How business, doctors and journalists prey on your food anxieties I

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! Designer kitchens are big <strong>business</strong> in Europe, but European kitchen makers are having a devil of a time establishing themselves in the U .S . Ho1d the Poggenpohl By Peter Pultrman IN EcftOP6Vi IiOnms the kirchen Ims generally hten a uznrpcd <strong>and</strong> airless n>Inn, not much bigger than a broonr clnset with pygtm size appliances- But in recent years Ewropcans have dcscloped a tasre for s{cck kinitcns fidl of cabinets, wot#space .s <strong>and</strong> tlmericon-siu :y>pG.mms. 11
Using phony invoices, importers are laundering dirty money, cheating the taxpayer <strong>and</strong>, incidentally, making the U .S . trade baiance look worse than it is . Salad oil, $720 By Damon Darlin LAST rF AR's S 166 billion merch<strong>and</strong>ise trade deficit could ha~e been inflated by more than S100 billion . That's becausecrookedimport/exportfirms cheated the U .S . Treasurv out of more than S40 billion in tax resenues . This startling claim comes from John S. Zdani <strong>and</strong> Simon J . Pak, finznce professors at Florida International I ;nit-ersittin Miami . The amounts ineolved mas be much less than the nvo researchers claim, bttt the practice thev uncotered is distnrbing all the same . Four years ago the pair began using potrertul computer sofuvare the%, designed to examine the prices of 23,000 different products imported from <strong>and</strong> exported to 235 countries ba the U .SThe profs originalle setout to ntea- Hmmm . . . Examples of abnormally low U .S. export prices Product Radial tires Snow plows Spark plugs Instant-print cameras Upright pianos Missile <strong>and</strong> rocket launchers Exported to Colombia Jamaiea Taiwan France France Egypt Examples of abnormally high U .S. importprices Product S<strong>and</strong> New truck tires Toilet paper Brassieres Spark plugs Instant-print cameras o0erreSAmor Pas ano /nM Zda~rwvi¢ N Imported from Japan SNeden Japan Italy Canada Japan sure the et ficiencv of the global market in pricing goodsThee stumbled ou ecidence that crooks are using international trade as cover tior massi% -c monet• launderin_e . Take razor blades imported rrom israe' <strong>and</strong> priced at 3 cents, «hile identical blades from Panama tere invoiced at S29 .35-each . The price of a simple telephone imported front Hong Kong ranged bemeen 53 .18 <strong>and</strong> S2,400 . The profs found S720 bottles ofimported salad dressing <strong>and</strong> S653 smoke detectors, while a helicopter exported to Kaea was invoiced for onlr S 15,609 . G .tn R. KcBt-ide, an accounting professor at California Srate C'nirersin', Hay~aard, uui an es-adNiser to the Internal Revenue Senice, esplains : "Bad guys are learning that banks are Price per unit $3 .03 267 .70 0 .01 3 .05 38 .00 38 .20 Price $6,025/ton 2,266/unit 6/roll 1 .5761dozen 70/unit 2,538/unit Fraudulently over-invoicing imports <strong>and</strong> under-invoicing exports cost taxpayers $40 billion last year . Sources of lost U .S, taxes due to abnormal trade pricing (Smllllons) Total : $39,540 9ingapore=g Germany 2;59I Mezico Canada Taiwan Fmnce 2;448 2,355 1,609 1,493 China 1,345 Flong Kong 1,278 All other 15,434 countries a hard place to launder monl so thev're turning to the export/import <strong>business</strong> ." FF'hY did that guy pac vou S 100,000? Because I sold him 200 razor blades . The feds ita\ 'e alreada tracked a tew cases of suspected invoicing fraud . Sunrider International is a 5300 million direct-sales retailer ofherbal cosmetics <strong>and</strong> health foods based in Torrance, Calif. It is ou-ned bv Palos Verdes Estates, Calif. residents Tei- Fu Chen <strong>and</strong> his ~eife, Oi-Lin Chen . Federal custotms agents claim Sunrider imported raw materials from Taiwan, Japan <strong>and</strong> South America <strong>and</strong> inflated the imports' values on invoices bv as much as 900'Ye . Suruider paid a little extra in customs duty, Nchich generallv runs under 10% of inroiced value, but sa% ed much more in taxes . HoNv4 Simple . It had shipped most of the profits to Hong Kong disguisedastiieco_stofimports . A20- count indictment filed in March by' U .S . attornevs in Los Angeles against Sunrider <strong>and</strong> the Chens asserts rhev evaded paving almost S40 million in ta_ es bern'een 1986 <strong>and</strong> 1990 . Through an attornev the Chens denanp wrongdoing <strong>and</strong> insist the matter is a civil tax dispute . Originall ' ~ to have begun this fall, their trial has been postponed . In a similar case eark this vear, federal prosecutors in Virginia %ron convictions of four Pakistanis who used a Springfield, Va .-based medical supplies importer, Falcon Instruments, to funnel $1 .4 million to Pakisran . In one insrance cited br the prosecutors during the trial, Falcon imported equipment that probabt}cost it about $ 19,000 but itnoiced it at $42,000, sending the tull amount to Pakistan . The scheme had a second benetlc One of the men used the invoice scam to avoid paying his personal LCS- income taxes . Floricia International L'nicersin''s Zdanowicz <strong>and</strong> Pak claim softmare the\- hm e deN roloped could, «ith additional information mailable to the goaernmenr, put the cops on the trail oEinternational monec launderers oy tlagging suspicious imporr invoices . II,S . Treasw, Department officials have visited the professors for a dem- Ollstra[lon <strong>and</strong> expressed interest iil the sofm are but have no current plans to buv !t. 111111111 i6 ~ ~ ~ ~ ~ ~ , s~ Forbes . Atrgust L4, 1995 ~ http://legacy.library.ucsf.edu/tid/agf97d00/pdf
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