Nine charged in counterfeit smuggling ring through L.A.-Long Beach ports

Nine people have been charged with federal crimes in connection with an alleged scheme to smuggle at least $200 million of counterfeit and illicit goods from China through the ports of Los Angeles and Long Beach, prosecutors announced Monday.

The U.S. attorney’s office alleged a conspiracy among logistics company executives, warehouse owners and truck drivers to transport shipping containers to warehouses in the City of Industry, unload the contraband inside and replace it with “filler” cargo before customs officials could inspect the containers.

Eight of the defendants in the 15-count indictment have been arrested. The lead defendant, Weijun Zheng, 57, of Diamond Bar, who prosecutors said controls several logistics companies in the Los Angeles area and orchestrated the scheme, remains at large and is believed to be in China. Zheng and the other defendants were charged with smuggling, breaking customs seals and conspiracy.

To evade discovery, prosecutors alleged, the defendants broke and removed locked security seals, which are supposed to be opened only by customs officials, and replaced them with counterfeit ones with the same unique numbers.

Investigators seized more than $130 million worth of contraband goods, including counterfeit shoes, perfume, luxury handbags, apparel and watches. The smuggled goods also included illegal and dangerous chemicals, as well as unapproved food and drugs that pose risks to consumers, authorities said.

Jaime Ruiz, a spokesperson for U.S. Customs and Border Protection, said that the charges announced Monday involve the largest trade fraud on record at the Los Angeles-Long Beach port complex.

Authorities at the ports of L.A. and Long Beach regularly intercept all manner of counterfeit goods — electronics, clothing and handbags, guitars, engines and more. In recent years, they have confiscated shipments of prohibited chemicals, plants and animal products, weapons parts and counterfeit coins. In 2022, U.S. Customs and Border Protection announced that the ports had seized $1 billion worth of counterfeit products in one year, a record high driven by a pandemic-era surge in online shopping.

Although customs officials have rigorous standards to prevent tampering with security seals before inspection, authorities acknowledged that the scheme exposed a serious vulnerability at the nation’s busiest port complex. The L.A.-Long Beach ports handle about 30% of the international seaborne cargo coming into and out of the country, and only a fraction of the thousands of shipping containers moving through every day are opened and inspected.

“With this much activity, transnational criminal organizations have a wide berth to operate and exploit vulnerabilities, and the defendants charged in this indictment took full advantage,” Eddy Wang, special agent in charge with the U.S. Department of Homeland Security Investigations in Los Angeles, said at a news conference Monday at the Port of Los Angeles.

U.S. Customs and Border Protection has taken steps to fix the vulnerabilities discovered in the investigation, said Joseph T. McNally, acting U.S. attorney for the Central District of California.

“I’m not going to get into exactly what it is, because I think that that would present its own risks,” McNally said, “but they have identified the issue and have taken steps to address it.”

McNally said that “prohibited and unregulated items coming into the United States threaten the health and well-being of our citizens, and smugglers threaten our national security by allowing dangerous items to enter without detection.”

The scheme was in operation from at least August 2023 to June 2024, prosecutors said, and was responsible for smuggling at least $200 million in goods from China. It was discovered as part of a routine examination of a shipment by a U.S. Customs and Border Protection agriculture specialist, who noticed that the security seal appeared to have been tampered with and that the cargo inside did not match what was on the manifest.

“He immediately notified his supervisors,” said Cheryl Davies, director of field operations for U.S. Customs and Border Protection’s Los Angeles field office. “And they quickly realized that the original cargo appeared to have been removed and replaced with domestic cargo before the shipment was presented to CBP for inspection.”

Prosecutors said the counterfeit security seals used to deceive customs officials were also shipped to the U.S. from China. The scheme was lucrative for the truck drivers involved, who usually earn $200 to $300 each time they move a shipping container but earned about $10,000 for each illegal shipment, officials said.