A Kearny company which sells swimming pool and spa chemicals was ordered to pay $2.25 million in restitution after its owner admitted that he took part in a scheme to dodge taxes imposed on some items imported from China, the Newark field office of the Internal Revenue Service said in a statement on Thursday.
The owner of the company, Mark Epstein of Alpine, was also sentenced to eight months in the prison on Feb. 1 for customs and import violations. He must also serve the four months home confinement.
The firm, Alden Leeds, obtained imported chlorine through a middleman in the Ohio, Caiwei Sheng. Sheng used a shell company in the Vietnam to conceal the true origin of chlorine, which was actually made in the China. Chlorine from the China was subject to a 286 percent anti-dumping tax ordered by the Department of Commerce but Vietnam was not.
"Dumping" is the practice of selling goods to other countries below the market value in order to obtain an unfair competitive advantage against the domestic suppliers.
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To further avoid the suspicions of dumping, Sheng and Alden Leeds agreed to establish two prices for the chlorine,the official invoice price to be used in the Customs documents and a lower price actually paid by the company. Sheng would receive the amount for the higher price from the Alden Leeds, wire an amount equal to the lower price to companies in the Vietnam and China, and then send the difference back to one of the Alden Leeds sister companies. The rebate was described as the "consulting fee."
Epstein, who pleaded guilty to one count of the conspiracy to make false statements and violate United States customs and importation laws and one count of entry of goods by means of the false statement, he must also pay $500,000 in restitution. The company has also agreed to donate 2,700 gallons of the disinfectant to Haiti's ministry of health.
Sheng was sentenced to a prison term of 12 months and one day and also was ordered to pay restitution of $100,000.
Mrudula Duddempudi.
