LOS ANGELES
The Justice Department announced Thursday that a downtown Los Angeles wholesale clothing importer and two of its executives had been found guilty of evading over $8 million in customs duties and laundering more than $17 million in unreported cash from their sales.
At the conclusion of a six-week trial, a federal jury on Tuesday found the following defendants guilty of dozens of felonies:
- C’est Toi Jeans, Inc. (CTJ), which imported apparel from China and other nations and exported clothing to customers in Mexico, Central America, and South America;
- Si Oh Rhew, 70, of La Cañada Flintridge, CTJ’s president and a 75% owner of the company; and
- Lance Rhew, 37, of downtown Los Angeles, Si Oh Rhew’s son, a CTJ corporate officer, and the owner of another Los Angeles-based company called GLLR Inc. that did business as CTJ.
The jury found CTJ and Si Oh Rhew guilty of conspiracy charges and multiple counts of failing to report currency transactions over $10,000.
All three defendants were also convicted of three counts of falsely classifying goods, three counts of using false statements to bring goods into the U.S., three counts of passing false documents through customs, and two counts of international money laundering.
CTJ received two extra convictions for laundering drug proceeds. Si Oh Rhew was found guilty of two additional counts of helping file false tax returns, while Lance Rhew faced one extra count for the same offense and one additional conspiracy count.
“Money laundering is the lifeblood of large-scale drug trafficking, and it is therefore essential that we go after businesses and individuals that feed criminal organizations the money they crave,” said United States Attorney Martin Estrada. “A jury found this corporation and its executives facilitated the laundering of millions of dollars in drug proceeds and now they will appropriately be held accountable. Together with our law enforcement partners, my office will continue to bring to justice businesses that facilitate criminal activity.”
Evidence presented at trial showed the following:
- Business Ownership: CTJ, owned and operated by Si Oh Rhew and his wife, received bulk cash payments derived from drug trafficking to settle customer invoices. The cash was delivered by unknown couriers unrelated to CTJ or its customers.
- Failure to Report Transactions:
- CTJ and Si Oh Rhew did not file the required currency transaction reports for cash transactions over $10,000.
- They concealed these cash receipts from their accountant, leading to the omission of over $17 million in gross sales on tax returns filed with the IRS.
- Customs Duty Evasion:
- CTJ bought garments from overseas suppliers, including from China, but reported falsely low values to U.S. Customs and Border Protection (CBP) to reduce import duties.
- As a result, import duties were significantly reduced. CTJ allegedly undervalued shipments by over $51 million, leading to approximately $8.4 million in unpaid tariffs.
- Payments to Overseas Suppliers:
- The indictment states CTJ sent 515 wire transfers, totaling $137 million, to pay suppliers for undervalued goods.
- Verdicts:
- The jury found the defendants not guilty on certain additional counts, including two concealment money laundering counts for CTJ and several counts for failure to file currency transaction reports for Lance Rhew.
U.S. District Judge Mark C. Scarsi scheduled a sentencing hearing for Jan. 21.
The Rhews will each face a sentence of decades in federal prison and CTJ will face fines of as much as $100 million, according to authorities.
Homeland Security Investigations and IRS-Criminal Investigation looked into this case.
Assistant U.S. Attorneys MiRi Song, Julie J. Shemitz, and Skyler F. Cho of the International Narcotics, Money Laundering, and Racketeering Section are prosecuting this case.