy Act and will be vigorously investigated."

If convicted, the defendants face maximum statutory penalties of five years in prison and $250,000 fine for conspiracy to defraud the United States; 20 years in prison and $500,000 fine for mail fraud; 10 years in prison and $500,000 fine for structuring; and 20 years in prison and $500,000 fine for money laundering.