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California Man Pleads Guilty to Importing Chinese Cigarettes
A Los Angeles man has been caught up in a massive tobacco smuggling operation, pleading guilty to importing thousands of cartons of Chinese cigarettes without paying taxes.
Zhi Xiong Chen, 56, of Los Angeles’ Chinatown neighborhood, admitted to using multiple addresses to receive 15,128 cartons of Chinese-brand cigarettes over a nearly five-year period. During this time, U.S. Customs and Border Protection officers stopped another 9,824 cartons of Chinese-brand cigarettes at international mail facilities in California and New York.
As part of the scheme, Chen attempted to evade paying more than $467,000 in federal and state excise taxes on the cigarettes he illegally imported. The scheme netted Chen a significant profit, but put unsuspecting consumers at risk of unregulated and potentially dangerous products.
‘While Zhi Xiong Chen was illegally importing tens of thousands of cartons of cigarettes into the United States, he was also evading hundreds of thousands of dollars in taxes due on those cigarettes,’ said Acting Deputy Assistant Attorney General Stuart M. Goldberg. ‘Importers who obtain the required permits and pay their fair share of taxes deserve to compete on a level playing field. Those who try to cut corners and skirt these legal obligations should know that they will be investigated and prosecuted.’
U.S. Attorney Eileen M. Decker added, ‘From early 2011 until mid-2016, this defendant illegally imported thousands of cartons of Chinese-made cigarettes without the necessary permits and without paying excise taxes. The defendant’s crime not only cheated taxpayers, but also caused unregulated, potentially dangerous products to be sold to an unsuspecting public.’
Chen faces a statutory maximum penalty of five years in prison, a period of supervised release, restitution and monetary penalties. Sentencing is scheduled for April 17.
The investigation was conducted by special agents of IRS–Criminal Investigation, the Alcohol and Tobacco Tax and Trade Bureau, and the U.S. Food and Drug Administration’s Criminal Investigations. Assistant U.S. Attorney Valerie L. Makarewicz and Trial Attorney Christopher S. Strauss of the Tax Division are prosecuting the case.
Key Facts
- State: California
- Category: White Collar Crime|Fraud & Financial Crimes|Drug Trafficking
- Source: DOJ Press Release â†â€â€
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