Six companies linked to Chinese billionaire found guilty of evading US aluminum tariffs

Six corporate entities tied to Chinese billionaire Liu Zhongtian were found guilty by a US federal jury of participating in a wide-ranging conspiracy to defraud the US using a wire-and-customs fraud scheme to avoid paying customs duties and boost the value of China Zhongwang Holdings, Asia's largest manufacturer of aluminum extrusions, according to a statement from the Department of Justice.

According to the DOJ, in a statement issued Aug. 23, China Zhongwang Holdings; Liu, the company's former president and chairman; several individual defendants; and the corporate defendants lied to US Customs and Border Protection to avoid paying $1.8 billion in antidumping and countervailing duties that were imposed in 2011 on certain types of extruded aluminum imported into the US from China by disguising the shipments as pallets.

"The aluminum sold to United States-based companies controlled by Liu was simply aluminum extrusions that were spot-welded together to make them appear to be functional pallets," the DOJ said. "In fact, there were no customers for the 2.2 million pallets imported by the Liu-controlled companies between 2011 and 2014, and no pallets were ever sold."

The majority of the pallets were imported through the ports of Los Angeles and Long Beach and then stockpiled at four large warehouses in Southern California, all of which were purchased at Liu's direction, according to the DOJ.

"Liu and his co-defendants orchestrated the bogus sales of aluminum to Liu-controlled companies in Southern California to falsely inflate China Zhongwang's value," the DOJ said. "... Since there was no actual demand for the pallets, defendants Liu and China Zhongwang arranged for aluminum melting facilities to be built and acquired, which were to be used to reconfigure the aluminum imported as pallets into a form with commercial value."

Two aluminum business and four warehousing companies -- all of which were related to one another -- were found guilty of one count of conspiracy, nine counts of wire fraud and seven counts of passing false and fraudulent papers through a customhouse, the DOJ said. The companies were Perfectus Aluminum; Perfectus Aluminum Acquisitions; Scuderia Development; 1001 Doubleday; Von Karman-Main Street; and 10681 Production Avenue.

The two Perfectus companies also were found guilty of seven additional counts of international promotional money laundering, the DOJ said.

A spokesperson for Zhongwang did not immediately respond to a request for comment Aug. 24.

The six companies are scheduled to be sentenced Dec. 13.

Four additional defendants that were charged in the 2019 federal grand jury indictment in the case have yet to appear in court in the US to face criminal charges in this matter, the DOJ said.