Chinese billionaire indicted in U.S. for alleged $1.8 billion aluminum
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[August 01, 2019] By
Makini Brice and Jonathan Stempel
WASHINGTON/NEW YORK (Reuters) - A Chinese
billionaire has been indicted by a grand jury on charges he schemed with
the aluminum company he founded to evade $1.8 billion of tariffs by
smuggling huge amounts of the metal into the United States, federal
prosecutors said on Wednesday.
Liu Zhongtian, 55, and China Zhongwang Holdings Ltd <1333.HK>, where he
served as chairman and president, were among several defendants charged
in a 24-count indictment by a Los Angeles grand jury.
The May 7 indictment had been kept under seal until late Tuesday. It
came as U.S. and Chinese negotiators resumed talks to end trade tensions
between the world's two largest economies.
Neither Zhongwang or Liu, who is still the company's controlling
shareholder, have received any notice of the proceedings, the company
said in a statement to the Hong Kong stock exchange on Thursday.
Zhongwang has previously described smuggling allegations as "misleading"
and "without any factual basis."
"The company would like to clarify that the group has always strictly
abided by in its business operation the laws and regulations of the
People's Republic of China and destination countries of its exported
products, and has developed overseas markets under the principle of fair
and orderly competition," it said in the statement to the exchange.
Zhongwang's shares fell as much as 20.9% on Thursday to HK$3.17 ($0.41),
the lowest since January 2016.
Liu is believed to be in China, which does not have an extradition
treaty with the United States, and an arrest warrant has been drawn up,
according to The Wall Street Journal. It was unclear whether Liu has a
U.S.-based lawyer. Liu and his family are worth $3.2 billion, Forbes
Prosecutors said the alleged scheme began as early as 2008, and
eventually involved efforts to escape duties imposed by the U.S.
Department of Commerce in 2011 on various types of extruded aluminum
imported from China.
The indictment said companies affiliated with Liu went through ports in
the Los Angeles area to import aluminum extrusions that were
"tack-welded" together, to appear as finished "pallets" that were not
subject to duties.
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China Zhongwang Holdings Chairman Liu Zhongtian toasts during the
debut of Zhongwang Holdings at the Hong Kong Stock Exchange May 8,
2009. REUTERS/Bobby Yip/File Photo
Prosecutors said Liu would then stockpile the aluminum at four southern
California warehouses, and with his associates orchestrate bogus sales
to companies he controlled to inflate Zhongwang's financials and make it
appear more valuable.
Liu, also known as "Big Boss" and "Uncle Liu" according to the
indictment, was also accused by prosecutors of running a "massive" money
laundering operation involving the use of shell companies to transfer
funds to Zhongwang.
U.S. authorities said the scheme gave Liu's companies an unfair
advantage over American rivals and posed other hazards.
"Our national security is jeopardized when domestic industry loses its
ability to develop and supply products for U.S. defense and critical
infrastructure applications, forcing us to become dependent on
unreliable imports," Joseph Macias, special agent in charge for homeland
security investigations in Los Angeles, said in a statement.
Liu and several other defendants face charges of wire fraud, money
laundering, passing fraudulent papers through a customhouse and
Most counts carry a maximum 20-year prison term, and if served
consecutively carry a maximum 465-year term.
The case is U.S. v Liu et al, U.S. District Court, Central District of
California, No. 19-cr-00282.
(Reporting by Makini Brice in Washington, and Jonathan Stempel in New
York; additional reporting by Tom Daly in BEIJING; editing by David
Gregorio and Christian Schmollinger)
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