The U.S. Justice Department has charged five individuals and two domestic honey-processing companies for allegedly mislabeling Chinese-origin honey on Customs declarations to evade anti-dumping duties totaling more than $180 million, U.S. Immigration and Customs Enforcement, which led the investigation, announced Wednesday.
The honey shipments were transshipped through other countries.
An undercover ICE agent took a job as director of procurement at Honey Holding Ltd., which by then was cooperating with the investigation, to catch other suspects, ICE said.
Honey Holdings does business as Honey Solutions of Baytown, Texas, and Groeb Farms Inc. of Onstead, Mich. Both subsidiaries agreed to deferred prosecutions for their cooperation with the government. Honey Holding agreed to pay $1 million and Groeb Farms agreed to pay $2 million in fines. Both companies have also agreed to implement corporate compliance programs as part of their deals.
"These businesses intentionally deprived the U.S. government of millions of dollars in unpaid duties," ICE Deputy Director Daniel Ragsdale said in a statement.
The individual defendants include three honey brokers, the former director of sales for Honey Holding, and the president of Premium Food Sales Inc., a broker and distributor of raw and processed honey in Bradford, Ontario.
In December 2001, the Commerce Department determined that honey from China was being sold in the United States at less than fair market value, and imposed anti-dumping duties. The duties were as high as 221 percent of the declared value, and later were assessed against the entered net weight, currently at $2.63 per net kilogram, in addition to a honey assessment fee of one cent per pound of all honey.
Domestic honey producers have complained for years that honey importers were evading payment through transshipment and mis-classification schemes. Malaysia has previously been identified as a source of honey, even though it doesn't produce much honey of its own. At a Senate hearing in 2011, U.S. Customs and Border Protection and ICE officials said they were developing better tools to detect and investigate duty-evasion schemes involving honey.
A 2008 federal investigation resulted in charges against 14 individuals, including executives of Alfred L. Wolff GmbH and several affiliated companies of the German food conglomerate. The defendants were charged with allegedly evading about $80 million in antidumping duties on Chinese-origin honey. Authorities seized more than 3,000 drums of honey that illegally entered the United States.
ICE alleged that some of the honey in the current investigation was also adulterated with antibiotics not approved by the Food and Drug Administration for use in honey.
"Trade fraud can have significant implications for the U.S. economy and consumers," CBP Chief Operating Officer Thomas S. Winkowski said. "These products take jobs away from American workers and frequently violate U.S. health and safety standards, potentially endangering the public. CBP is committed to fighting these fraudulent actors alongside our government partners." - Eric Kulisch