On Aug. 24, Hong Kong-based jewelry exporter Fai Po Jewellery pleaded guilty to customs fraud charges and faces nearly $2 million in fines and restitution.
According to a press release from the U.S. Department of Homeland Security, the company admitted to intentionally submitting false invoices to the government in connection with the import of merchandise in order to avoid paying more than $1 million in customs duties.
Fai Po Jewellery has been 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, $144,324, and was placed on three years’ probation.
Here’s how the Department of Homeland Security described the customs violation:
HSI special agents found that 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. 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 [U.S. Customs and Border Protection] when an audit revealed a discrepancy between the actual value of the gold jewelry shipment and what was stated on the fraudulent invoices.
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.