US Seeks Over $15 Million From Importer at CIT for Customs Fraud on Vegetable Entries

Importer Sun Ray Group and its owner, Jihua "Mike" Liu, face over $15 million in penalties for alleged fraud and lying on customs forms and underpayment duties on vegetable entries. A complaint at the Court of International Trade filed Dec. 6 by the DOJ says that Liu and Sun Ray avoided duties on 216 entries of dried and dehydrated garlic, onion and other vegetables, and also owe nearly $2 million in unpaid duties (United States v. Jihua "Mike" Liu, CIT #22-00330).

Liu and Sun Ray imported the vegetables during the period 2010 to 2012. The U.S. alleged that Liu directed Sun Ray to understate the value of the imports via two methods. The first allegedly had Sun Ray creating two invoices for each shipment. One would be sent to CBP showing only a portion of the goods' price and the other would have the same invoice number and show a host of service fees. These fees included payments for testing, customer service, research and development and special packaging. For every entry that used two invoices, Liu had Sun Ray pay its suppliers the sum of the prices listed on both invoices.

The second alleged duty-avoidance scheme saw Liu direct Sun Ray to "understate the value" of the merchandise via false invoices that had lower unit prices than actually assigned to the goods. Liu allegedly had Sun Ray pay the supplier a price greater than the total entered value for the imports and kept spreadsheets showing the actual price paid for the imports. The U.S. says through the two schemes it lost around $1,934,489.26 in duties. CBP issued a pre-penalty notice to Liu and Sun Ray in 2016, citing the amount lost and a proposed penalty of over $15 million. Liu and Sun Ray did not respond to the pre-penalty notice.

Should the trade court rule it fails to prove fraud, the DOJ seeks a penalty of $7,737,957.04 for gross negligence, or $3,868,978.52 for negligence, plus the unpaid duties, the complaint said.