California Apparel News

The U.S. Attorney’s office has accused three Southern California companies of smuggling apparel destined for Mexico into the United States.

As many as 5,000 containers of apparel, valued at $418 million, skirted U.S. customs, avoided quotas and $63 million in tariffs, and found their way into retail stores that paid cut-rate prices for the clothing, the government said.

Accused in a civil complaint filed in the U.S. District Court in Los Angeles are Panorama City, Calif.–based Key Delta International Co., managed by David Kirby; Commerce, Calif.–based Friends Trucking (now operating as Friend Global Logistics Inc.), owned by Armando Salcedo; and Rosemead, Calif.–based New East Inc., managed by Camila Lee. Asian Charter, a Hong Kong company, was also named in the complaint, which was filed last November and unsealed in late May.

The defendants were not available for comment and have not yet entered a plea in court. Key Delta is no longer listed in the phone book. New East’s phone line has been disconnected.

Attorney Elon Pollack, who represents Friend Global, said the allegations against his client are “merely allegations.” Pollack said he believes David Kirby, whom he does not represent, has left town.

The government maintains that between June 2000 and May 2002, apparel from Hong Kong arrived in the ports of Los Angeles and Long Beach. The apparel shipments were supposed to continue to Mexico.

Instead of being examined by customs and undergoing duty taxation, the goods were placed in an in-bond warehouse, where they awaited truck transportation to Mexico.

The complaint alleges that David Kirby, on behalf of Asian Charter, filed papers that falsely stated that more than 2,700 containers of apparel, valued at $231 million, were to be exported from the United States to Mexico.

Salcedo and his trucking company picked up the shipments at the ports and delivered the goods to a container storage yard in the Los Angeles area, the government said. He is accused of substituting paperwork and replacing high-security seals with low-security domestic seals to disguise the content of the containers.

According to the government, Salcedo then took the goods to another warehouse, where they were transferred from ocean containers to truck trailers and delivered to stores in the United States.

The government maintains that New East received the ocean containers at several warehouses in the Los Angeles area. In late 2001 and early 2002, the U.S. Attorney’s office said the shipments were delivered primarily to two warehouses in Carson, Calif.: Keihin America Corp. and GTS Terminals.

The complaint adds that the government believes goods were still being smuggled into the country as recently as late October 2002. The government estimates that up to 5,000 containers of apparel, valued at $418 million, were smuggled through the ports.

The U.S. Attorney’s office is trying to seize the Hong Kong bank accounts of several companies and people it suspects were involved in the smuggling ring. Those include Asian Charter, The Link Trading Co., Armando Salcedo, David Kirby, Kinson Garments and Superior Treasure Investment.

Customs steps up inspections

This is just the latest government crackdown on apparel smuggling and illegal transshipment of goods.

Since June, customs officials in Los Angeles and the rest of the country have been scrutinizing imported apparel and fabric to make sure the shipments are actually coming from the countries listed on their import documentation.

The increased attention in Los Angeles means goods have been stuck in customs for as long as four or five days. Delays have created havoc for local manufacturers who rely on imported fabric to make their lines.

“We’ve been having to produce things like timecards and cutting tickets on goods coming from Hong Kong, Oman and Dubai,” said Robert Krieger, president of Norman Krieger Inc., a Los Angeles–based international freight forwarder and customs broker. “They want to make sure these goods are really coming from these countries.”

For years now, customs officials have known that apparel items, particularly goods manufactured in China, have been shipped to other countries such as Vietnam and Cambodia, where new labels have been sewn and false documents have been written to hide the true origin of the garments. The idea has been to get around import quotas established by the United States.

While officials from the U.S. Bureau of Customs and Border Protection (formerly U.S. Customs) did not acknowledge they have been cracking down on illegal transshipments of apparel, they did notify customs brokers that starting June 1, they would implement a 30-day program to focus on the issue.

“Most textile shipments are on high alert throughout the country,” said Enrico Salvo, chief executive of Carmichael International Service, a Los Angeles–based freight forwarder and customs broker. “There is increased scrutiny. The documents have to be well-prepared. In the past, the paperwork has sometimes been on the sloppy side.”New Inspection Facility Proposed

The federal government is hoping to build a facility at the Long Beach/Los Angeles port complex where customs officials could manually inspect cargo containers for high-risk materials.

Currently, officials inspect those containers in Carson, Calif., a town in Los Angeles County that is located about eight miles north of the port complex.Robert C. Bonner, commissioner of the U.S. Bureau of Customs and Border Protection (formerly known as U.S. Customs) in the Homeland Security Department made the announcement on June 20 when he toured the port complex.Bonner said his bureau is using a $1.5 million federal funding grant, made last year for port security improvements, to conduct a feasibility study to determine where a new cargo-container inspection site could be located at the port.“We need to have an inspection facility here,” Bonner said, talking over the din of freight trucks driving by the Port of Los Angeles. “Part of the grant funding that has been provided to the complex is to study the feasibility of that. We expect a final report in August. We will move forward from there to develop and locate and build out a joint [port complex] container facility.”Bonner said the facility would be extremely important to customs officials. Currently, customs inspectors at the ports X-ray containers they suspect might carry suspicious cargos. Anything that must be manually inspected is transported to Carson.In addition, the customs bureau is working on expanding the Container Security Initiative, which currently requires shippers of ocean-going cargo containers to file their manifests 24 hours before the shipments leave a foreign port and head to the United States. On Oct. 1, the initiative will be extended to include cargo containers carried by planes, trains and trucks.The government initially talked about a 12-hour manifest rule for air cargo. But many importers would like to see that time reduced.

“We are in the process of developing additional regulations for everything from air cargo to rail and truck traffic,” Bonner said, noting that the government will come out with its proposed regulations in the next two weeks and follow its announcement with a public-comment period. Since the Sept. 11 terrorist attacks, the ports of Long Beach and Los Angeles have added four machines to X-ray cargo containers and 120 customs inspectors, Bonner said. Before the terrorist attacks, the ports had only one X-ray machine.Since Sept. 11, we have increased by 350 percent the number of cargo containers screened at the ports of Los Angeles and Long Beach,” Bonner said. “That translates into screening 2,000 containers a week that are coming into the [area] ports.”Every week, more than 41,000 containers arrive at the two ports from overseas.

Nationwide, customs officials are screening about 10 percent of all air, sea and land cargos that enter the country, Bonner said. —D.B.