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US-accused Chinese billionaire as part of a suspected customs evasion proceeding



The indictment, which arrived in May but was canceled earlier this week, charges Liu Zhongtian, the founder of the Chinese aluminum giant

China Zhongwang

Holdings Inc., plotting to defraud the US through a comprehensive system that spans its headquarters in Liaoning, China, ports in Los Angeles, and a remote desert in Mexico. It is alleged that the scheme started in 2008 and continues to this day.

The prosecution said it was one of the largest collective bargaining cases ever heard by the Department of Justice. The indictment comes as negotiations between the Trump administration and China over their ongoing trade dispute resume this week after weeks of allegations.

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An arrest warrant was issued for Mr. Liu, one of the world's richest aluminum magnates, an official with knowledge of the investigation said. The 55-year-old, known under the names Uncle Liu and Big Boss, is said to be in China. According to prosecutors, he is threatened with fraud and international money laundering charges leading to a maximum of 465 years in prison.

"America is not a playground for corrupt business people," said Nicola Hanna, US attorney for the Central Government district of California.

A spokeswoman for China Zhongwang, who was also charged, did not immediately respond to an e-mail for comment and to speak with Mr. Liu. A call to a representative from China Zhongwang in Hong Kong was not answered. The Journal could not determine if Mr. Liu has a US based lawyer. A lawyer who has represented Mr. Liu in the past did not immediately respond to an e-mail requesting a comment.

The company is accused of using aluminum shipments to increase its sales over years, giving the false impression that the US is calling for products was strong. China Zhongwang is listed on the Hong Kong Stock Exchange.

Aluminum stock was stored in 2016 in Mexico's Aluminicaste Fundición, a company once owned by his son Liu Zuopeng.


Photo:

Janet Jarman for the Wall Street Journal

Mr. Liu previously denied a connection to illegal shipping schedules. China Zhongwang has also denied any connection for a long time.

Jeremy Scott, Deputy Special Envoy for Homeland Security Investigations in Los Angeles, who led the investigation, said efforts to bring Mr. Liu to the US to bring charges would likely be drafted by the State Department. The US has no extradition agreement with China.

The State Department in Beijing and the Chinese Embassy in Washington, DC, did not immediately respond to requests for comments.

The lawsuit accuses Mr. Liu and his staff of handing over cash to shell companies that are effectively owned by Mr. Liu to buy China Zhongwang aluminum and then market it to American buyers, masking the origins of the metal and the US tariffs are being bypassed.

US and Chinese trade negotiators meet in Shanghai this week, with the US pushing for expanded intellectual property protection and cutting corporate subsidies to businesses, while China is calling on the US to drop all tariffs.

The Trump administration claims billions of dollars of goods manufactured in China deviate from the tariffs by entering the United States via other countries in Asia, especially Vietnam. Mr. Trump warned this week that he would impose a harsher trade agreement on China's re-election than is currently under discussion. A major target of the government's tariffs was steel and aluminum imports.

A Los Angeles US Attorney spokesman said the trade negotiations had no impact on the investigation into Mr. Liu.

The Wall Street Journal previously reported that Mr. Liu controlled a number of companies that avoided tariffs by shipping China Zhongwang aluminum worth billions of US dollars to the US English: www.germnews.com/archive/ /dn/1996/03/27.html The Procuratorate announced that it had done business with Mr. Liu and published an article on the alleged system in 2016. Liu denied the participation at this time. "These things have nothing to do with me," he said in an interview with The Journal in 2016.

The US punitive tariffs on certain aluminum imports from several Chinese companies, including China's Zhongwang, were imposed in 2011 according to a trade ministry Investigations revealed that companies sold metal in the US at artificially low prices while receiving subsidies at home.

A wall opposite the Aluminicaste Fundición hid more aluminum.


Photo:

Janet Jarman for Wall Street

Mr. Liu allegedly bypassed the tariffs by transporting aluminum in the form of pallets to the US, a finished product that was not on the list of punished goods. However, according to the indictment, most of the pallets were not finished products but allegedly a way to smuggle aluminum into the US without paying the appropriate tariffs. Between 2011 and about 2014, Mr. Liu 's companies imported 2.2 million counterfeit pallets to the US, equivalent to $ 1.8 billion in import duties /27.html Liu had been shipped to Mexico and the US began traveling to Vietnam when he allegedly tried to evade investigations by US authorities from Po-Chi "Eric" Shen, a native of Taiwan and a US citizen According to court records and interviews with Mr. Shen.

Shen agreed to plead guilty to evading federal income tax and cooperate with the investigation, Justice Department officials said. An attorney from Mr. Shen declined to comment.

Letter to Dan Frosch at [email protected] and Scott Patterson at [email protected]

Corrections and Improvements
Po-Chi "Eric" Shen is a native of Taiwan and a US citizen. An earlier version of this article falsely stated that Mr. Shen was from Singapore. (July 31, 2019)

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