U.S. Cracks Down on Illegal Wine Imports : Crime: Successful prosecution of 14 smuggling and label fraud cases has resulted in more than $200,000 in penalties.

The federal government said last Thursday that fraud and smuggling of imported wine is on the rise and that it has successfully prosecuted 14 cases and has 70 more cases under active investigation.

“Our recent investigations have shown a definite increase in illegal activities in wine imports and we intend to take all steps possible under the law to stop it,” said Stephen E. Higgins, director of the Bureau of Alcohol, Tobacco and Firearms.

Candace Moberly, chief of the special programs branch of the ATF, said ATF recently concluded 14 cases that resulted in more than $200,000 in penalties and taxes.

In addition, she said, ATF has 70 ongoing investigations of label fraud and 23 more cases targeted for investigation. In those actions, some 17,000 cases of alcoholic beverages have been detained at ports of entry, she said.

Moberly said most of the products discovered to be fraudulently shipped to the United States are small shipments “aimed at ethnic communities.”

She gave only one example of an “ethnic product” -- a Portuguese brandy that was labeled as wine to avoid paying a higher excise tax.

“We’re looking more particularly at ethnic areas because there are certain products that people are accustomed to drinking that they may not be able to get domestically in the United States,” she said.

“The most common practice is manipulating the label and submitting false documents to customs to avoid the proper tax classification.” She said ATF, which has about 650 field inspectors, has found some products being smuggled into the country uncaught by customs inspectors.

She said this is possible because “Customs officers are overwhelmed and they tell us they can only check something like 10% of the containers that come in.

“So they’ll open the door of a container and what they see is what they check against their manifest. If something (illegal) is buried in the middle of the container, chances are unlikely it will be caught.”

She said in one case, an ATF inspector “picked up a Portuguese product in our market basket sampling and saw there was a problem,” and then tracked the item back to the importer. She said investigators recently have “picked up a steady stream of problems, and in some cases it isn’t just mislabeling; in some cases it’s outright fraud.”

She said some importers bring in products that ATF, the branch of the Treasury Department that regulates alcoholic beverages, has prohibited for various reasons. “Or they are simply lazy, and they stick on an old label that does not represent the product.”

In one case recently settled, she said, a company paid $130,000 in offers in compromise and criminal fines, plus tax penalties and interest, after pleading guilty to felony smuggling and label fraud.

Two companies that have paid fines for infractions are Hoffman Imports of Carlstadt, N.J., and Chapon Wine Merchants doing business as Chapon Imports in White Plains, N.Y., Moberly said.