The owner of a garment wholesaling company in Los Angeles who used letters of credit (L/Cs) in a scheme to undervalue imported garments and avoid paying millions of dollars in duties to the US has been sentenced to 12 months and one day in federal prison

Sang Bum Noh, owner of Ambience Apparel, failed to report millions of dollars in income on tax returns. He also failed to report large cash transactions to the federal government.

Undervalued shipments

In this customs fraud scheme, Ambiance imported clothing from Asian countries and submitted fraudulent invoices to US customs and border protection (CBP) that undervalued the shipments and allowed Ambiance to avoid paying the full amount of tariffs owed on the imports.

At Noh's direction, the Asian manufacturers prepared two invoices for the clothing ordered by Ambiance. One invoice usually reflected 60 to 70 percent of the actual price and was paid by L/C while the other reflected the balance of the actual price and was paid by wire transfer.

The first invoice, which stated only 60 to 70 per cent of the shipment's value, was fraudulently submitted to CBP and was used to calculate the tariffs due on the imports. As a result of this scheme, over the course of nearly five years, Ambiance undervalued imports by about US$82.6 million and failed to pay more than US$17.1 million in tariffs.

Ill gotten gains

Noh and Ambience must also comply with a restitution order in this case for US$35.2 million, a forfeiture money judgment of US$81.6 million and the additional forfeiture of US$1.1 million previously seized by law enforcement.

Prosecutors in case said that while Noh was "facilitating money laundering...he enjoyed a house in Bel Air, bought luxury cars, and squirreled away bundles of cash worth US$35 million in shoeboxes and garbage bags."

A press release by the US Attorney's Office, Central District of California providing more details on this case can be found here.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.