A 24-count indictment lays out a billionaire's scheme to import Chinese aluminum disguised as pallets to skirt tariffs and engineer bogus sales to inflate his company's revenues.
A Chinese billionaire and his company had a problem, federal prosecutors allege: They wanted to import massive amounts of aluminum into the United States without paying tariffs.Zhongtian Liu, 55, and China Zhongwang Holdings Ltd. imported extruded aluminum from China into the ports of Los Angeles and Long Beach, avoiding the tariffs because the material appeared to have been manufactured into finished pallets, authorities said.
Investigators believe the plan was to eventually melt the pallets and sell the raw aluminum, which was extremely high-grade and could have been used to manufacture medical devices, military equipment or aircraft, said Jeremy Scott, assistant special agent in charge for Homeland Security Investigations in Los Angeles.About 260,000 of the pallets are now sitting in a seizure warehouse owned by the federal government.
Liu resigned as president of China Zhongwang Holdings Ltd. in 2016 and as board chairman in 2017. He could not be reached for comment, and the company did not immediately return calls. China Zhongwang Holdings Ltd. drew on the “bogus sales” in its annual reports to mislead investors by creating “a false narrative that there was a robust demand for aluminum pallets in the United States,” according to a news release issued by federal prosecutors.
“It was very complicated,” Scott said. “I’d say it was pretty ambitious. But had they been able to maybe get the smelting plant online sooner, I think this plan could have actually worked.” U.S. Atty. Nick Hanna said in a statement that “the rampant criminality described in this case also posed a threat to American industry, livelihoods and investments.”
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