Bay Area company and CEO charged in fraud scheme involving illegally imported gourmet mushrooms

OAKLAND, Calif. – A Bay Area businessman made his initial appearance in federal court Thursday on wire fraud charges lodged against him and his company for allegedly orchestrating a scheme to evade customs duties on imported gourmet mushrooms.

David Tung, 72, formerly of Hillsborough, California, and his company, Concord Farms, Inc., are charged in an indictment with conspiracy to commit wire fraud and wire fraud. The charges stem from a probe by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

According to the indictment, Tung, and the company engaged in a scheme to defraud the United States out of duties owed on imported items, including gourmet mushrooms. Concord Farms claimed to be one of the largest importers and growers of gourmet mushrooms in the United States, with multiple business locations including operations in California and New York. The case is being prosecuted by the U.S. Attorney’s Office for the Northern District of California.

Duties are taxes assessed on the value of imported items. The duties accrue when the items arrive at a U.S. port of entry. According to the indictment, Tung carried out his scheme by creating fraudulent invoices that undervalued Concord Farms’ imports and then caused those fraudulent invoices to be transmitted to the U.S. Customs and Border Protection (CBP), which relied on the invoices in assessing the amount of import duties owed by the defendants. Tung and others used computer file templates and photocopy machines to create some of the fraudulent undervalued invoices that were transmitted to CBP. Through the scheme, Tung and Concord Farms were able to avoid the full payment of duties actually owed on the imported items.
       
Tung was released on a $250,000 bond following his initial appearance. If convicted, he faces a maximum sentence of 20 years in prison, and a fine of $250,000, plus restitution for the alleged violations. Concord Farms, meanwhile, faces a fine of $500,000 and five years of probation for each alleged violation.

The case is being prosecuted by Assistant U.S. Attorney Wade M. Rhyne aided by Janice Pagsanjan and Noble Hughes.