When Yingqing "Jeff" Zeng pleads guilty in federal court to a felony conspiracy charge, he'll be one of the latest alleged criminals caught in the U.S. government's crackdown on port-related crimes in the wake of the Trump Administration's trade war.
Zeng, president of Miramar, Fla.-based Blue Furniture Solutions, signed a plea agreement last month admitting his role in a scheme to avoid tariffs on furniture his company imported from China through the Port of Charleston. He has not yet entered his plea in court.
Zeng, along with company co-owner Alexander Cheng, are accused of submitting customs forms that mislabeled their furniture to avoid 216 percent anti-dumping fees enacted against China. Cheng has pleaded not guilty.
While the Port of Charleston has always been an important focus for law enforcement, Sherri Lydon, the U.S. attorney for South Carolina, said the administration's "focus on tariffs has reminded us how important it is to enforce our customs laws vigorously."
As world trade and tariffs have increased, law enforcement officials say, more shippers are trying to find ways to avoid the extra duties.
"Lately, the Port of Charleston has been growing considerably," said William Mataya, the resident agent in charge for the Charleston office of Homeland Security Investigations. "The more traffic and commerce you have going through a port, the more you're going to see these types of issues."
The most common methods of tariff avoidance are by misrepresenting on customs forms the goods that are shipped inside the metal containers that arrive on container ships, lying about the condition of those goods or fudging figures.
For example, a South Carolina importer was prosecuted for under-reporting the weight of tobacco it brought to Charleston from Greece, a scheme designed to save the company hundreds of thousands of dollars in duties.
Homeland Security also is stepping up efforts to intercept illegal weapons shipments and "controlled commodities" — items such as solar-sensitive microchips for F-16 fighter jets or night-vision scopes — that aren't allowed to go to certain countries. For example, the president of North Charleston-based and Russian-owned Delfin Group USA was sentenced to two years in prison in 2014 for a scheme to ship refined oil for jets to Iran through the United Arab Emirates.
More recently, Mataya said, law enforcement has seen a greater number of vehicles — some of them stolen — being used in tariff schemes.
Rhett DeHart, an assistant U.S. attorney based in Charleston, is prosecuting the case that accuses two men of submitting false documents to government officials to avoid high tariffs in Nigeria.
The men — Tolulope Rahman Salam and Ibrahim Shehu — allegedly claimed to be shipping old and damaged cars from the Port of Charleston when, in fact, they were exporting a pair of Mercedes sedans, a BMW X5 SUV and a Bentley. Salam has pleaded guilty to one charge of smuggling goods from the United States, while Shehu has pleaded not guilty to seven charges of smuggling and bribery.
DeHart said lying on customs forms rarely involves small amounts.
"They figure if you're going to be a bear, be a grizzly bear," he said. "I haven't seen any cases where they just nibble around the edges."
With a record 1.3 million cargo boxes moving through the Port of Charleston's terminals last year, it's difficult to catch everything, Mataya said. That's particularly true because cargo boxes don't sit on the terminals for long, which means agents must move quickly — sometimes within hours — to intercept goods.
Most times, tariff avoidance schemes are discovered before the cargo arrives at a port, either through whistleblowers notifying agents ahead of time or by customs officials sorting through electronic and paper forms to find patterns that don't make sense — like shipping junker cars to Nigeria, a country known for its high vehicle tariffs.
"You try to find that little hidden gem that will tell you everything you need to know about a case," Mataya said of the Homeland Security and Customs and Border Protection officers who scour through the paperwork.
The initial case against Zeng, the furniture importer, was prompted by a complaint from a business competitor, leading to an investigation that federal agents say uncovered millions of dollars in unpaid duties over nearly a decade.
Zeng and Cheng are facing similar allegations in a civil case filed in Texas, with a trial proposed for November. Documents in that case allege the pair mislabeled wooden furniture subject to anti-dumping duties as metal storage cabinets.
While the specific facts of each case are different, DeHart said there's usually a common thread linking them.
"These cases almost always revolve around making false statements on import or export forms to avoid tariffs and duties," he said. "These crimes are motivated by greed."