Grand Jury Convicts L.A. Businessman Over Customs Fraud

Executive and his corporation M Trade Inc. were found guilty of conspiring to evade duties on more than $30 million in Chinese-made apparel.

WASHINGTON — U.S. authorities said Wednesday that a federal jury in San Diego convicted a Los Angeles-area business executive and his corporation, M Trade Inc., for conspiring to evade duties on more than $30 million in Chinese-made jeans, skirts, shorts and other apparel illegally imported into the U.S.

This story first appeared in the June 13, 2013 issue of WWD.  Subscribe Today.

Sunil Jiwat Mirwani, 39, is scheduled to be sentenced Sept. 9 in U.S. District Court in San Diego. Nine other defendants in the case are also facing trials and sentencing, according to U.S. Immigration and Customs Enforcement officials.

Mirwani and M Trade Inc. were found guilty Friday on all four felony counts contained in the original case indictment, including conspiring to defraud the U.S.; two counts of importing goods by means of false statements, and conspiring to launder money.

The charges carry a maximum sentence of up to 29 years in prison and $1 million in criminal fines.

Federal authorities charged Mirwani and M Trade Inc. in July 2012, along with nine other defendants, including the then-president of the San Diego Broker’s Association, as part of a larger conspiracy in the customs-fraud scheme, which involved imported textiles, cigarettes, snack foods and produce found to be infected with salmonella.

According to the court records, “The defendants operated a ring and devised an elaborate scheme to exploit the in-bond import process, a routine feature of international trade that provides for duty-free importations on goods that do not formally enter into U.S. commerce.”

The case was investigated by ICE’s Homeland Security Investigations, the Internal Revenue Service, the Food and Drug Administration, and prosecuted by the U.S. Attorney’s Office for the Southern District of California.

According to court documents, Mirwani conspired with the other defendants and hired a group of San Diego-based businessmen and logistics experts to import large commercial quantities of foreign-made goods to the Port of Long Beach and evaded paying customs duties.

As part of the scheme, the group created false paperwork and database entries to classify goods entering the port as “in bond,” and marked for Mexico as the final destination. However, Mirwani and his coconspirators never sent the imported products to Mexico and instead hired truck drivers to haul the merchandise to several warehouses in the Los Angeles area.

Mirwani then sold the merchandise in the U.S. with a duty-free advantage, which put his competitors, including many L.A.-based apparel manufacturers and other foreign manufacturers paying duties on imported apparel to the U.S., at a competitive disadvantage. An ICE official said one of the retail outlets that Mirwani sold to was Ross Stores.

Mirwani was also found to have transmitted millions of dollars via international wire transfers to hide the illicit proceeds and to fund the fraudulent shipments. The wire transfers, including a $10 million amount transferred from M Trade Inc.’s bank accounts to Mirvana International, a Hong-Kong based company Mirwani co-owns with his brother. He also transferred similar amounts of money to that account through intermediary accounts in the U.S. and Mexico and through M Trade Inc.’s account directly to mainland China.