'Smoking gun document' gives thrill in fraud unit Tenacious agent's work leads to major conviction in auto parts dumping case

November 08, 1993|By Frank D. Roylance | Frank D. Roylance,Staff Writer

TC U.S. Customs Service officers labor in near anonymity. Arrests they make rarely make headlines. The public rarely sees them. Yet they're part of one of the country's most sophisticated law enforcement agencies. This is a look at another Baltimore case handled, quietly, by this law enforcement agency, which in a sense is the United States' first line of economic defense.

Bob Trader was a veteran Baltimore City homicide cop who had tracked killers in more than 100 murders on the city's streets. The last thing he wanted to do after joining the U.S. Customs Service in 1984 was lead a paper chase for fraudulently imported clutch bearings.

"Nobody likes to work fraud cases because they are very tedious and boring," he said. "Police like to be on the street, taking names and kicking ass. But these [fraud] cases . . . involve a lot of documents and accounting."

Besides, Mr. Trader had worked hard since joining customs and was by now the Baltimore office's expert on Nigerian heroin smuggling.

"I was really rolling," he said. "We had just established a lot of sensitive contacts in Nigeria, and we had a real successful program."

But Mr. Trader's superiors wanted top investigators in the commercial fraud unit. Its job is to ferret out unfair and illegal competition from abroad -- which can cost the economy billions in lost business -- and thus help preserve American jobs.

The work is not glamorous. Fraud investigators search through mountains of customs documents for evidence that an importer or exporter is disguising the true nature of his wares in order to duck an export ban or avoid paying higher import duties.

Donald G. Turnbaugh, special agent in charge of the Baltimore District, wanted Mr. Trader working fraud. "He's a tenacious guy. I hope he never goes to Internal Affairs and gets my case," he said.

In August, Mr. Trader, 43, closed the biggest customs fraud case in Baltimore's history, winning a guilty plea from Heinz K. Wolfmaier, president of a German-owned auto parts distributor. On Friday, Wolfmaier was sentenced to 15 months in prison by a U.S. District Court judge in Baltimore for his part in a scam involving the "dumping" of replacement clutch bearings.

In the end, the scam was simple. The company just called the clutch bearings something else and brought them in through ports where it thought no one was watching. But the plot was devilishly difficult to catch in the mountains of paperwork that importers generate as they pour goods into ports around the country.

It was the first anti-dumping case prosecuted in the United States since the early 1980s, customs officials said. And Wolfmaier is the first person to face a prison term for a dumping conviction.

The U.S. government also collected a check from the company for $4.5 million in overdue duties and penalties -- the biggest such collection in the Baltimore port's history.

And the investigation is not over. "Other importers are involved in a similar scheme with bearings," Mr.Trader said. "Within the next year we are hoping to have another major indictment."

Work in the fraud unit now looks more appealing.

"I feel different about it now; it's pretty exciting," he said. "Going through documents is dull, but when you find the right document -- the smoking gun document -- you can get excited about it."

Dumping is a predatory business practice in which foreign corporations sell their products in the United States for less than at home. If they can capture a large enough share of the U.S. market that way, they can drive competing U.S. manufacturers out of business.

Dumping by Japanese electronics companies is blamed, in part, for the demise of television manufacturing in the United States.

Although cheaper foreign labor costs also play a role, dumping is a continuing issue in other industries, including autos, steel and, most recently, electronic typewriters.

When a manufacturer complains about dumping, the Commerce Department investigates, and the International Trade Commission determines whether the U.S. companies have been injured. If damage can be proved, the government imposes heavy duties on the imports to erase their price advantage.

In the clutch bearing case, Federal-Mogul Corp. in Detroit and the Torrington Co. in Connecticut charged in 1988 that companies in Germany, Japan, England, Singapore, Sweden and France were dumping auto bearings.

In November 1988, the government agreed and imposed anti-dumping duties that ranged from 50 percent to 120 percent.

Almost immediately, a U.S. Customs Service import specialist in Baltimore spotted several shipments of clutch release bearings.

Clutch release bearings are steel discs the size of small saucers. They allow the clutch mechanisms on manual transmissions to spin freely with the engine when the clutch pedal is depressed. ** They retail for $20 to $50 at auto parts stores.

These bearings belonged to Sachs Automotive Products in Westlake, Ohio, a subsidiary of Fichtel & Sachs AG, of Schweinfurt, Germany.

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