Federal prosecutors have filed charges against the owner of a Los Angeles fashion district firm and his son for their role in schemes to avoid paying millions of dollars in duties and taxes to the United States, officials announced Thursday.
The defendants include: C’est Toi Jeans, Inc. (CTJ) a clothing import and export company in L.A.’s fashion district; 67-year-old Si Oh Rhew of La Canada Flintridge, who is president of CTJ; and 33-year-old Lance Rhew, son of Si Oh Rhew and a CTJ corporate officer. Lance is also the owner of another company called GLLR Inc. that did business with CTJ.
In a 35-count indictment filed Wednesday, prosecutors allege that CTJ and the Rhews were at the center of two schemes — one that avoided paying more than $10 million in customs duties on imported clothing, and a second scheme in which the company laundered narcotics money and failed to report tax returns of more than $17 million from cash transactions.
The indictment announced Thursday includes counts of conspiracy, tax fraud and money laundering, among several other criminal charges. The case stems from an ongoing investigation into money laundering and other crimes involving fashion district businesses, according to the U.S. Attorney’s Office for the Central District of California.
In the first scheme, the company and the Rhews allegedly avoided customs duties and tariffs by purchasing garments from overseas manufacturers and submitted fraudulent information to U.S. Customs and Border Protection that undervalued imported garments. As a result, the import duties owed on the shipments were lowered, prosecutors said.
Prosecutors said the fashion district company undervalued its imported goods by more than $62 million, resulting in over $10,200,000 in unpaid tariffs and duties.
For the second scheme, the Rhews used CTJ “to receive large amounts of bulk United States currency, including from narcotics proceeds, as payment for outstanding merchandise orders from customers in Mexico and elsewhere,” according to the indictment.
The clothing company allegedly accepted large cash payments of up to $70,000 and failed to file mandatory reports for any transactions involving more than $10,000 in cash. The defendants are accused of hiding the cash receipts from an accountant who prepared their taxes, which allowed the Rhews to omit more than $17.6 million in gross sales from tax returns filed with the IRS.
The defendants are due to appear for arraignments in Los Angeles federal court on Feb. 4, 2021.
If convicted of the charges in the indictment, the Rhews would each face potential sentences of decades in federal prison, and CTJ could face fines of as much as $100 million, prosecutors said.