Nine Charged in $200 Million Smuggling Scheme at Ports of LA & LB

Federal authorities have announced a 15-count indictment, charging nine individuals with allegedly operating a sophisticated smuggling scheme that moved at least $200 million worth of counterfeit and illegal goods from China through the Ports of Los Angeles and Long Beach.

The charges, announced on January 27 by the U.S. Attorney’s Office for the Central District of California, detail a conspiracy among logistics company executives, warehouse owners and truck drivers to allegedly circumvent customs inspections.

The Smuggling Operation

According to the indictment, the defendants allegedly participated in a wide-ranging scheme to evade port inspections. The scheme involved a network of logistics companies, warehouse owners and truck drivers working together to smuggle goods into the United States illegally.

The defendants and their partners in China allegedly filled shipping containers with contraband, including counterfeit goods, illegal and dangerous chemicals, and other items not permitted to be imported into the U.S.

The conspirators employed a multi-layered strategy to evade detection by U.S. Customs and Border Protection (CBP). They allegedly learned the unique serial numbers of the security seals that would be attached to their illegal shipments in advance. They then created duplicate, fake seals in China and sent them to their partners in the U.S.

When containers arrived at Los Angeles and Long Beach ports, CBP would direct some of them for secondary inspection.  Instead of taking these containers to the designated inspection sites, the truck drivers allegedly would divert the containers to off-site warehouses.

At these warehouses, conspirators allegedly would break the original security seals, remove the contraband and then affix the counterfeit seals to the containers. Now filled with generic goods to hide the illegal activity, the containers were then sent to CBP for inspection.

The seized contraband included tens of millions of dollars worth of counterfeit merchandise, unapproved food and drugs, and chemicals. The items included counterfeit shoes, fragrances, luxury handbags, apparel and watches. The potential for more serious implications, including national security threats, was also highlighted by authorities.

The Defendants

The nine defendants charged in the indictment are alleged to:

Weijun Zheng, 57, a.k.a. “Sonic,” of Diamond Bar, is identified as the lead defendant and the mastermind behind the scheme. He is believed to be in China and is currently a fugitive. Zheng controls several logistics companies in the Los Angeles area and orchestrates the scheme.

Hexi Wang, 32, of El Monte, manages K&P International Logistics LLC, which hires commercial truckers to transport containers from the Port of Los Angeles.

Jin “Mark” Liu, 42, of Irvine, owns K&P International Logistics LLC and managed the finances of one of the warehouses where contraband was unloaded. He also issued payments to truck drivers who transported smuggled goods.

Dong “Liam” Lin, 31, of Hacienda Heights, along with Zheng, controlled and operated one of the contraband warehouses.

Marck Anthony Gomez, 49, of West Covina, owns and operates Fannum Trucks LLC, which coordinated the movement of shipping containers from the Port of Los Angeles, including large shipments of contraband.

Andy Estuardo Castillo Perez, 32, of Apple Valley, drives M4 Transportation Inc., which transports shipping containers from the Port of Los Angeles.

Jesse James Rosales, 41, of Apple Valley, coordinated truckers from the ports to warehouses.

Daniel Acosta Hoffman, 41, of Hacienda Heights, worked with Rosales to bring cargo containers from the Port of Los Angeles to warehouses.

Galvin Biao Liufu, 33, of Ontario, directed and managed truck drivers to bring the contraband into the warehouses.

The defendants are charged with smuggling, breaking customs seals and conspiracy. Truck drivers involved in the scheme were allegedly paid about $10,000 for each illegal shipment, significantly more than the $200 to $300 they typically earn.

The other individuals allegedly had ties to criminal partners in China. Five of the nine defendants are Chinese nationals and a couple have status in the United States.

Customs Procedures

U.S. law requires all containers coming into the United States to be sealed with a locked security seal assigned a unique number. This system ensures that containers remain sealed from leaving China until they arrive in the U.S. and clear the customs inspection process. The seals are a key part of this security process.

Customs and Border Protection has developed standards for high-security seals to prevent tampering.  However, the smuggling scheme exposed a significant vulnerability in the system.

Los Angeles and Long Beach ports are the busiest in the Western Hemisphere, processing 5.2 million ocean containers in fiscal year 2024, or over 14,000 containers daily, according to Director of Field Operations Cheryl Davies for Los Angeles Customs and Border Protection. The ports handle about 30% of all international seaborne cargo entering or exiting the United States.

With this amount of activity, it was only a matter of time before individuals saw an opportunity to commit fraud. While only a small fraction of the containers moving through the ports are opened and inspected, this scheme demonstrated how transnational criminal organizations can exploit vulnerabilities.

How Scheme Was Uncovered

The scheme was uncovered in 2023 when a CBP agriculture specialist noticed something unusual during a routine examination of a shipment. The specialist noted that the high-security seal appeared to have been tampered with and that the cargo inside did not match what was on the manifest.

The specialist notified his supervisors, who realized that the original cargo had been removed and replaced with domestic cargo before the shipment was presented to CBP for inspection. This vigilance by the CBP specialist led to the discovery of the complex smuggling network.

CBP had identified 141 cargo diversion incidents and 204 seizures over the last two years. These seizures included controlled substances, chemical precursors, weapons parts, fake postage stamps, counterfeit coins, consumer products, drug paraphernalia and over 220 tons of prohibited plant and animal products.

The smuggling operation ran from at least August 2023 to June 2024. Authorities have said that the operation may have been going on before that. However, the time frame they have definitively linked to this operation is this time frame.

Law Enforcement Response

Following the scheme’s discovery, law enforcement agencies, including Homeland Security Investigations (HSI), CBP and Coast Guard Investigative Services, launched a coordinated investigation.

HSI Special Agent in Charge Eddy Wang emphasized the commitment of his agency and its partners to enforce customs laws and practices, facilitate legitimate trade and protect the integrity of the nation’s supply chain.

The investigation led to over $130 million in contraband seizure, with authorities estimating that the organization smuggled at least $200 million worth of goods. According to the press release, authorities have seized over $1.3 billion in counterfeit goods associated with this and other similar seal-swapping schemes.

CBP has taken steps to address the vulnerabilities identified during the investigation. The exact measures were not disclosed, as officials stated that doing so would present risks. However, the agency is working to prevent similar diversions in the future.

Acting U.S. Attorney Joseph T. McNally stressed the importance of secure seaports and borders to national security.

“Ensuring the integrity of who and what comes into our country is critical to our border security and ultimately to our national security,” he said at a press conference. He added that the smuggling of large amounts of contraband hurts American businesses and consumers.

If convicted on all charges, the defendants face a statutory maximum sentence of five years in federal prison for each conspiracy count, up to 10 years for breaking customs seals and up to 20 years for each smuggling count. The seven smuggling charges alone carry a penalty of up to 20 years in federal prison. Although not considered part of the core scheme, truck drivers also face federal charges.

Ongoing Efforts

The investigation is part of an Organized Crime Drug Enforcement Task Force (OCDETF) operation, which focuses on identifying, disrupting and dismantling the highest-level criminal organizations that threaten the United States.

Federal authorities have emphasized that they will continue to work with law enforcement partners to hold accountable anyone who attempts to violate the security of the ports and borders.

Authorities have acknowledged the efforts of CBP personnel who work at the ports daily with vigilance, service and integrity to protect the community from dangerous and fraudulent imports while facilitating economic growth.

The investigation remains ongoing and Assistant United States Attorneys Colin S. Scott and Amanda B. Elbogen of the Terrorism and Export Crimes Section are prosecuting the case.

For any inquiries or further information, please contact Jose Cervantes at JoseC.Press@pm.me