Los Angeles Clothing Company Fails to Fulfill $8 Million in Customs Duties
The company, along with two executives, engaged in a cross-border money laundering system to evade reporting more than $17 million in suspected narcotics proceeds.
LOS ANGELES—A Los Angeles Fashion District clothing wholesaler and two of its executives will be sentenced in January for avoiding over $8 million in customs duties and using a cross-border money laundering system to bypass reporting over $17 million in suspected narcotics proceeds, federal authorities announced Wednesday.
Following a six-week trial, a federal jury in downtown Los Angeles late Tuesday found the defendants guilty of numerous felonies. The company C’est Toi Jeans (CTJ) imported apparel from China and other nations and exported clothing to customers in Mexico, Central America, and South America.
The other two defendants are Si Oh Rhew, 70, of La Cañada Flintridge, CTJ’s president and a 75 percent owner, and Lance Rhew, 37, of downtown Los Angeles, Si Oh Rhew’s son and a corporate officer at CTJ and owner of another Los Angeles-based company, GLLR Inc., which operated as CTJ.
The case, outlined in a 49-page indictment filed in December 2020, stemmed from a September 2014 operation where law enforcement authorities executed numerous search warrants in the Fashion District as part of an investigation into money laundering and other crimes at Fashion District businesses.
During a search at a downtown condominium linked to the defendants in the CTJ case, authorities seized over $38.3 million in cash, according to the U.S. Attorney’s Office.
CTJ and Si Oh Rhew were found guilty of two conspiracies and multiple counts of failure to report currency transactions over $10,000 in a trade or business. The panel also found all three defendants guilty of various other charges, according to the U.S. Attorney’s Office.
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CTJ was also found guilty of two additional concealment money laundering counts involving drug proceeds. Si Oh Rhew faced two additional counts of aiding, assisting, and procuring the filing of a false tax return. Additionally, Lance Rhew was found guilty of one additional count of aiding, assisting, and procuring the filing of a false tax return and one conspiracy count.
The first scheme involved evading customs duties and tariffs by providing false information to U.S. Customs and Border Protection about the value of imported garments. This resulted in $8.4 million in unpaid tariffs and duties that should have been paid.
In the second scheme, the Rhews used CTJ to receive large amounts of U.S. currency, including funds from narcotics proceeds, as payment for merchandise orders from customers in Mexico and other countries, according to the indictment.
CTJ accepted cash payments up to $70,000 even after the 2014 law enforcement action. The defendants failed to file required currency transaction reports for transactions over $10,000 in cash and concealed cash receipts from their accountant for tax purposes, leading to the omission of over $17 million in gross sales from tax returns filed with the IRS.
The defendants were acquitted of several criminal counts, including two concealment money laundering counts for CTJ and multiple counts of failure to report currency transactions in a nonfinancial trade or business for Lance Rhew.
U.S. District Judge Mark C. Scarsi scheduled a sentencing hearing for Jan. 21, with potential decades-long prison sentences for the Rhews and fines of up to $100 million for CTJ, as per the U.S. Attorney’s Office.
