U.S. Goes After Warehouses in Bogus Pallet Scheme

The warehouses were used to store some 2.2 million bogus aluminum pallets.

Last week, the U.S. Justice Department filed an asset-forfeiture complaint against California-based Perfectus Aluminum to try and seize warehouses in Irvine, Ontario, Fontana, and Riverside, each in California, that were used as part of a scheme to dodge about $1.5 billion in tariffs.

Basically, Perfectus allegedly imported nearly 2.2 million bogus aluminum pallets that were going to be melted down into aluminum billets and then sold into the U.S. market illegally. Not a single pallet was ever sold to be used as a traditional pallet. 

The complaint sheds new light on the enormity of the scheme. If you can believe it, it is pretty difficult to store 2.1 million pallets, counterfeit or not.

In 2015, fire inspectors issued citations for pallets blocking emergency vehicle access at the Fontana Warehouse. In April 2016, the same warehouse was cited because the pallets were stacked too high, and the fire inspector noted that the warehouse was filled to capacity with pallets and other aluminum products.

The inspector returned in January 2017 to find the Fontana Warehouse empty. On site personnel said that the pallets had been sent to Vietnam, however, the complaint alleges that Perfectus actually moved more than 6.5 million pounds of pallets to the Riverside Warehouse from the Fontana and Ontario Warehouses. It took 439 shipping containers to make the move.

An inspector of the Irvine Warehouse in February 2017 found up to 90% of the warehouse filled with aluminum pallets stacked up to 16 feet high.

After the scheme was exposed in 2015, Perfectus started exporting its U.S. stockpile to Vietnam, where it would melt the pallets down and reintroduce the aluminum to the U.S. market as Vietnamese aluminum. According to the complaint, the company exported 6,337 containers of bogus pallets out of the U.S. in 2016.

By September 2016, the government was tipped off that the Irvine Warehouse was being emptied. Agents conducted an inspection which lead to the seizure of 549 shipping containers at the port, holding about 130,000 bogus pallets.

The government believes that Perfectus can be linked to 2,190,000 bogus aluminum pallets that were imported into the U.S. beginning in 2011.

The containers that made it out of the country likely carried hundreds of millions of dollars’ worth of Aluminum, but hey, at least the government has a chance to pick up four warehouses.

This is IEN Now with David Mantey.

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