Spring Valley Man Pleads Guilty to Customs Fraud, Money Laundering

Two San Diego County men pleaded guilty in federal court Thursday to importing about $100 million worth of foreign-made goods without paying import taxes, the U.S. Attorney's Office announced Thursday.

Gerardo Chavez of Spring Valley and Carlos Medina of Chula Vista had large quantities of items such as Chinese-made clothing and cigarettes from India brought into the Port of Long Beach but avoided paying customs duties because they said they would ship the goods to other countries, prosecutors said.

They said the items were trucked to warehouses around Southern California and fraudulent papers were filled out.

Items to be transshipped to other countries are not subject to federal fees.

According to the U.S. Attorney's Office, the goods were then distributed throughout the United States.

"In addition to harming businesses that play by the rules, this type of massive customs fraud harms all taxpayers – individual and business alike – who pay their fair share of taxes to the United States Treasury," U.S. Attorney Laura Duffy said. The government lost about $18 million in tax revenues, she said.

Chavez, 42, pleaded guilty to conspiracy to defraud the U.S. government, two counts of bringing in goods via false statements, and money laundering.

Medina, 34, admitted to the conspiracy charge.

Sentencing for both defendants was set for Jan. 14 before U.S. District Judge Michael Anello.

Chavez faces up to 29 years in prison and a $1.25 million fine, if the charges are run consecutively. Medina faces five years in prison and a $250,000 fine.

Prosecutors said Chavez ran the scheme through his company, International Trade Consultants LLC.

—City News Service