On Wednesday, federal prosecutors declared that a fashion district company and its owner would plead guilty and refund over $100 million due to a scheme used to avoid paying the United States millions of dollars and undervalue the cost garment importation.

The office of the US attorney has also claimed a tandem tax scheme where the owner of the company, Sang Bum “Ed” Noh refused to provide over millions of dollars generated from cash transactions.

This was charged on Tuesday alongside criminal charges, plea agreements were filed by prosecutors in which Noh and Ambiance Apparel have decided to plead guilty for the crimes and agreed to pay about $118 million, comprising a cash amount of about $36 million seized from Noh and Ambiance in 2014, according to federal prosecutors.

Noh, aged 66 have decided to plead guilty to a count of conspiracy and providing a false tax return which is punishable by up to eight years in a federal penitentiary, as stated by the prosecutor.

Ambiance Apparel, the operational brand name of two entities, Apparel Line USA, Inc and Ambiance USA, Inc have also decided to plead guilty to 8 counts of money laundering, conspiracy, and custom crimes.

Ambiance and Noh will be arraigned in the federal court in Los Angeles on the 14th of September.

Different schemes have been outlined by the court documents involving Noh and Ambiance but were closed in September 2014 after the authorities implemented different search warrants during the investigation of money laundering and other criminal acts against Fashion district businesses.

Ambiance involvement in the customs fraud scheme includes the importation of garments from Asian countries where dubious invoices were filed to the US customs and Border Protection that reduce the value of the shipments and permitted Ambiance to pay a reduced amount in import tariffs, as stated by the court documents.

Asian producers created two different invoices for the garments as requested by Ambiance. An invoice that revealed about 60 to 70% of the real cost was paid through a letter of credit and another invoice that revealed the actual cost and paid through wire transfer. The fraudulent invoice that undervalued the actual cost was presented to the CBP and was used for estimating the import tariffs.

The authorities indicated that this scheme has been used by Ambiance for about 4 1/2 years to undervalue imports worth around $82.6 million and refused to pay over $17.1 million in import tariffs. Noh and Ambiance have agreed to refund about $18.42 million to the US Customs and Border Protection which comprises unpaid interests and tariffs accumulated from year 2014.

Ambiance records sale transactions in two sets of books together with those cash transactions. One sales record contains records of cash transactions only which is unknown to Ambiance external accountants. Also, Noh requested that some set of transactions be reported below its actual value to its accountants.

These low sales figures were documented in the tax returns filed by Noh in 2011 and 2012. He agreed that he refused to provide the genuine income for the two years and currently in a debt of over $16.8 million payable to the Internal Revenue Service, comprising of penalties, interests, and unpaid taxes, as stated by the Office of the US Attorney.

Immediately the guilty plea is filed for Ambiance, the company would be on five-year probation during which it must execute an efficient anti-money laundering ethics and compliance scheme which would be monitored by an external compliance team.

Tax problems Fajardo And Associates can help

Tax Resolution Services Fajardo And Associates can help