Six Southern California companies have been ordered to pay $1.8 billion in restitution after evading import duties on aluminum from China and participating in a scheme to artificially inflate the revenues of a Chinese company, federal prosecutors said.
The scam involved raw aluminum extrusions that were spot-welded together to appear as finished and functional pallets, the U.S. Attorney’s Office for the Central District of California said in a statement Monday.
Prosecutors said the firms lied to U.S. Customs and Border Protection to avoid paying $1.8 billion in anti-dumping and related duties on extruded aluminum. Finished aluminum products such as pallets are not subject to the same duties.
The scheme was directed by Zhongtian Liu, the former president and chairman of China Zhongwang Holdings, Asia’s largest manufacturer of aluminum extrusions, prosecutors said.
A federal jury last August found all six California companies guilty of conspiracy, wire fraud and passing false and fraudulent papers through a custom house. The companies are: Perfectus Aluminium and Perfectus Aluminium Acquisitions, along with warehouse owners Scuderia Development, Von Karman, 1001 Doubleday and 10681 Production Avenue.
The metal was stored in the warehouses around Southern California, and China Zhongwang Holdings told investors that high volumes of the metal were being sold, prosecutors said.
In fact, the pallets were not sold and were kept in warehouses around Southern California and in New Jersey.
Liu, China Zhongwang Holdings and others were charged in Los Angeles federal court in May 2019. The U.S. does not have an extradition treaty with China, and the defendants have not appeared in court.
The aluminum seized during the investigation is estimated to be worth about $70 million, federal officials said.