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November 29, 2012New York, NY, United StatesFinancial Crimes

Caviar distributor pleads guilty to multi-million dollar customs fraud scheme

NEW YORK – The head of a major New York caviar distributor pleaded guilty Nov. 29 to unlawfully importing more than 100,000 pounds of Russian and Iranian caviar. This plea stems from an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

"The defendant in this case cheated not only the United States government but his clients around the globe," said James T. Hayes Jr., special agent in charge of HSI New York. "Today's plea sends a message to those who seek to profit by evading the customs laws of the United States that HSI remains committed to the enforcement of those statutes."

"Isidoro Garbarino ran his high-end importation business in a low-end way – cheating the government out of millions of dollars in tax revenues and defrauding his international clients who paid top dollar for exotic caviar they did not receive," said U.S. Attorney Preet Bharara, Southern District of New York. "Twenty-three years is a long time to be on the lam, but Garbarino will now be held to account for his fraud."

After more than 23 years as a fugitive, Isidoro "Mario" Garbarino, 69, pleaded guilty to unlawfully importing more than 100,000 pounds of Russian and Iranian caviar, valued at more than $10 million, into the United States between 1984 and 1987.

Garbarino was charged by criminal complaint in July 1987 and indicted in November 1987. Garbarino, who was free on bail after his arrest, fled the country in July 1989 and remained a fugitive until his arrest by the U.S. Marshal Service in September 2012.

According to the complaint, the indictment, Garbarino's plea agreement, statements made in court proceedings, and other public documents:

At the time of his arrest in 1987, Garbarino was the president and owner of the now-defunct Aquamar Gourmet Imports Inc. (Aquamar), a company that supplied luxury food items, including Russian and Iranian caviar, to prominent New York City gourmet stores such as Zabar's, and to some of the world's largest air and cruise lines. At that time, certain Russian and Iranian goods that were imported into the U.S., including caviar, were taxed at a high rate – approximately 30 percent.

Between 1984 and 1987, Garbarino and Aquamar used several schemes to avoid the tariffs, which were administered according to the value of the goods being imported. For example, Garbarino would significantly understate the weight and value of the caviar he was importing by placing orders for thousands of pounds of caviar – with a wholesale value of hundreds of thousands of dollars – while declaring to the United States Customs Service that he was importing a small fraction of that amount.

In another scheme, Garbarino would arrange for Russian or Iranian caviar to land at John F. Kennedy International Airport in New York, purportedly for immediate exportation to customers overseas. Immediate exports, which were never supposed to leave the airport, were exempt from U.S. tariffs. Garbarino, however, would secretly substitute much cheaper American caviar for the expensive Russian or Iranian caviar that had just arrived. He would then export the domestic goods, and unlawfully import and sell the foreign caviar to his U.S. customers. In so doing, Garbarino avoided paying the required tariffs to the United States for the expensive foreign caviar, and defrauded his international customers who were paying full price for the imported caviar, but were instead receiving the cheaper American caviar. Through these schemes, Garbarino was able to unlawfully import more than 100,000 pounds of Russian and Iranian caviar into the United States with a then-wholesale value in excess of $10 million.

Garbarino, an Italian citizen, pleaded guilty to one count of falsely classifying imported goods, namely more than 100,000 pounds of Russian and Iranian caviar, and one count of making false statements in connection with the importation of the caviar. In connection with his guilty plea, Garbarino also agreed to make restitution to U.S. Customs and Border Protection in the amount of $3 million, which represents the duties, penalties and accrued interest owed for the unlawfully imported caviar.

Garbarino faces a maximum sentence of four years in prison, and is scheduled to be sentenced Jan. 7, 2013.

Mr. Bharara thanked HSI and its predecessor, the U.S. Customs Service, for their assistance in the investigation.