In a July 1, 2013, news release from the U.S. Attorney's Office for the Southern District of California, a judge sentenced Gerardo Chavez to 37 months in prison and his corporation, International Trade Consultants, LLC, to serve 5 years of probation.
In the news release, United States Attorney Laura E. Duffy said, "Our system of international trade relies on the honesty and integrity of all participants; and perhaps most of all, of customs brokers, to ensure that applicable taxes are paid, and that hazardous materials do not cross our country's borders. Gerardo Chavez abused the trust this country instilled in him, endangering public health and stealing from the United States treasury at a time when we could ill afford it—all for his personal, fraudulent, gain."
According to court documents, Chavez's scheme focused on purchasing large, commercial quantities of foreign-made goods and importing them without paying import taxes, also known as Customs duties. Wholesalers in the United States would procure commercial shipments of, among other things, Chinese-made apparel and Indian-made cigarettes, and arrange for them to be shipped by ocean container to the Port of Long Beach, California.
This case was investigated by Immigrations and Customs Enforcement, U.S. Customs and Border Protection, the Internal Revenue Service, the U.S. Food and Drug Administration, and TTB.