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Financial Crimes
06/10/2011

Tijuana businessman sentenced to 70 months for violating US tariff laws

Defendant ordered to pay more than $3 million in restitution for importing mislabeled wire hangers

steel wire garment hangers purchased from Chinese companies and then shipped to the U.S. without marking the country of origin
steel wire garment hangers purchased from Chinese companies and then shipped to the U.S. without marking the country of origin

SAN DIEGO - The owner of two Tijuana dry cleaners has been sentenced to 70 months in federal prison after pleading guilty to charges in a 55-count indictment arising from an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) that he violated U.S. anti-dumping laws.

Arturo Huizar-Velazquez, 49, of Tijuana, Mexico, was also ordered to pay more than $3 million in restitution to the U.S. government and to forfeit more than $4 million in proceeds gained through the scheme.

At the time of his guilty plea, Huizar-Valazquez, who owns Proveedoras de Limpiaduria de Tijuana and Huizar Cleaner de Mexico, admitted he purchased steel wire garment hangers from Chinese companies and had them shipped to the U.S. without marking the country of origin. After the hangers arrived in Long Beach, Calif., Huizar-Valazquez arranged for them to be shipped to Tijuana, Mexico, where they were falsely labeled as "Made in Mexico," before being shipped back to the U.S. through the Otay Mesa port of entry. The scheme allowed Huizar to exploit the North American Free Trade Agreement (NAFTA) and avoid paying duty on the hangers.

The case was prosecuted by the U.S. Attorney's Office in San Diego and initiated by import specialists from U.S. Customs and Border Protection (CBP) who alerted HSI trade investigators when they became suspicious of Huizar-Valazquez's importation activities.

"The sentence imposed on Arturo Huizar-Velazquez reflects the United States' commitment to punishing those who seek to gain unfair market advantage and evade United States' customs duties," said U.S. Attorney Laura Duffy.

"This case serves as a warning to others who think they can get away with exploiting U.S. trade laws," said Miguel Unzueta, special agent in charge for ICE HSI in San Diego. "Our aggressive trade investigators are on their game. They've uncovered a complicated commercial fraud operation on the U.S./Mexico border that put law-abiding businesses at a disadvantage - it's payback time now."

"This case was initially developed by U.S. Customs and Border Protection (CBP) import specialists who are charged with enforcing trade laws and ensuring duties are paid on imported merchandise," said Chris Maston, director of CBP Field Operations in San Diego. "Our CBP import specialists worked closely with special agents from ICE Homeland Security Investigations and the U.S. Attorney's Office to ensure that illegal acts are met with the appropriate consequences. The sentencing and successful conclusion of this case, exemplifies the high level of cooperation and coordination within the federal law enforcement community to intercept, investigate, and prosecute individuals who attempt to circumvent the laws of the United States. This is also a great example of how our CBP import specialists and officers protect the revenue and the economic vitality of our country while protecting our borders."

A co-defendant in the case, Jesus De La Torre-Escobar, 31, of Tijuana, Mexico, and one of Huizar-Velazquez's employees, pleaded guilty in January to one criminal count for making false statements to import goods. At the time of his plea, he admitted to having falsely told CBP officers the garment hangers were manufactured in Mexico. De La Torre-Escobar was sentenced to 365 days of time served in May and ordered to pay restitution of more than $3 million to the U.S. government.

The anti-dumping tariff is a special import duty the U.S. imposes on foreign manufacturers that sell goods at prices that unfairly harm competing manufacturers in the United States. An anti-dumping duty exists on Chinese manufacturers of steel wire garment hangers.