A Taiwanese executive of several honey import companies pleaded guilty Aug. 4 to conspiring to avoid more than $5 million in U.S. anti-dumping duties by illegally importing Chinese-origin honey that was falsely identified as coming from South Korea, Taiwan, Thailand, and India. This guilty plea is part of a large-scale investigation being conducted by the U.S. Immigration and Customs Enforcement (ICE) Office of Homeland Security Investigations (HSI).
Hung Ta Fan, aka Michael Fan, 40, owned and operated multiple California-based honey import companies, including Blue Action Enterprise, 7 Tiger Enterprises, Kashaka USA, and Honey World Enterprise, all of which he used to fraudulently import Chinese honey into the United States. He admitted that he was advised by co-conspirators that a high volume of imports into the United States by a single company would be noticed by Customs and Border Protection (CBP).
Fan, a Taiwanese national, admitted that between 2005 and 2006 he conspired with others to illegally bring into the United States 98 shipments of Chinese honey to avoid paying antidumping duties of about $5,378,370 due to the U.S. government.
As part of the plea agreement, Fan further admitted that in 2009 he conspired with others to fraudulently import about $8 million of honey that was diluted and blended with 20 to 30 percent artificial sugar. He admitted to instructing a Taiwanese company to add the artificial sugar to the honey in an effort to obtain a higher price and profit margin than if the shipments contained pure honey.
Also, blended product was imported because a significant Fan client, a broker and distributor of raw and processed honey in Ontario, Canada, requested the cheaper product to supply U.S. customers, according to the plea agreement. Fan used his company Kashaka USA to bring in the diluted, blended honey.
“This crime of mislabeling and misrepresenting imported honey was motivated exclusively by greed,” said Gary Hartwig, special agent in charge of the ICE HSI Office in Chicago. “These actions defrauded the U.S. government and the American public, while providing an unfair financial advantage over law-abiding competitors.”
Fan was arrested April 1 without incident when he arrived at Los Angeles International Airport on a flight from Taiwan. He has remained in federal custody since his arrest.
Fan pleaded guilty Aug. 4 before U.S. District Judge Elaine E. Bucklo, Northern District of Illinois. Sentencing is scheduled for later in the year. Fan faces a maximum penalty of five years’ imprisonment and a fine up to $250,000 or twice the gross gain or loss resulting from the offense. According to the plea agreement, in return for Fan’s “full and truthful cooperation” in the continuing investigation of fraudulent honey imports, the government is prepared to recommend a reduced term in prison of about 30 months. Fan is also expected to make restitution to the United States of nearly $5.4 million.
According to the ICE arrest affidavit filed in Chicago, the charges against Fan stem from an ongoing investigation of the honey importing practices of Alfred L. Wolff, Inc. (ALW), and other corporate affiliates of Wolff & Olsen, headquartered in Hamburg, Germany. Two Chicago-based executives of ALW, Stefanie Giesselbach and Magnus Von Buddenbrock, were arrested in Chicago on federal conspiracy charges in May 2008, and are cooperating while the charges against them remain pending, says the affidavit
As part of the government’s investigation following the Wolff arrests, on May 6, 2009, the government arrested a Chinese national and supplier of honey, Yong Xiang Yan, in Los Angeles. Yan subsequently pleaded guilty, admitting that he oversaw and approved the China-to-Philippines-to-United States transshipment route for Chinese-origin honey. His guilty plea included restitution to the United States of $3,953,515, and the government prosecutors were recommending imprisonment of about 30 months, in consideration of Yan’s cooperation with the investigation.
Assistant U.S. Attorneys Andrew S. Boutros and William R. Hogan, Northern District of Illinois, are prosecuting this case.
For the complete arrest complaint, click here.