Tuesday, October 14, 2025

LA Fashion District firm, 2 executives sentenced for schemes to avoid millions in customs duties and to launder narcotics proceeds – Daily News

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LA Fashion District Firm Sentenced for Schemes to Avoid Millions in Customs Duties and to Launder Narcotics Proceeds

Introduction to the Case

LOS ANGELES — A Fashion District wholesaler and two of its executives have been sentenced for ducking more than $8 million in customs duties and using a cross-border money laundering system to avoid reporting over $17 million in suspected narcotics proceeds, federal authorities said Tuesday.

The Sentencing

The three defendants were found guilty in Los Angeles federal court in October 2024 of dozens of felonies. On Monday, C’est Toi Jeans Inc., which imported apparel from China and other nations and exported clothing to customers in Mexico, Central America and South America, was sentenced by U.S. District Judge Mark Scarsi to five years of probation and ordered to submit to federal monitoring. The judge also fined CTJ $11.5 million and ordered it to pay more than $15 million in restitution.

Executive Sentencings

Si Oh Rhew, 71, of La Cañada Flintridge, CTJ’s president and a 75% owner of the company, was sentenced to eight years and seven months in federal prison, fined $8 million, and ordered to pay more than $19 million in restitution. Lance Rhew, 38, of downtown Los Angeles, Si Oh Rhew’s son, a CTJ corporate officer and owner of another Los Angeles-based company that did business as CTJ, was sentenced to seven years in federal prison, fined $500,000, and ordered to pay restitution.

Background of the Case

The case outlined in a 49-page indictment filed in December 2020 resulted from an operation in which law enforcement swarmed the 100-block hub of the West Coast apparel industry, executing dozens of search warrants as part of an investigation into money laundering and other crimes at Fashion District businesses. During one of those searches at a downtown condominium linked to the defendants in the CTJ case, authorities seized more than $38.3 million in cash, according to the U.S. Attorney’s Office.

Guilty Verdicts and Charges

The jury found CTJ and Si Oh Rhew guilty of two conspiracies and multiple counts of failure to file report of currency transaction over $10,000 in a trade or business. The panel also found all three defendants guilty of three counts of entry of falsely classified goods, three counts of entry of goods by means of false statements, three counts of passing false and fraudulent papers through a customhouse, and two counts of international promotional money laundering, according to the U.S. Attorney’s Office.

Schemes and Money Laundering

The first scheme involved the avoidance of customs duties and tariffs by purchasing garments from overseas manufacturers, including from China, but then submitting false information to U.S. Customs and Border Protection that understated the true value of the items being imported in the United States, prosecutors said. As a result, the import duties owed on the shipments were lowered, causing about $8.4 million in unpaid tariffs and duties that should have been paid, prosecutors said. In the second scheme, the Rhews used CTJ “to receive large amounts of bulk United States currency, including from narcotics proceeds, as payment for outstanding merchandise orders from customers in Mexico and elsewhere,” according to the indictment.

Conclusion

The sentencing of C’est Toi Jeans Inc. and its executives marks a significant milestone in the fight against customs duty evasion and money laundering. The case highlights the importance of compliance with customs regulations and the need for businesses to report all financial transactions accurately. The severe penalties imposed on the defendants serve as a deterrent to others who might engage in similar illegal activities.

FAQs

  1. What was the main charge against C’est Toi Jeans Inc. and its executives?
    • The main charges included avoiding millions in customs duties and using a cross-border money laundering system to avoid reporting suspected narcotics proceeds.
  2. How much in customs duties was avoided?
    • The company avoided paying about $8.4 million in customs duties.
  3. What was the total amount of cash seized during the investigation?
    • Authorities seized more than $38.3 million in cash during the investigation.
  4. What are the penalties imposed on Si Oh Rhew and Lance Rhew?
    • Si Oh Rhew was sentenced to eight years and seven months in federal prison, fined $8 million, and ordered to pay more than $19 million in restitution. Lance Rhew was sentenced to seven years in federal prison, fined $500,000, and ordered to pay restitution.
  5. What is the significance of this case?
    • This case is significant because it highlights the efforts of law enforcement to combat money laundering and customs duty evasion, and it serves as a warning to businesses of the severe penalties for engaging in such activities.
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