LOS ANGELES (CN) - A Los Angeles-based freight forwarding company and two of its executives were charged with running a billion-dollar smuggling scheme over the last 12 years involving shipping goods from and through the U.S. to Mexico, using shell companies and fake documents, bribing Mexican custom officials and paying kickbacks to a cartel.
Humberto Lopez Belmonte, 53, the chief executive officer of Sport LA Inc., and Ralph Olarte, 55, the company's chief financial officer, were arrested this week, according to a statement Wednesday by the U.S. attorney's office in LA.
They and their company, which does business as HR Logistics, were charged in 22-count grand jury indictment with smuggling, wire fraud and money laundering among other crimes.
"As a result of the conspiracy, defendants Olarte, Lopez, and the HRL defendants smuggled billions of dollars' worth of domestic and in-bond goods from the United States to the HRL defendants' true clients in Mexico in order to evade duties owed to [Servicio de Administracion Tributaria] and, as a result, received millions of U.S. dollars from the execution of the scheme," prosecutors say in the indictment unsealed Tuesday.
Prosecutors claim that Lopez and Olarte set up a series of shell companies in Mexico that they used as the named recipients of shipments of goods that either passed through the U.S. as so-called bonded goods that arrived at U.S. ports from overseas to be transported to Mexico or of goods that originated in the U.S.
These shell companies, however, weren't the real customers for whom HR Logistics handled shipments. The freight forwarders, according to prosecutors, also lied on the official paperwork they filed with U.S. Customs and Border Protection about what was in the shipments they transported from ports in California to Mexico.
In addition, the pair are accused of bribing Mexican border officials to let their shipments cross into the country without paying any customs and of telling their truckers which lanes to choose when they arrived at border inspection so that they would be handled by an officials who had been paid off.
The two, the government charges, also paid kickbacks to the Jalisco New Generation Cartel. This cartel, according to the indictment is involved in major drug trafficking corridors in states like Guerrero, Michoacan, Colima, and Veracruz. It has a strong presence in several border towns where it controls smuggling routes into the U.S.
The actual Mexican customers could avoid paying hundreds of millions of dollars in import duties on the large shipments of clothes, shoes and fabrics that were handled by the LA-based freight forwarding business, and they paid the company in cash or through wire transfers to the Mexican shell companies. The cash payments, in turn, were smuggled into the U.S. without reporting to financial authorities.
In addition, to the undeclared legitimate cargo that was shipped to Mexico, the company reportedly also smuggled contraband across the border, such as counterfeit medical devices and cell phone batteries, as well as handguns, stun guns, ammunition magazines, ammunition, marijuana and electronic cigarettes.
Lopez, a Mexican citizen living in both LA and Mexico City, pleaded not guilty to the charges on Tuesday. His attorney didn't immediately respond to a request for comment. A July 21 trial date is scheduled for Lopez.
Olarte, of Los Angeles, hasn't made his first court appearance yet. The court docket doesn't list an attorney for him.
Source: Courthouse News Service
