Los Angeles' fashion world was rocked by a recent court decision as a downtown L.A. clothing wholesaler and its top brass were handed prison sentences and stiff fines for laundering money and dodging customs duties, as reported by the Department of Justice. C’est Toi Jeans Inc. (CTJ), along with its president, Si Oh Rhew, 71, and his son Lance Rhew, 38, were convicted of engaging in multiple conspiracies and failure to report substantial cash transactions in a six-week trial that culminated in October last year.
CTJ was slapped with five years of probation by U.S. District Judge Mark C. Scarsi, who also mandated federal oversight and imposed fines totaling $11.5 million. Additionally, the company is on the hook for more than $15 million in restitution. Si Oh Rhew was hit with an $8 million fine and a 103-month federal prison stint; he was also ordered to pay more than $19 million in restitution. Not to be spared, his son received an 84-month sentence and was slapped with a $500,000 fine, coupled with restitution payments.
The investigation, embodying the efforts of Homeland Security Investigations and IRS-Criminal Investigation as well as a myriad of local law enforcement agencies, was part of Operation Take Back America, targeting the far-reaching tentacles of cartels and transnational crime rings. Per the Justice Department's announcement, CTJ was embroiled in a scheme wherein cash derived from drug trafficking was used to settle invoices – a practice unknown to both the courier and customers involved in the transactions.
The father-son duo flagrantly neglected to file currency transaction reports for cash exchanges over $10,000 and concealed these hefty cash receipts from their tax preparer, leading to a fraudulent omission of over $17 million from their IRS filings. Furthermore, the scheme extended to underreporting the value of imported clothing, defrauding the United States Customs and Border Protection out of approximately $8.4 million in customs duties and taxes.
This case, undertaken by the HSI-led El Camino Real Financial Crimes Task Force, aimed at the juggernaut of financial crimes in Southern California. Assistant United States Attorneys Lana Morton Owens and James E. Dochterman of the Transnational Organized Crime Section helmed the prosecution. The heavy-handed legal repercussions signal a warning shot to entities contemplating similar fraudulent enterprises.
