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November 14, 2013Chicago, IL, United StatesIntellectual Property Rights and Commercial Fraud

Texas honey broker sentenced in Illinois to 3 years in prison for evading nearly $38 million in tariffs on Chinese-origin honey

CHICAGO — A Texas honey broker was sentenced Thursday to three years in federal prison for illegally brokering the sale of hundreds of container loads of Chinese-origin honey, which was misrepresented as originating from India or Malaysia, to avoid anti-dumping duties when it entered the United States.

This sentence was announced by U.S. Attorney Zachary T. Fardon, Northern District of Illinois, and Gary Hartwig, special agent in charge of U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) in Chicago.

Jun Yang, 40, pleaded guilty in March to facilitating illegal honey imports by falsely declaring that the honey originated in countries other than China to avoid $37.9 million in anti-dumping duties.

Yang, of Houston, operated National Honey Inc., which did business as National Commodities Company in Houston, and brokered the sale of honey between overseas honey suppliers and domestic customers. Yang was ordered to begin serving his sentence Jan. 15. In imposing the sentence, U.S. District Judge Charles Kocoras cited the "inescapable harm" Yang caused to the U.S. honey industry.

Yang has already paid financial penalties totaling $2.89 million to the government, including a maximum fine of $250,000, mandatory restitution of $97,625, and agreed restitution of $2,542,659.

"This is a significant sentence against a perpetrator of one of the largest food fraud schemes uncovered in U.S. history," said Hartwig. "Unbeknownst to Yang, he was dealing with an undercover HSI special agent who was one step ahead of his illegal activities. Together with our partners at U.S. Customs and Border Protection, we will continue to protect American industries from deceptive import practices, while facilitating the lawful flow of goods across our borders that is so critical to the U.S. economy."

According to court documents, Yang caused transportation companies to deliver to U.S. honey processors and distributors 778 container loads of honey, which were falsely declared at the time of importation as being from Malaysia or India, knowing that all or some of the honey had actually originated in China. As a result, the honey, which had an aggregate declared value of nearly $23 million when it entered the country, avoided anti-dumping duties and honey assessments totaling more than $37.9 million.

In addition, Yang admitted that he sold purported Vietnamese honey that tested positive for the presence of Chloramphenicol, an antibiotic not allowed in U.S. honey or other food products. After learning of the unfavorable test results, Yang obtained new test results that purported to show that the honey was not adulterated, and instructed the undercover agent to destroy the unfavorable test results. This adulterated honey was seized by the government.

Yang was among a group of individuals and companies charged in February in the second phase of an HSI-led investigation. See:

In December 2001, the U.S. Commerce Department imposed anti-dumping duties after determining that Chinese-origin honey was being sold in the United States at less than fair-market value. The duties first imposed were as high as 221 percent of the declared value. Later these duties were assessed against the entered net weight, currently at $2.63 per net kilogram, in addition to a "honey assessment fee" of one cent per pound of all honey. In October 2002, the U.S. Food and Drug Administration issued an import alert for honey containing the antibiotic Chloramphenicol, a broad spectrum antibiotic that is used to treat serious infections in humans, but which is not approved for use in honey. Honey containing certain antibiotics is deemed "adulterated" within the meaning of federal food and drug safety laws.

In 2008, federal authorities began investigating allegations of organizations circumventing anti-dumping duties through illegal imports, including transshipment and mislabeling, on the "supply side" of the honey industry. The second phase of the investigation involved the illegal buying, processing, and trading of honey that illegally entered the U.S. on the "demand side" of the industry.

Assistant U.S. Attorney Andrew S. Boutros, Northern District of Illinois, prosecuted this case.