3. Defendant INTERNATIONAL TECHNOLOGY GROUP, INC. ("INTERNATIONAL TECHNOLOGY") was located in Orchard Park, New York in the Western District of New York. Defendant WILLIAM NEHILL was the President of INTERNATIONAL TECHNOLOGY. INTERNATIONAL TECHNOLOGY was an importer of specialty metals, including magnesium powder.
4. Defendant QIAN CHEN resided in the People's Republic of China and was in the business of importing specialty metals, including magnesium powder, into the United States. Defendant QIAN CHEN sought out Chinese manufacturers who could provide magnesium to defendant WILLIAM NEHILL for importation into the United States.
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A. OBJECTS OF THE CONSPIRACY
25. Beginning in or about February 2003, and continuing up to in or about December 2006, in the Western District of New York and elsewhere, the defendants, GREGORY MAGNESS, JUSTIN MAGNESS, SUPERIOR METAL POWDERS, INC., CHARLES WRIGHT, WILLIAM NEHILL, INTERNATIONAL TECHNOLOGY GROUP, INC., ELDON BOTT, INNOVATIVE MATERIALS & SOLUTIONS, INC., and QIAN CHEN, did knowingly, willfully and unlawfully combine, conspire and agree together with each other and with others, known and unknown:
(1) to defraud the United States that is, to obstruct by deceitful and dishonest means, the lawful and legitimate function of the United States Government, including the function of:
(a) the United States Department of Homeland Security, through the Customs and Border Protection and Immigration and Customs Enforcement agencies, to be provided with truthful and accurate information regarding the type and nature of materials being imported into the United States;
(b) the United States Department of Commerce and United States Customs and Border Protection to determine whether the substance being imported complied with the Anti-Dumping order; and
(c) the United States Department of Defense to determine whether the substance being provided complied with the Defense Federal Acquisition Regulations “DFAR”, with the applicable Mil-Specs, and with the contractual obligations owed to the United States; and
(2) to commit the following offenses against the United States:
(a) with intent to defraud the United States, to smuggle and clandestinely introduce into the United States merchandise by making false and fraudulent invoices, in violation of Title 18, United States Code, Section 545;
(b) to devise a scheme and artifice to defraud the United States and for obtaining money and property from the United States by means of false or fraudulent pretenses, representations or promise, and transmitting and causing to be transmitted, by wire communication in interstate or foreign commerce, writings for the purpose of executing the scheme or artifice in violation of Title 18, United States Code, Section 1343; and
(c) knowingly and willfully, within the jurisdiction of the executive branch of the Government of the United States, making
materially false, fictitious and fraudulent statements and representations, and making and using false writings and documents knowing the same to contain materially false, fictitious, and fraudulent statements and entries, in violation of Title 18, United States Code, Sections 1001(a)(1), 1001(a)(2) and §1001(a)(3).
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35. Defendants GREGORY MAGNESS and JUSTIN MAGNESS, on behalf of defendant SUPERIOR METAL, entered into an agreement with defendant WILLIAM NEHILL, whereby defendant NEHILL would import, with the assistance of defendant QIAN CHEN, from the People's Republic of China, ultra-fine ground magnesium powder mixed with 1/4 inch aluminum nuggets.
36. Defendant QIAN CHEN located industrial facilities in China capable of producing either pure fine ground magnesium powder or atomized magnesium powder with the 1/4 inch aluminum nuggets added to the magnesium powder. The pure fine ground magnesium powder would be placed in sealed drums and shipped for importation into the United States.
37. Defendant WILLIAM NEHILL and defendant QIAN CHEN also determined that the drums would be labeled, and the invoices and bills of lading would falsely and fraudulently describe the product as being, "magnesium reagent" and/or "magnesium desulfurization reagent.”
38. Defendants WILLIAM NEHILL and QIAN CHEN also agreed to keep two sets of invoices regarding the cost of the product
actually being imported into the United States.
39. It was agreed between defendants WILLIAM NEHILL and QIAN CHEN that if the true price of the "magnesium reagent" was placed on the invoice presented at importation, Customs and Border Protection officials would realize that the product was not “magnesium reagent” but the more expensive fine pure magnesium powder. Thus, defendants WILLIAM NEHILL and QIAN CHEN agreed to create a second set of invoices to be used only for importation purposes which would not only describe the product as being "magnesium reagent" or "magnesium desulfurization reagent" but would also reflect the price as if it were “magnesium desulfurization reagent,” even though the actual price was for the higher-cost pure magnesium powder. The true cost of the finely ground pure magnesium powder to ESM was approximately $2.40 per pound, and the true cost of the atomized pure magnesium powder was approximately $7.60 per pound. However, the invoices created to defraud Customs and Border Protection falsely and fraudulently indicated that the cost of the substance imported was approximately 90 cents per pound. That price is the approximate equivalent price of genuine “magnesium desulfurization reagent.”
40. Once entered into the United States, the falsely labeled drums (i.e., those labeled as "magnesium reagent" or "magnesium
desulfurization reagent") were shipped to ESM's industrial facility at Saxonburg, PA, or to a nearby holding warehouse at S. H. Bell in Braddock, PA. In addition, the invoice accompanying the aluminum nugget laced magnesium powder falsely described the product as “magnesium reagent”, “magnesium desulfurization reagent”, or a variation thereof.
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