This archive report was first published on 1 August 2019.
On August 1, 2019, a federal grand jury indictment was unsealed, revealing a complex scheme to evade $1.8 billion in tariffs on aluminum imports to the United States.
China Zhongwang Holdings Limited, a Chinese company, allegedly designed the scheme to avoid paying the tariffs imposed on certain types of aluminum imports in 2011.
The company's former president and chairman, Liu Zhongtian, a Chinese billionaire, is among those accused of lying to Customs and Border Protection.
Prosecutors claim that the company disguised its shipments as 'pallets,' which would be classified as finished goods and not subject to the duties.
The indictment alleges that the company imported the aluminum through the ports of Los Angeles and Long Beach, stored it nearby, and purportedly sold it to United States-based companies controlled by Mr. Liu.
However, prosecutors say the sales were a sham intended to inflate the value of the company, which is publicly traded on the Hong Kong Stock Exchange.
Mr. Liu, 55, remains a major shareholder, prosecutors said.
Zhongwang stated that it complied with the law in China and in places where it exports products, and that its controlling shareholder had not received any legal notices in connection with the case.
The indictment also accuses the defendants of carrying out a large-scale money-laundering operation that funneled millions of dollars through shell companies to the United States-based aluminum companies controlled by Mr. Liu, and then back to China Zhongwang Holdings.
The majority of the activity referred to in the indictment took place between 2011 and 2014, and deprived the United States of $1.8 billion in tariffs, prosecutors said.
Prosecutors said that the company's annual reports 'created a false narrative that there was a robust demand for the aluminum pallets in the United States.'
The defendants are accused of conspiracy, wire fraud, and money laundering.
