Chinese Metal Tycoon Indicted in $1.8 Billion Tariff Fraud Scheme in U.S.
Prosecutors say a company, China Zhongwang Holdings Limited, designed a plan to avoid paying aluminum tariffs and defraud investors. Liu Zhongtian, its former chairman, was also charged.
The Chinese billionaire founder of metals giant Zhongwang has been indicted in the United States for his alleged role in an elaborate scheme to avoid paying $1.8 billion in tariffs on aluminum shipped to the US.
Liu Zhongtian, the former chairman of China Zhongwang Holdings, is accused of exporting huge amounts of aluminum disguised as pallets to avoid paying customs duties of up to 400 percent.
Also named in the indictment, filed in Los Angeles federal court, is the company as well as several individuals and shell companies.
“This indictment outlines the unscrupulous and anti-competitive practices of a corrupt businessman who defrauded the United States out of $1.8 billion in tariffs due on Chinese imports,” said prosecutor Nick Hanna.
“Moreover, the bogus sales of hundreds of millions of dollars of aluminum artificially inflated the value of a publicly traded company, putting at risk investors around the world.”
Authorities say the scheme, started in 2008 and still operating, consisted of Zhongwang selling the purported aluminum pallets to US-based companies controlled by Liu.
The metal was simply aluminum extrusions that were spot-welded together to make them appear to be functional pallets which would be considered finished goods not subject to duties, according to the indictment.
“In reality, 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,” authorities said.