Analysis Uncovers Additional Companies in Fraud & Money Laundering Network Not Included in DOJ Indictment

Written by Stacy Hubert

September 15, 2020

A clothing importer based in the Los Angeles Fashion District recently agreed to plead guilty to charges related to his company’s tax fraud scheme, money laundering, and customs violations, resulting in nearly $118 million in fines. The company owner, Sang Bum “Ed” Noh, was scheduled for arraignment on Monday.

Over the course of nearly five years Noh orchestrated two major schemes via Ambiance Apparel, the operating name for two California-based businesses — Ambiance U.S.A. Inc. and Apparel Line U.S.A., Inc. 

In the customs fraud scheme, Noh directed Asian manufacturers to prepare multiple invoices — one that reflected 60 to 70 percent of the actual price of clothing ordered by Ambiance, paid by letter of credit, and another invoice that reflected the balance of the actual price, paid by wire transfer. The former, fraudulent invoice was submitted to U.S. Customs and Border Protection (CBP) to calculate tariffs based on the reduced value of the shipment. 

In the second scheme, Ambiance repeatedly failed to document cash transactions of more than $10,000, a common money laundering practice. Ambiance also used two books to record sales — one for cash transactions only and not reported to accountants, whereas the second set of transactions was underreported with lower sales figures.     

In total, Ambiance “undervalued imports by about $82.6 million and failed to pay more than $17.1 million in tariffs,” according to a U.S. Department of Justice (DOJ) press release.

 

Questionable entities, individuals, properties enmeshed in Noh’s business network

Company data from the California Secretary of State reveals that in addition to owning and operating Ambiance U.S.A. Inc. and Apparel Line U.S.A., Inc., Noh is an officer of Blue Dot USA, Inc. and Leonis Property LLC — neither of the latter entities were named in the investigation.

The registered agent of all four companies — In Y Noh — is tied to three additional entities, shown in the Sayari Graph snapshot below. All entities affiliated with the two individuals are registered at the same Los Angeles address. The direct relationship between these entities and Sang B. Noh’s corporate network suggests these entities may have also been used to facilitate customs fraud and other related crimes. 

Fig. 1: Sayari Graph snapshot of defendant Sang B. Noh’s business network. All entities shown here are registered at  2415 E 15th Street, Los Angeles, CA 90021.

Additionally, Towneford Property LLC, Leonis Property LLC, Sante Fe 15 Property, LLC, and Jesi Enterprise, LLC own a variety of properties in downtown L.A, including industrial warehouses, storefronts, and parking lots, according to property records from the L.A. County Registrar-Recorder’s office. None of these companies nor their properties were publicly identified by DOJ.

One such property is Wax Jean, which is linked to multiple lots on Stanford Ave and the adjacent street address, 930 Towne Ave. Wax Jean is listed on Ambiance Apparel’s company website, and claims to be the largest denim vendor in the Fashion District with around 9 million units of denim in stock in its warehouse at all times. This, in addition to Ambiance Apparel’s 50 thousand sq. ft. showroom and 600 thousand sq. ft. warehouse space across four warehouses, makes up a very large real estate footprint in L.A.’s Fashion District.

 

Cut from the same cloth — L.A. Fashion District as a hotspot for money laundering

Over the last decade there have been other notable cases of illicit financial transactions involving clothing and textile import-export companies in downtown Los Angeles. 

In 2014, a large-scale U.S. federal law enforcement investigation into illicit financial activity in the Fashion District culminated in the execution of dozens of arrest warrants and the seizure of $100 million in narcotics proceeds. Authorities targeted multiple businesses that were indicted for their alleged involvement in Black Market Peso Exchange schemes to launder narcotics proceeds for the Sinaloa Cartel by way of the Fashion District. 

In one particular case, the cartel used a Fashion District wholesaler named QT Fashion, Inc. (additional business names included QT Maternity and Andres Fashion) to accept and launder ransom payments to secure the release of a hostage. The hostage’s family was directed to provide ransom money to retail businesses in the United States, including QT Fashion. The funds were then used to pay for clothing shipments sent to an importer based in Sinaloa, Mexico, who subsequently paid the cartel in pesos for the goods. Federal agents seized $90 million after raiding QT Fashion and other downtown L.A. businesses in September 2014.

Additionally, in a separate case that was part of the same federal law enforcement investigation in downtown L.A., two import-export textile company owners and executives were sentenced to federal prison in 2018 for their role in a trade-based money laundering scheme based in the Fashion District. 

Morad “Ben” Neman and his brother Hersel pleaded guilty to a number of charges, including conspiring to structure monetary transactions with a domestic financial institution. Through their company Pacific Eurotex, they “received, laundered and structured approximately $370,000 in bulk cash delivered on four separate occasions over 2.5 months,” according to a DOJ press release. They used the company to launder cash that they “deliberately ignored were drug trafficking proceeds,” and did not file the required reports for their bulk cash transactions over $10,000. 

 

An unexpected thread — tying past and current fraud schemes together

Our research indicates Morad Neman is named as an officer or registered agent of over a dozen entities in Los Angeles, according to company data from the California Secretary of State. 

Coincidentally, on a grant deed submitted to L.A. County in 2012 for the transfer of multiple lots associated with Sang B. Noh’s company Wax Jean and Ambiance Apparel, Morad B. Neman is listed as the manager of the grantor — Towne and Stanford, LLC. Towne and Stanford sold the lots to Towneford Property LLC, a company that, as previously mentioned, is connected to Sang B. Noh’s corporate network.

Fig. 2: Grant deed showing the sale of property from Towne and Stanford, LLC to Towneford Property LLC. At the time of sale, Morad B. Neman was the manager of Towne and Stanford — he was sentenced to federal prison in 2018 for his role in a previous scheme to launder money for international drug cartels.  

The L.A. Fashion District spans 100 city blocks and hosts more than 2,000 independently-owned retail and wholesale businesses for apparel, accessories, and footwear. About 80 percent of stores in the district are for wholesale and for trade only, and many stores only accept cash payment. 

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