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Financial Crimes
05/06/2009

Washington man and Chinese national charged in honey import conspiracy

Illegal import scheme cost United States millions

SEATTLE - Two men accused of conspiring to defraud the United States by submitting false paperwork on the importation of numerous shipments of Chinese honey are in federal custody today following an international investigation by U.S. Immigration and Customs Enforcement (ICE).

Boa Zhong Zhang, 58, a Chinese national, was arrested this morning at Los Angeles International Airport as he prepared to board a United Airlines flight to Denver. Zhang, a long-time employee of Changge Jixian Bee products Ltd., located in Henan, China, arrived in Los Angeles May 3, on a flight from Zhengzhou, China.

Chung Po Liu, 68, of Bellevue, Wash., turned himself in to federal prosecutors in Seattle this morning. Liu is a corporate officer and former president of Rainier Cascade, an import company registered with the U.S. government, as well as the president of Evergreen Produce, Inc., a business that sells and transports honey imported by Rainier Cascade.

Both men are expected to make their initial appearance in federal court today. Liu's hearing will take place in Seattle. Zhang's initial appearance will be held in Los Angeles. The conspiracy charges lodged against the two men carry a maximum penalty of five years in prison and a $250,000 fine.

According to ICE investigators, the value of the illegally imported honey is more than $1.4 million and the anti-dumping duties owed on the honey total more than $3.3 million.

"Those who misrepresent the origin of goods imported into the United States are motivated by greed and unfairly seek a financial advantage over those who play by the rules," said Leigh Winchell, special agent in charge of the ICE Office of Investigations in Seattle. "ICE aggressively investigates these cases to deter this type of illegal activity and protect those who abide by our nation's customs laws and regulations."

Court documents filed in the case show that Zhang and Liu devised a scheme to sell Chinese honey to Rainier Cascade - but not before shipping the product to other Asian countries, where it was repackaged to hide its true country of origin

ICE has been investigating the origin of the honey shipped to the United States for Rainier Cascade and Evergreen Produce since January 2008. Investigators determined there were no manufacturing facilities in Thailand and the Philippines where the honey was supposedly processed. In fact, one of the locations was actually a warehouse used for storage and repackaging of goods.

When ICE agents executed search warrants at the offices of Rainier Cascade and Evergreen Produce in April 2008, they recovered multiple e-mails between Liu and Zhang, as well as invoices indicating the honey was manufactured in China and shipped using falsified documents.

In January 2007, officers with U.S. Customs and Border Protection (CBP) confiscated a shipment of honey in Long Beach, Calif. Liu allegedly presented falsified documents attempting to prove the honey came from the Philippines. After the honey was released, investigators found additional documentation that the shipment was Chinese honey that had been shipped via the Philippines.

In January 2008, several honey shipments were intercepted at the Port of Seattle and testing later indicated the honey likely originated in China. Another shipment was encountered in February 2008 and again it was not marked with the country of origin. ICE later seized the honey.

In addition to the arrest of Zhang and Liu, Yong Xiang Yan, the president of a Chinese honey manufacturing company, was arrested on a criminal complaint filed in Chicago in a separate case. That complaint alleges that Yan conspired to import falsely labeled honey into the United States for a Chicago-based honey distributor. According to the complaint, the honey's country of origin was falsified and some of the Chinese honey was found to be contaminated with three different antibiotics.

Since 2001, anti-dumping duties have been applied to all honey imports from China. The duties are designed to offset the effects of unfair trade practices that provide imports an unfair advantage over competing U.S. goods. The duty on Chinese honey was 183 percent from 2001 until 2007, when it was raised to 221 percent.

Seattle ICE agents received substantial assistance in the investigation from the agency's attache; offices in the Philippines and Thailand as well as from CBP, the Port of Seattle Police Department and the U.S. Food and Drug Administration.