LOS ANGELES—A Los Angeles Fashion District clothing wholesaler and two of its executives will be sentenced in January 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 announced Wednesday.

At the conclusion of a six-week trial, a federal jury in downtown Los Angeles late Tuesday found the defendants guilty of dozens of felonies, including the company C'est Toi Jeans (CTJ) which imported apparel from China and other nations and exported clothing to customers in Mexico, Central America, and South America.

The other two defendants are Si Oh Rhew, 70, of La Cañada Flintridge, CTJ’s president and a 75 percent owner of the company, and Lance Rhew, 37, of downtown Los Angeles, Si Oh Rhew’s son, a CTJ corporate officer, and the owner of another Los Angeles-based company called GLLR Inc. that did business as CTJ.

The case outlined in a 49-page indictment filed in December 2020 resulted from an operation in September 2014, when law enforcement authorities 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 U.S., 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.

U.S. District Judge Mark C. Scarsi scheduled a sentencing hearing for Jan. 21, at which time the Rhews will each face a sentence of decades in federal prison and CTJ will face fines of as much as $100 million, according to the U.S. Attorney’s Office.