Drug Cartel Linked to $10.4 million Customs Fraud Penalty

Jan. 16, 2024
By: Ashley J. Bodden

Undervaluing imported garments and doing business with people designated a “Special Designated Narcotics Traffickers” under the Kingpin Act will land you and your business paying a hefty fine and put you at serious risk for time behind bars. Just ask Ghacham Inc. and its executive, who are still dealing with the consequence of their actions today.

Back in 2022, we noted that Ghacham Inc., and its executive Mohamad Ghacham agreed to plead guilty to $6.4M customs fraud and violation of drug trafficking sanctions. For almost 10 years, Ghacham Inc., at the order of its executive, falsified invoices of imported clothing to U.S. Customs and Border Protection (CBP) in order to reduce the amount of tariffs owed, while keeping true copies of the invoices in Ghacham Inc.’s accounting records.

Last month, the Department of Justice announced that Ghacham Inc., will be fined $4 million, and be required to pay almost $6.4 in restitution for Customs Fraud and violating U.S. Drug Trafficking Sanctions. In addition, the company was placed on a five-year probation for its undervaluing garments scheme and for doing business with a woman with ties to the Mexico Sinaloa drug cartel. The judge also ordered Ghacham Inc. to create and maintain an anti-money laundering compliance and ethics program and submit a review on a yearly basis.

Mohamed Ghacham is personally facing up to five years in federal prison. He is expected to be sentenced in the coming months.

This cannot be stressed enough, Customs fraud can, and does, lead to prison time for violators. It is important that you report the correct and accurate value to Customs. It is also imperative that you do not do business with people designated as “Specially Designated Narcotics Traffickers” under the Kingpin Act, because Treasury Department’s Office of Foreign Assets Control (OFAC) can bring criminal charges as well.

If you have any questions regarding import compliance do not hesitate to contact any attorney at Barnes, Richardson & Colburn LLP.