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 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.
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.
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.
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.
CTJ was found guilty of an additional two concealment money laundering counts involving drug proceeds. Si Oh Rhew was found guilty of an additional two counts of aiding, assisting and procuring the filing of a false tax return. Lance Rhew was found guilty of one additional count of aiding, assisting and procuring the filing of a false tax return. Lance Rhew was also found guilty of one conspiracy count.
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.
The jury heard that CTJ accepted large cash payments of up to $70,000 even after the law enforcement action targeted their businesses in 2014. The defendants failed to file currency transaction reports, which are required for any transaction involving more than $10,000 in cash, and concealed the cash receipts from an accountant who prepared their taxes, which led the Rhews to fraudulently omit more than $17 million in gross sales from tax returns filed with the Internal Revenue Service, evidence shows.
The jury found the defendants not guilty of several additional criminal counts, including two counts of concealment money laundering for CTJ and several counts of failure to file a report of a currency transaction in a nonfinancial trade or business for Lance Rhew.