A decade after my reporting linked an Irvine industrial building near John Wayne Airport to an international trade caper involving tariff-evading aluminum shipments from China, a collection of Southern California warehousing companies has agreed to a pricey settlement with the U.S. government.
The Department of Justice announced in mid-May that five related property owners with foreign ties, including Von Karman-Main Street LLC, had agreed to pay $549.5 million “to resolve allegations that they violated the False Claims Act by knowingly and improperly evading, or conspiring to evade, antidumping and countervailing duties owed to the United States on aluminum extrusions imported from the People’s Republic of China.”
Von Karman-Main Street LLC had been the registered owner of 2323 Main St., a nearly 261,000-square-foot warehouse that sits at one of the busier intersections in Irvine.
Starting in 2011, the defendants “knowingly and improperly avoided antidumping and countervailing duties owed on more than 2.2 million aluminum extrusions in the form of ‘pallets,’ which they misrepresented to [customs officials] as finished merchandise not subject to antidumping and countervailing duties,” the DOJ said in a May 13 statement.
Those aluminum pallets—much heavier than traditional pallets typically used for shipping—were brought into the U.S. for the purpose of being melted for other uses, the DOJ alleged.
The defendants, with other properties in Fontana, Ontario and Riverside, were at one point charged with evading $1.5 billion in tariffs through their scheme.
The 2323 Main St. warehouse was acquired by the LLC in 2009, and for years it sat largely unused, a rarity given the low vacancy rate for industrial buildings in the area at the time.
That changed in 2016, when the Business Journal reported on an odd sight in the airport area. A line of trucks began queuing up along Main Street and Von Karman Avenue to unload shipments at the property. A bulk of the trucks bore the name of Wan Hai Lines, a Taiwan-based shipping firm with a presence at the Port of Long Beach.
The building was nearly full within several days with stacks of what appeared to be aluminum sheets and aluminum pallets.
The property’s ties to a larger enterprise soon became apparent. A Wall Street Journal report around the same time noted how a Chinese billionaire-backed firm with ties to the Irvine building had embarked on “a brazen scheme” to “game the global trade system.”
Among other allegations, the Chinese company at one point stockpiled nearly 6% of the world’s inventory of aluminum at a remote factory in Mexico, the WSJ reported.
Prior to the Business Journal’s reporting, only one U.S. facility, a warehouse in New Jersey, had been identified as holding the Chinese company’s aluminum shipping pallets.
By the time the U.S. government’s formal charges were unveiled against the defendants in 2017, the 2323 Main building was empty again; the aluminum was allegedly moved from Southern California to Vietnam.
Federal prosecutors initially attempted to seize ownership of the Irvine building, but that move wasn’t successful. 2323 Main St. traded hands last month for $32 million; a conversion to housing could be in the cards.
Finally, the well-known Newport Beach Car Wash has closed. Insider has learned that Irvine Company is buying the property and plans to redevelop it. More updates to come.
