Chinese honey importers used Olongapo-Subic to fake source of goods
Federal agents said they tracked Chung's honey from a producer in Henan, China, to Olongapo City in the Philippines. There, after false documentation was created and the contents of the drums relabeled as a product of the Philippines, the honey was quickly shipped again -- from the site of the old U.S. naval base at Subic Bay to Seattle and Tacoma.
Government coffers were cheated out of more than $3 million by two Bellevue men who illegally laundered hundreds of thousands of pounds of Chinese honey to avoid paying import fees, federal authorities say.
Some of the seized shipments have been found to be contaminated with banned antibiotics, investigators say, raising concerns about tainted honey possibly making it onto store shelves.
The two longtime brokers of foreign honey, Chung Po Liu and Robert Coyle, falsely claimed that the shipments in question were from Thailand or the Philippines, Assistant U.S. Attorney Darwin Roberts states in court documents filed this week in Seattle.
For more than a year, Special Agents Thomas Penn and Bram Urbauer of Immigration and Customs Enforcement have been investigating Chung, who owns Rainier Cascade and Evergreen Produce, and Coyle, who heads the Coyle Group.
A Seattle P-I investigative report published last week revealed how some honey importers are developing schemes to avoid paying stiff import tariffs on Chinese honey. The fees were imposed to keep the cheap imports from undercutting the meager profit margins of U.S. honey producers.
It's not illegal to import noncontaminated honey from China if the tariffs are paid, and no criminal charges have been brought so far against either man.
However, in what could be a prelude to an indictment, the federal government has filed forfeiture actions to seize Chung and Coyle's upscale homes. The government claims the houses -- located within a half-mile of each other -- "were used to facilitate the unlawful importation of honey from China."
Chung allegedly used his home office to place orders for the honey and wire funds to the Chinese manufacturers. Coyle is accused of writing checks from his home to fund the wire transfers.
"Various business records, documents and shipping records are being analyzed, and additional records are being obtained from overseas sources," said Emily Langlie, a spokeswoman for the U.S. Attorney's Office.
"Computerized records are also being analyzed," she said. "These are time-consuming processes that are required to meet a high legal standard."
Customs believes Chung was involved in at least 20 falsely labeled shipments to the U.S. between December 2005 and March 2008, each containing tons of honey. Had the shipments been accurately declared as Chinese, anti-dumping duties of more than $3.3 million would have been required.
The detailed paper trail the feds collected after search warrants were served on Chung and Coyle last spring documents the circuitous route the steel drums of honey took from China to the Pacific Northwest.
Federal agents said they tracked Chung's honey from a producer in Henan, China, to Olongapo City in the Philippines. There, after false documentation was created and the contents of the drums relabeled as a product of the Philippines, the honey was quickly shipped again -- from the site of the old U.S. naval base at Subic Bay to Seattle and Tacoma.
Another series of shipments from a different Henan honey producer was traced to two companies in Thailand, where the federal agents say it was similarly laundered and sent to the U.S.
Rainier Cascade claims another company, Loader Freedom and Custom Service Air of Bangkok, was responsible for several of the disputed honey shipments, according to court documents. But authorities say Chung has registered with the Food and Drug Administration as the manager and U.S. agent for the Bangkok company.
A customs agent who checked out the Thai company's facility last year reported in court documents that it was "a dilapidated building and not suitable for normal business practices."
The agent reported that the same was true for another Bangkok company, Na-Rich Overseas Ltd., which reported making another three shipments to one of Chung's companies.
Shipping papers and other records show that much of Chung's honey was eventually sold to Mike Ingalls, the owner of Pure Foods, a honey packer in Sultan.
Some shipments allegedly laundered in the Philippines were shipped to the Iowa-based Sioux Honey Association, one of the nation's biggest honey distributors under the Sue Bee label.
In April, Ingalls watched customs agents raid his business, seizing 66 drums of honey imported by Chung and Coyle. Ingalls has insisted the honey is Thai and defended Coyle as "a real white hat ... who has really fought against illegal honey imports for years."
The government is convinced the seized honey is really Chinese but has yet to show any proof of that allegation. Testing honey for its precise country of origin requires analytical sophistication that most honey experts believe doesn't exist in this country.
Documents seized when the search warrants were served on Chung and Coyle show how insidious honey smuggling is -- and that many of those involved knew some of the honey they were selling was contaminated with antibiotics that the FDA has banned in food products.
In a March 7, 2006, e-mail to Coyle and Chung, a Chinese honey seller named Wei Min Zhang discussed the presence of fluoroquinolones, an illegal antibiotic, in the honey he was handling.
He wrote to his U.S. clients, "There is definitely this problem. ... I'm worried whether the FDA or USDA may get involved. Our future shipments will definitely have this fluoroquinolones, and it may take a couple of years to improve."
Reached Wednesday, Coyle said his lawyer advised him not to comment on the federal investigation.
Chung's lawyer, John Lundin, said his client was told the honey he imported was produced in Thailand, shipped by Thai exporters, and came with certificates of origin issued by the government of Thailand, certifying the honey was produced there.
"We have seen no evidence that would cause us to doubt the validity of those certificates of origin," said Lundin, who earlier commented that the forfeiture action was "inappropriate and unfounded."
Ingalls, meanwhile, is lamenting that his profession has become a rough business.
"You've got to keep your eyes open all the time, or you're going to get burned by buying bad honey," he said. "Today, I'm ordering for April and May deliveries, from people that I believe are honest.
"But I'm surely not going to pay for it until it's sitting in my warehouse and has been tested."
