Hampton contractor pleads guilty in fraud scheme

Conspiracy tagged Chinese goods with ‘Made in USA’

HAMPTON — The owner of a Hampton-based defense contractor and four of his employees have pleaded guilty in a scheme to pass off Chinese-made products as being “Made in the U.S.A.,” according to documents filed in Newport News federal court.

The conspiracy, between 2011 and 2018, also involved having a retired disabled veteran falsely pose as the company’s “president and owner” in order to qualify for Department of Defense set-asides under certain contracts, the docu

ments said.

Beyung S. Kim, 61, of Newport News, and his company, I-Tek, had contracts to supply products to the Army, Marine Corps and Coast Guard, as well as the National Guards of various states, according to statements of facts entered with the various guilty pleas. For example, the company provided thousands of “West Point swim trunks” for the Army, and trinkets — such as mugs, bottles, mouse pads, foam balls, T-shirts, and pencils — for the Marine Corps, and various state National Guards.

I-Tek also provided wire rope for the Coast Guard’s “buoy tender cutter operations,” and other wire for the Department of Defense Logistics Agency.

Those contracts required that the products be made in either the

United States or in certain approved countries that don’t include China. But the statements of facts agreed to by both prosecutors and defense lawyers under the plea agreements say that Kim and his employees acted through a separate company, Atlantic Solar Power Inc., to conceal that the goods were coming from China.

“The conspirators acted to defraud the U.S. ... by fraudulently importing goods into the U.S. that were made in China, in violation of the terms of these contracts,” the U.S. attorney’s office said in a news release. “They then falsely relabeled these goods as if they were made in the U.S.”

They did this by using third party companies to remove and replace the labels. The scheme also included providing the Department of Defense with false supplier quotes and purchase orders, the documents say.

In one case, the statement of facts said, the “adult son of a conspirator” impersonated a representative of an American wire manufacturer, Allied Industry Supply, to deceive the regulators.

The documents say the conspirators also falsely claimed that I-Tek was owned by a disabled veteran in order to land government set asides from the Small Business Administration’s program for “Service-Disabled Veteran-Owned Small Businesses.”

The documents say they did this by listing a federal employee and retired disabled veteran — Individual #2 — as the company’s president and owner. “In fact, Individual #2 exercised no operational leadership or day to day control over the affairs of either I-Tek or (Atlantic Solar Power),” the statement said.

The documents further say that the conspirators submitted false documents to undervalue imported goods in order to avoid higher taxes and import duties.

Alengthy investigation by special agents with the Department of Homeland Security and other agencies resulted in an indictment on Aug. 7 in U.S. District Court in Newport News.

Aside from Beyung Kim, four employees were charged: Seung “Sam” Kim, 30, of Newport News; Dongjin “D.J.” Park, 53, of York County; Chang “Alex” You, 61, of York County; and Pyongkon “Phil” Pak, 53, of James City County. All five men were arrested on Aug. 26. Another defendant, Li-Ling “Vivienne” Tu, 57, of China, has not been arrested. I-Tek, on Executive Drive in Hampton’s Coliseum area and formally known as Iris Kim Inc., was also charged in the conspiracy as a corporate entity.

The four employees pleaded guilty in November to one count of conspiracy to defraud the United States, punishable by up to five years in prison and a fine of up to $250,000. They made the plea before U.S. District Judge David Novak in Richmond.

Beyung Kim and I-Tek pleaded guilty before Novak on Nov. 30 to one count of conspiracy to defraud the United States, and one count of entry of foreign goods by way of false statements. Those are jointly punishable by seven years in prison and $500,000 in fines.

Multiple fraud charges — such as wire fraud, mail fraud and smuggling goods — were dropped as part of the guilty pleas, with some employees having more initial charges than others. All five men are expected to be sentenced in March.

Adocket entry shows that I-Tek’s plea agreement hearing was being “reset” to Dec. 14, but it was not clear if that meant the Nov. 30 plea deal had been scrapped. Sarah Hall, a Washington, D.C., lawyer for I-Tek and Beyung Kim, declined to immediately elaborate.

Attorneys for the other four men, based in Washington or Northern