The United States Federal Grand Jury has filed a lawsuit against two Chinese residents in San Francisco, one Chinese citizen, and three companies, accusing them of evading US import tariffs through illegal means and accumulating over one hundred million US dollars in tax evasion.
According to a press release issued by the Northern District of California Federal Prosecution Office on Thursday,
defendants Henry Pan, Nolan Xie, Johnson Wang, Yuli Ceramic Marble Company, Yuli Marble Cabinet Company, and Shenzhen Dinghui International Freight Forwarding Co. are accused of evading anti-dumping duties, countervailing duties, and other tariffs through fraudulent means, with the total tax evasion amount exceeding 1.09 billion US dollars.
According to the indictment released on December 18th,
63-year-old San Francisco resident Mr. Pan, 61-year-old South San Francisco resident Mr. Xie, 53-year-old Chinese citizen Mr. Wang; Mr. Pan’s Bay Area businesses Yuli Ceramic Marble and Yuli Marble Cabinet; Mr. Wang’s China-based company Shenzhen Dinghui International Freight Forwarding are implicated in conspiring and executing wire transfer fraud, wire fraud, smuggling, and false statement importation.
Mr. Pan and his companies are also charged with international money laundering. He was arrested on December 17th and made his initial court appearance on the 18th in Federal District Court.
US Federal Prosecutor Craig H. Missakian stated, “The defendants are accused of evading tariffs aimed at protecting American manufacturers and job opportunities, causing the US to lose billions of dollars in tariffs and harming rule-abiding businesses… Companies attempting to exploit loopholes should be cautious, as they will be investigated and held accountable.”
Deputy Assistant Attorney General of the Civil Division Brenna Jenny emphasized, “Evading tariffs and import taxes is not just a violation on import documents. Today’s indictment demonstrates our department’s determination to punish those who flout US trade laws through trade fraud special working group.”
Tatum King, head of Homeland Security Investigations (HSI) in San Francisco, stressed, “The charges of conspiracy, wire fraud, smuggling, false statement importation, and international money laundering reflect the seriousness of the crimes involved in this case. We will continue to work with US Customs and Border Protection (CBP), US Attorney’s Offices, and other collaborative agencies to ensure those seeking to profit through deception and illegal means are brought to justice.”
According to the indictment, the US Department of Commerce imposes tariffs, including anti-dumping and countervailing duties, on certain foreign-imported goods.
Between 2018 and 2020, the US Department of Commerce determined that quartz surface products, wooden cabinets and vanities, and ceramic tiles manufactured in China were being sold in the US at prices below fair market value. Consequently, the US imposed combined tax rates of 341.47% on quartz surface products, 251.64% on wooden cabinets and vanities, and 689.50% on imported ceramic tiles from China.
The indictment alleges that from September 2018 to August 2023, the defendants planned to evade the combined duties and other taxes to increase profit for Mr. Pan’s businesses. Mr. Pan controlled multiple companies that imported kitchen products subject to the combined tax rates. He and his accomplices employed various means to evade taxes, including rerouting goods through Malaysia, using shell companies, and misclassifying imported products.
Mr. Wang and Shenzhen Dinghui International Freight Forwarding assisted Mr. Pan in evading the combined duties through various means such as shipping goods manufactured in China to Malaysia before transshipping them to the Port of Oakland, falsely claiming to CBP that these goods were manufactured in Malaysia.
Additionally, Mr. Pan falsely reported shell companies as US-based importers and consignees in import documents, while the actual destination of the goods was his own enterprises.
The defendants are also accused of submitting false documents to CBP, including false import declaration forms presented by licensed customs broker Mr. Xie.
Through these schemes, the defendants imported approximately 520 batches of goods, enabling Mr. Pan’s businesses to evade over 1.09 billion US dollars in taxes.
Furthermore, CBP issued pre-penalty notices totaling around 222.5 million US dollars to Yuli Ceramic Marble, Yuli Marble Cabinet, and Mr. Pan, holding them jointly and severally responsible. CBP preliminarily determined that Mr. Pan and these two companies engaged in fraudulent importation through false statements, violating Title 19 of the US Code.
Mr. Pan is currently detained by the federal government, with his next court appearance scheduled for December 19, 2025. He will face a detention hearing presided over by US Magistrate Judge Thomas S. Hixson.
If convicted, the defendants could face the following penalties:
Conspiracy in violation of Title 18, Section 371 of the US Code may result in a maximum sentence of five years imprisonment per count; Conspiring to commit wire fraud under Section 1349 carries a maximum sentence of 20 years imprisonment per count; Wire fraud under Section 1343 carries a maximum sentence of 20 years imprisonment per count; Smuggling under Section 545 may result in a maximum sentence of 20 years imprisonment per count; False statement importation under Section 542 may result in two years imprisonment per count; International money laundering under Section 1956(a)(2) may result in a maximum of 20 years of imprisonment per count.
The Northern District of California Federal Prosecution Office noted that the indictment in this case stemmed from a joint investigation by CBP and HSI. Civil penalties will be pursued through administrative procedures by CBP.