The U.S. indicts Liu Zhongtian, owner of China Zhongwang for US$1.8 billion aluminum tariff evasion

Liu Zhongtian, chairman and president of China Zhongwang Holdings Ltd was accused of ditching US$1.8 billion in tariffs through a scheme under which, he had disguised “huge amounts” of aluminium as pallets and smuggled the material into the United States, federal prosecutors declared in Los Angeles on Wednesday.

The 24-count indictment dated May 7 was made public when U.S. and Chinese negotiators resumed talks to end trade tensions between the two economies.

“The aluminum sold to United States-based companies controlled by Liu were simply aluminium extrusions that were spot-welded together to make them appear to be functional pallets, which would be finished goods not subject to the duties,” the indictment says.

“In reality, there were no customers for the 2.2 million pallets imported by the Liu-controlled companies between 2011 and 2014, and no pallets were ever sold,” the U.S. attorney said in a statement.

The disguised aluminium was shipped through Southern California ports and stored in local warehouses owned by companies controlled by Liu. According to The Wall Street Journal, an arrest warrant has been drawn up against Liu.

According to the prosecutors the alleged scheme to evade duties imposed by the U.S. Department of Commerce in 2011 on some imported aluminium extrusion from China began as early as 2008.

Zhongwang said in a statement on Thursday that neither the company nor Liu have received any notice of the proceedings.

“The company would like to clarify that the group has always strictly abided by in its business operation the laws and regulations of the People’s Republic of China and destination countries of its exported products, and has developed overseas markets under the principle of fair and orderly competition,” it said in the statement to the exchange.

Liu was also accused by prosecutors of running a “massive” money laundering operation involving shell companies to transfer funds to Zhongwang. They alleged the schemes gave his companies an unfair advantage over American rivals and posed other hazards.

Liu and several other defendants and companies related to his company face charges of wire fraud, money laundering, passing fraudulent papers through a customhouse and conspiracy. Perfectus Aluminum Inc., a subsidiary, Perfectus Aluminum Acquisitions also faces charges. Also indicted were the four LLCs that owned the warehouses for Liu’s aluminium.

Founded in 1993, Zhongwang Group claims itself to be “a world-leading fabricated aluminium product developer and manufacturer.