Hong Kong Company to Pay Nearly $2Million for Submitting False Invoices to Avoid Duties
A Hong Kong-based jewelry exporter pleaded guilty Aug. 24 to customs fraud and faces nearly $2 million in fines and restitution in a scheme discovered by CBP’s Regulatory Audit Unit, said Immigration and Customs Enforcement. Fai Po Jewellery (H.K.) Co. admitted to intentionally submitting false invoices to the government in connection with the importation of merchandise in order to avoid paying more than $1 million in customs duties, ICE said. The company was ordered to pay an $800,000 criminal fine and restitution of $1,017,737. Additionally, the company was ordered to pay the cost of the investigation in the amount of $144,324 and was placed on three years' probation.
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According to ICE, from early 2007 to late 2009, Fai Po enclosed false invoices in their direct shipments to U.S. purchaser ShopNBC while sending the actual full value invoice to the purchaser by email. Fai Po advised the purchaser to ignore the invoice enclosed in the shipment because it was there only to avoid customs clearance issues.
Since Fai Po was acting as both the exporter and importer, the company was responsible for customs duties, not the U.S. purchaser, ICE said. The purchaser paid the higher amount listed on the true invoice, while Fai Po declared to the government the lower value on the fraudulent invoice. The purchaser was not aware of Fai Po's scheme and didn't receive any benefit from it.
The fraud was detected by CBP when an audit revealed a discrepancy between the actual value of the gold jewelry shipment and what was stated on the fraudulent invoices, ICE said.
Under the terms of probation, Fai Po is required to appoint a responsible corporate officer who will be required to prepare and submit quarterly reports to the U.S. Probation Office to ensure that no similar conduct occurs in the future.