L.A. Fashion District Wholesaler and Two of Its Executives Found Guilty of Money Laundering and Avoiding Tariffs and Taxes

LOS ANGELES - A wholesale clothing importer located in the Fashion District of downtown Los Angeles and two of its executives have been found guilty by a jury of avoiding the payment of more than $8 million in customs duties on imported clothing, and of running a scheme in which the company laundered money and failed to report on tax returns more than $17 million derived from cash transactions, the Justice Department announced today.

At the conclusion of a six-week trial, a federal jury on late Tuesday found the following defendants guilty of dozens of felonies:

• C'est Toi Jeans, Inc. (CTJ), which imported apparel from China and other nations and exported clothing to customers in Mexico, Central America, and South America;
• Si Oh Rhew, 70, of La Cañada Flintridge, CTJ's president and a 75% owner of the company; and
• Lance Rhew, 37, of downtown Los Angeles, Si Oh Rhew's son, a CTJ corporate officer, and the owner of another Los Angeles-based company called GLLR Inc. that did business as CTJ.

The jury found CTJ and Si Oh Rhew guilty of two conspiracies and multiple counts of failure to file report of currency transaction over $10,000 in a trade or business. The jury also found all three defendants guilty of three counts of entry of falsely classified goods, three counts of entry of goods by means of false statements, three counts of passing false and fraudulent papers through a customhouse, and two counts of international promotional money laundering.

CTJ was found guilty of an additional two concealment money laundering counts involving drug proceeds. Si Oh Rhew was found guilty of an additional two counts of aiding, assisting, and procuring the filing of a false tax return. Lance Rhew was found guilty of one additional count of aiding, assisting, and procuring the filing of a false tax return. Lance Rhew was also found guilty of one conspiracy count.

"Money laundering is the lifeblood of large-scale drug trafficking, and it is therefore essential that we go after businesses and individuals that feed criminal organizations the money they crave," said United States Attorney Martin Estrada. "A jury found this corporation and its executives facilitated the laundering of millions of dollars in drug proceeds and now they will appropriately be held accountable. Together with our law enforcement partners, my office will continue to bring to justice businesses that facilitate criminal activity."

"This verdict once again demonstrates that working with drug trafficking organizations is a bad business model," said Homeland Security Investigations Los Angeles Special Agent in Charge Eddy Wang. "This verdict should send a strong message to those who utilize their businesses to aid the cartels, that the HSI Los Angeles-led El Camino Real Financial Crimes Task Force and partners at U.S. Customs and Border Protection, and the IRS Criminal Investigation, will work tirelessly to hold you accountable."

According to evidence presented at trial, CTJ was a business owned by Si Oh Rhew and his wife that the Rhews operated. CTJ received U.S. currency in bulk cash that was derived from drug trafficking as payment for customer invoices. Those funds were delivered to CTJ by money couriers unrelated to and unknown to CTJ or to the customers whose invoices were being paid.

CTJ and Si Oh Rhew failed to file currency transaction reports, which are required for any transaction involving more than $10,000 in cash, and the defendants concealed the cash receipts from an accountant who prepared their taxes, which led to the fraudulent omission of more than $17 million in gross sales from tax returns filed with the IRS.

The defendants also avoided customs duties and tariffs by purchasing garments from overseas manufacturers, including from China, but then submitting false information to United States Customs and Border Protection (CBP) that understated the true value of the items being imported into the United States.

As a result, the import duties owed on the shipments were lowered. The indictment alleges that the defendants sent 515 individual wire transfers totaling $137,156,726 to pay overseas suppliers for undervalued garments. Overall, CTJ imported goods that were undervalued by more than $51million, causing approximately $8.4 million in unpaid tariffs and duties that should have been paid to CBP.

The jury found the defendants not guilty of several additional criminal counts, including - for CTJ - two counts of concealment money laundering and - for Lance Rhew - several counts of failure to file a report of a currency transaction in a nonfinancial trade or business.

United States District Judge Mark C. Scarsi scheduled a sentencing hearing for January 21, 2025, at which time the Rhews will each face a sentence of decades in federal prison and CTJ will face fines of as much as $100 million.

This case was investigated by Homeland Security Investigations and IRS-Criminal Investigation. They were aided by U.S. Customs and Border Protection, the Monterey Park Police Department, the El Segundo Police Department, the Long Beach Police Department, the Los Angeles Police Department, the Gardena Police Department, and the West Covina Police Department.

This case is part of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation known as Operation Fashion Police. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at www.justice.gov/OCDETF.

The investigation was conducted by the HSI-led El Camino Real Financial Crimes Task Force, a multi-agency task force that includes federal and state investigators who are focused on financial crimes in Southern California.

Assistant United States Attorneys MiRi Song, Julie J. Shemitz, and Skyler F. Cho of the International Narcotics, Money Laundering, and Racketeering Section are prosecuting this case.

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