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Metals seized in alleged ‘carousel’ scheme

Keywords: Tags  Homeland Security, Recuperaciones Industriales Internacionales, Bernardo Llaguno, Equus Steel International, Steel Bird Brokers, BE-CA Copper, Red White & Blue Logistics, Daniel Coindreau aluminum imports

CHICAGO — Aluminum and copper shipments that federal authorities allege were smuggled between the United States and Mexico as part of a "carousel" scheme have been seized by the U.S. Department of Homeland Security.

The material was seized after an investigation into metal shipped between Mexico’s Recuperaciones Industriales Internacionales SA de CV (RIISA) and three U.S.-registered companies: Equus Steel International LLC, Steel Bird Brokers LLC and BE-CA Copper LLC, according a complaint filed in federal court in June by Kenneth Magidson, U.S. attorney for southern Texas.

Also involved in the alleged scheme was Red White & Blue Logistics Inc. Laredo, Texas, which federal investigators said received and inventoried overvalued metal imported by RIISA from Mexico before shipping the material to an Equus warehouse in San Antonio, Texas. The metal was then exported to Mexico at below-market prices, according to court documents.

RIISA declined to comment July 1, and AMM couldn’t locate contact information for Equus, Steel Bird or BE-CA.

"RIISA had created a scheme in cooperation with Equus, Steel Bird and BE-CA to import and export the same metals from Mexico to help correct a trade imbalance that RIISA had with Mexican Customs maquiladora program," according to documents filed with the court by a Mexican law firm representing RIISA owner Bernardo Llaguno and Daniel Coindreau, Llaguno’s son-in-law and owner of Red White & Blue. Metal was "overvalued upon import" and "underweight upon export."

Homeland Security investigators accuse RIISA and the other three companies of illegally importing 1,448 shipments of aluminum, baled copper and copper filings in drums by using overvalued sales invoices and false North American Free Trade Agreement (Nafta) certificates of origin stating that the metal was made in Mexico. The aluminum and copper brought into the United States by RIISA and sold to Equus, Steel Bird and BE-CA was then resold to RIISA at "below market prices," according to federal investigators. When the metal was exported to Mexico, falsified Nafta certificates indicated it was produced in the United States and Canada.

The metal imported from RIISA and declared as alloyed aluminum and premium processed copper scrap was then resold to RIISA declared as unalloyed aluminum and scrap copper, court documents said. "The scheme created a ‘carousel effect’ when the companies imported and exported the same merchandise between the U.S. and Mexico."

Aluminum ingots were stamped with what an Alcoa Inc. employee identified as the stamp for the Pittsburgh-based aluminum producer’s smelter in Baie-Comeau, Quebec, according to court documents. Alcoa, which is not a party in the litigation, declined to comment.

Approximately 1,450 shipments of aluminum and copper brought into the United States through the Port of Laredo by RIIS and sold to Equus, Steel Bird and BE-CA had a declared invoice value of approximately $264.8 million, according to investigators. But that declared value appears to have been inflated. For example, on March 20, 2012, RIISA imported 46,980 pounds of aluminum to the United States at a declared value of $3.58 per pound, while the London Metal Exchange price for aluminum was 94 cents per pound, according to court documents.

Coindreau told Homeland Security investigators on Oct. 24, 2012, that he had closed Red White & Blue, sold his fleet of trucks and moved the aluminum and copper to an undisclosed warehouse in Laredo. Agents learned the whereabouts of the metal and seized it on Feb. 19, 2013.

U.S. prosecutors in June issued a forfeiture notice for metal seized, including three pallets of aluminum ingots, 785 aluminum T-bars, 71 pallets of copper shavings and 60 pallets of baled copper, according to court documents. Any interested parties have until July 23 to claim the material.

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