Gerardo Chavez, 42, the former president of the San Diego Customs Broker Association, has been sentenced to 37 months in federal prison for his role in a multimillion-dollar commercial fraud scheme to evade paying duties on goods imported into the U.S.
In addition to the prison term, Chavez was ordered by U.S. District Judge Michael M. Anello during a sentencing hearing in federal court to forfeit his property in Tecate, Calif., and to appear at a future restitution hearing. Chavez’s corporation, International Trade Consultants, was also sentenced to five years of probation.
The sentencing is the result of a four-month wiretap investigation led by agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Food and Drug Administration’s Office of Criminal Investigations and U.S. Customs and Border Protection.
According to court records, Chavez served as president of the San Diego import-export trade group between 2007 and 2012. During that period, Chavez and his companies, as well as other co-conspirators, procured foreign goods, such as Chinese-made apparel and cigarettes manufactured in India, that were transported via ship to the Port of Long Beach. Before the goods entered the U.S., Chavez directed other members of the conspiracy to prepare fraudulent paperwork and make erroneous entries into a government database so it appeared the goods were being transshipped to Mexico and not subject to customs duties. However, instead of being transshipped to Mexico, the merchandise was delivered to warehouses in Southern California and eventually sold in the U.S. for less than similar items offered by their law-abiding competitors.
Darrell Sekin, president of the National Customs Brokers and Forwarders Association of America, issued a statement, posted on the NCBFAA Web site, responding to the sentencing and conviction. He noted that the fact that Chavez was president of the San Diego Customs Brokers Association was “certainly not an indictment on the other good, hardworking firms who are members of that association or the industry as a whole.” He added, “We support the removal of bad actors from the international trade community, whether they be customs brokers, customs officials, or any others who would seek to illegally introduce articles into the commerce of the United States.”