Defense contractor labeled Chinese goods as American while taking in $25 million, feds say
By KATHERINE HAFNER | The Virginian-Pilot | Published: August 27, 2020
NEWPORT NEWS, Va. (Tribune News Service) — A Hampton-based business sold the U.S. government Chinese-made goods that it falsely labeled as “Made the USA,” according to a federal indictment unsealed Wednesday.
I-Tek Inc. got about $25 million from the procurement scheme as a supplier to the U.S. Army, Marine Corps, Coast Guard and other federal agencies, prosecutors said. The company delivered clothing, wire, parachutes and more that had been imported from China and systematically made to look otherwise.
Six people were indicted in the conspiracy: I-Tek owner Beyung S. Kim, 61, of Newport News; and employees Seung Kim, 30, of Newport News, Dongjin Park, 53, of Yorktown, Chang You, 61, of Yorktown, Pyongkon Pak, 53, of Toano, and Li-Ling Tu, 57, of China. All but Tu, who is in China, have been arrested.
I-Tek,originally known as Iris Kim Inc., was started in Hampton in 1995, according to court records.
The company pitched itself for government contracts as an experienced defense contractor with a specialty in innovation and logistics.
Between 2011 and 2018, it coordinated with “various Chinese manufacturers” to produce goods under U.S. government contracts and ship them here under a shell company dubbed Atlantic Solar Power, prosecutors wrote. The items included T-shirts, hats, drawstring bags and more. The Chinese manufacturers were ultimately paid nearly $11 million, according to court documents.
A third-party logistics business described in court documents only as “Company #1\u2033 was used to warehouse the imported goods.
I-Tek then used a second company — described as a garment screen printing and embroidery business in Newport News — to remove any mentions of China on the items and replace them with “Made in the USA” labels, according to court records. Company officials coordinated with the Chinese manufacturers to make tear-away labels that would be easier to replace.
Among other things, the company concealed the Chinese origin of Indiana National Guard T-shirts, swim trunks sent to West Point, Army parachutes, Marine Corps lanyards and barbed concertina wire for the Defense Logistics Agency, among other things.
Several times I-Tek falsely claimed to have a manufacturing facility in Virginia Beach and later provided falsified purchase orders, the indictment said.
The company also used one employee’s status as a military service disabled veteran to get certain set-aside government contracts, officials said. Management identified the employee as “president” even though the person had no actual leadership role.
Prosecutors are pursuing 32 charges in all, including smuggling goods, wire and mail fraud and conspiracy to defraud the United States.