US prosecutors have accused Liu Zhongtian, the billionaire founder of China Zhongwang Holdings, of evading $1.8bn in import duties on aluminium as part of an alleged scheme to inflate the company’s sales.
Mr Liu and the Hong Kong-listed aluminium maker were charged in a 24-count indictment that detailed an alleged decade-long conspiracy to sell the metal into the US to entities he secretly controlled.
The company’s shares fell as much as 21 per cent in morning trading in Hong Kong on Thursday.
Nick Hanna, the US attorney for the central district of California, called Mr Liu “a corrupt businessman” who had defrauded the US out of billions of dollars of tariffs due on Chinese imports.
“Moreover, the bogus sales of hundreds of millions of dollars of aluminium artificially inflated the value of a publicly traded company, putting at risk investors around the world,” Mr Hanna added in a statement.
An attorney for Mr Liu could not be immediately identified. The billionaire has previously denied wrongdoing. A justice department spokesman said Mr Liu was not in custody.
China Zhongwang did not immediately return an email seeking comment.
The indictment, unsealed this week but filed in May, came as the US and China continued talks to end a trade war launched after US president Donald Trump took office and promised a tougher approach to relations with Beijing.
US officials linked the alleged conduct by Mr Liu to broader US economic concerns about China that Mr Trump has put at the centre of his trade policy.
“The rampant criminality described in this case also posed a threat to American industry, livelihoods and investments,” said Mr Hanna.
China Zhongwang listed in Hong Kong in 2009 and is the largest manufacturer of aluminium extrusions in Asia. Until 2017, Mr Liu was its chairman.
In the indictment unsealed on Wednesday, the US said the company’s financial position was inflated by sales to shell companies and the evasion of US anti-dumping tariffs imposed in 2011.
Between 2011 and 2014, the company sold 2.2m pallets of aluminium to a US entity controlled by Mr Liu, prosecutors claimed.
The pallets were fraudulently represented as finished merchandise to evade tariffs and were stockpiled at warehouses in southern California, according to the indictment.
“Defendants Liu and China Zhongwang would direct that aluminium melting facilities be built and acquired to be used to reconfigure the aluminium imported as pallets into a form with commercial value,” the indictment alleged.
China Zhongwang allegedly funded the imports by transferring hundreds of millions of dollars to the purchasing entity through shell companies in what the justice department called a “massive money laundering scheme”.
The indictment was first reported by The Wall Street Journal.