DOJ Seeks Over $10 Million in Unpaid Duties and Fines in Wire Hangers Case
DOJ is looking to collect over $10 million in unpaid duties and penalties from Florida businessman Zhe "John" Liu and one of his companies, AB MA Distribution, alleging Liu and AB MA transshipped steel wire hangers through India and Thailand to avoid the payment of antidumping and other duties on steel wire hangers from China, according to a June 7 complaint at the Court of International Trade (U.S. v. Zhe "John" Liu and AB MA Distribution Corporation, CIT # 23-00116).
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The new case comes on top of another penalty case against Liu seeking over $6 million in penalties and unpaid duties for different shipments transshipped using the same network of companies. The trade court recently rejected a motion by Liu to dismiss that case, which is still pending (see 2303160050).
In the new case, the government alleged that Liu was "operated, controlled, and was an agent of multiple companies through which he directed and abetted the importation of steel wire hangers," including GL Paper, NC Supply, NC Supply Group, CEK Group, Garment Cover Supply, and AB MA. The government asked the court for judgment against AB MA of $3,798,516.56 in penalties and $2,386,966.26 in lost revenue as well as $3,922,350.85 in penalties and $2,463,793.27 in lost revenue from Liu, saying that both were at culpability level of negligence.
DOJ said Liu began importing wire hangers from China in approximately 2004 and he continued to import after the antidumping duty order on steel wire hangers went into effect in 2008, DOJ said. At first, Liu truthfully declared that these hangers were manufactured in China and paid the applicable duties, DOJ said.
Liu then allegedly created a series of companies for the purposes of importing Chinese steel wire hangers and evading antidumping duties while disguising his involvement, DOJ said. Liu allegedly incorporatated GCS under a false name in 2013 and began to import Chinese wire hangers in 2014, saying they were of Malaysian origin. In 2017, the government conducted a site visit to an alleged Malaysian manufacturer and discovered the companies were not manufacturing wire hangers. Less than three weeks later, DOJ said, Liu shuttered GL Paper.
Liu then allegedly formed AB MA under another name and "personally directed" AB MA's importation of hangers beginning in 2018, this time claiming they were from India and Thailand. DOJ said that Liu then moved operations to CEK before dissolving that company in 2020.
In 2022, CBP issued a pre-penalty notice to AB MA for its 2018-2019 entries and received no response. CBP then issued a penalty notice to AB MA and Liu for $3,922,350.85 and demanded payment of $2,463,793.27 in lost revenue.