The Justice Department said 55-year-old Chinese billionaire Liu Zhongtian, former president of aluminum producer China Zhongwang Holdings Ltd., was indicted by federal court in Los Angeles for allegedly evading antidumping and countervailing duties on aluminum shipments destined to the U.S.
He disguised the shipments by identifying them as “pallets to avoid customs duties of up to 400% and then ‘sold’ the purported pallets to related entities to fraudulently inflate the company’s revenues ad deceive investors around the world,” the department said.
According to the 53-page indictment, Liu’s company allegedly evaded payment of $1.8 billion to Customs and Border Protection for the aluminum shipments.
Liu sold the aluminum to U.S.-based companies that he controlled. Aluminum extrusions were spot welded together to give them the appearance of pallets, which were not subject to U.S. import duties. As many as 2.2 million of these faked “pallets” entered the U.S. between 2011 and 2014.
The Justice Department noted that the aluminum was imported into the ports of Los Angeles and Long Beach and stored in four Southern California warehouses.
The indictment also alleges that hundreds of millions of dollars were laundered through Liu’s U.S.-based shell companies back to China Zhongwang.
Co-conspirators named in the indictment include Zhaohua Chen, 60, a Chinese national and a friend of Liu, and Xiang Chun Shao, 58, who managed Southern California businesses that fronted as independent third parties importing the Chinese aluminum, as well as Ontario, Calif.-based Perfectus Aluminium Inc., which warehoused the aluminum.
U.S. authorities began seizing the aluminum from Liu’s warehouses in late 2017.
The Justice Department said the three defendants are not believed to be in the U.S. presently.
If convicted on the charges, each of the men faces a maximum sentence of five years in federal prison for the conspiracy charge and up to 20 years for each of the remaining 23 counts. Liu’s companies also face stiff monetary penalties.