DTLA retailer found guilty of money laundering

A Los Angeles Fashion District clothing wholesaler and two of its executives will be sentenced in January for evading more than $8 million in customs duties and using a cross-border money laundering scheme to prevent the transfer of more than $17 million in suspected narcotics proceeds is reported, federal authorities announced Wednesday. .

At the end of a six-week trial, a federal jury in downtown Los Angeles on Tuesday found three defendants guilty of dozens of crimes:

— C’est Toi Jeans Inc., which imported clothing from China and other countries and exported clothing to customers in Mexico, Central America and South America;

— Si Oh Rhew, 70, of La Cañada Flintridge, president of CTJ and 75% owner of the company; And

– Lance Rhew, 37, of downtown Los Angeles, the son of Si Oh Rhew, a corporate officer of CTJ, and the owner of another Los Angeles-based company called GLLR Inc. that did business under the name CTJ.

The case outlined in a 49-page indictment filed in December 2020 was the result of an operation in September 2014, when law enforcement authorities swarmed the 100-block center of the West Coast apparel industry and executed dozens of search warrants as part of a investigation into financial matters. money laundering and other crimes at businesses in the Fashion District.

During one such search of a downtown apartment building linked to the defendants in the CTJ case, authorities seized more than $38.3 million in cash, according to the U.S. Attorney’s Office.

The jury found CTJ and Si Oh Rhew guilty of two counts of conspiracy and multiple counts of failing to file a report of a currency transaction of more than $10,000 in a trade or business. The panel also found all three defendants guilty of three counts of entering falsely classified goods, three counts of entering goods by false representation, three counts of passing false and fraudulent papers through a customs office, and two counts of money laundering of international promotional money. This is reported by the American Public Prosecution Service.

CTJ was found guilty of a further two covert money laundering schemes involving drug proceeds. Si Oh Rhew was found guilty of a further two charges of aiding and abetting and inducing the filing of a false tax return. Lance Rhew was found guilty of one more count of aiding, assisting and procuring the filing of a false tax return. Lance Rhew was also found guilty of one conspiracy count.

The first scheme involved avoiding customs duties and tariffs by purchasing clothing from overseas manufacturers, including from China, but then providing false information to U.S. Customs and Border Protection that understated the true value of the items imported into the U.S. , prosecutors said.

As a result, duties owed on the shipments were reduced, creating approximately $8.4 million in unpaid tariffs and duties that should have been paid, prosecutors said.

In the second scheme, the Rhews used CTJ “to receive large amounts of U.S. currency, including from narcotics proceeds, as payment for outstanding orders for goods from customers in Mexico and elsewhere,” according to the indictment.

The jury heard that CTJ accepted large cash payments of up to $70,000 even after law enforcement actions targeted their businesses in 2014. The defendants failed to file currency transaction reports, which are required for any transaction involving more than $10,000 in cash, and concealed the data. cash receipts from an accountant who prepared their taxes, leading the Rhews to fraudulently omit more than $17 million in gross sales from tax returns filed with the Internal Revenue Service, evidence shows.

The jury found the defendants not guilty of several additional criminal counts, including two counts of concealment of money laundering for CTJ and several counts of failure to file a report of a currency transaction in a non-financial trade or business for Lance Rhew.

U.S. District Judge Mark C. Scarsi has scheduled a sentencing hearing for Jan. 21. At that point, the Rhews will each face decades in prison and CTJ fines of as much as $100 million, the U.S. Attorney’s Office said.