By ANDREW SCHNEIDER .. P-I SENIOR CORRESPONDENT - http://seattlepi.nwsource.com
Government coffers were cheated out of more than $3 million by two Bellevue men who illegally laundered hundreds of thousands of pounds of Chinese honey to avoid paying import fees, federal authorities say.
Some of the seized shipments have been found to be contaminated with banned antibiotics, investigators say, raising concerns about tainted honey possibly making it onto store shelves.
The two longtime brokers of foreign honey, Chung Po Liu and Robert Coyle, falsely claimed that the shipments in question were from Thailand or the Philippines, Assistant U.S. Attorney Darwin Roberts states in court documents filed this week in Seattle.
For more than a year, Special Agents Thomas Penn and Bram Urbauer of Immigration and Customs Enforcement have been investigating Chung, who owns Rainier Cascade and Evergreen Produce, and Coyle, who heads the Coyle Group.
A Seattle P-I investigative report published last week revealed how some honey importers are developing schemes to avoid paying stiff import tariffs on Chinese honey. The fees were imposed to keep the cheap imports from undercutting the meager profit margins of U.S. honey producers.
It's not illegal to import noncontaminated honey from China if the tariffs are paid, and no criminal charges have been brought so far against either man.
However, in what could be a prelude to an indictment, the federal government has filed forfeiture actions to seize Chung and Coyle's upscale homes. The government claims the houses -- located within a half-mile of each other -- "were used to facilitate the unlawful importation of honey from China."
Chung allegedly used his home office to place orders for the honey and wire funds to the Chinese manufacturers. Coyle is accused of writing checks from his home to fund the wire transfers.
"Various business records, documents and shipping records are being analyzed, and additional records are being obtained from overseas sources," said Emily Langlie, a spokeswoman for the U.S. Attorney's Office.
"Computerized records are also being analyzed," she said. "These are time-consuming processes that are required to meet a high legal standard."
Customs believes Chung was involved in at least 20 falsely labeled shipments to the U.S. between December 2005 and March 2008, each containing tons of honey. Had the shipments been accurately declared as Chinese, anti-dumping duties of more than $3.3 million would have been required.
The detailed paper trail the feds collected after search warrants were served on Chung and Coyle last spring documents the circuitous route the steel drums of honey took from China to the Pacific Northwest.
Federal agents said they tracked Chung's honey from a producer in Henan, China, to Olongapo City in the Philippines. There, after false documentation was created and the contents of the drums relabeled as a product of the Philippines, the honey was quickly shipped again -- from the site of the old U.S. naval base at Subic Bay to Seattle and Tacoma.
Another series of shipments from a different Henan honey producer was traced to two companies in Thailand, where the federal agents say it was similarly laundered and sent to the U.S.
Rainier Cascade claims another company, Loader Freedom and Custom Service Air of Bangkok, was responsible for several of the disputed honey shipments, according to court documents. But authorities say Chung has registered with the Food and Drug Administration as the manager and U.S. agent for the Bangkok company.
A customs agent who checked out the Thai company's facility last year reported in court documents that it was "a dilapidated building and not suitable for normal business practices."
The agent reported that the same was true for another Bangkok company, Na-Rich Overseas Ltd., which reported making another three shipments to one of Chung's companies.
Shipping papers and other records show that much of Chung's honey was eventually sold to Mike Ingalls, the owner of Pure Foods, a honey packer in Sultan.
Some shipments allegedly laundered in the Philippines were shipped to the Iowa-based Sioux Honey Association, one of the nation's biggest honey distributors under the Sue Bee label.
In April, Ingalls watched customs agents raid his business, seizing 66 drums of honey imported by Chung and Coyle. Ingalls has insisted the honey is Thai and defended Coyle as "a real white hat ... who has really fought against illegal honey imports for years."
The government is convinced the seized honey is really Chinese but has yet to show any proof of that allegation. Testing honey for its precise country of origin requires analytical sophistication that most honey experts believe doesn't exist in this country.
Documents seized when the search warrants were served on Chung and Coyle show how insidious honey smuggling is -- and that many of those involved knew some of the honey they were selling was contaminated with antibiotics that the FDA has banned in food products.
In a March 7, 2006, e-mail to Coyle and Chung, a Chinese honey seller named Wei Min Zhang discussed the presence of fluoroquinolones, an illegal antibiotic, in the honey he was handling.
He wrote to his U.S. clients, "There is definitely this problem. ... I'm worried whether the FDA or USDA may get involved. Our future shipments will definitely have this fluoroquinolones, and it may take a couple of years to improve."
Reached Wednesday, Coyle said his lawyer advised him not to comment on the federal investigation.
Chung's lawyer, John Lundin, said his client was told the honey he imported was produced in Thailand, shipped by Thai exporters, and came with certificates of origin issued by the government of Thailand, certifying the honey was produced there.
"We have seen no evidence that would cause us to doubt the validity of those certificates of origin," said Lundin, who earlier commented that the forfeiture action was "inappropriate and unfounded."
Ingalls, meanwhile, is lamenting that his profession has become a rough business.
"You've got to keep your eyes open all the time, or you're going to get burned by buying bad honey," he said. "Today, I'm ordering for April and May deliveries, from people that I believe are honest.
"But I'm surely not going to pay for it until it's sitting in my warehouse and has been tested."
By ANDREW SCHNEIDER .. P-I SENIOR CORRESPONDENT - http://seattlepi.nwsource.com
Labels: honey, Olongapo City, smuggling, subic
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