| Importer of Clothes From
China Bailey Has February 3 Trial Date But One
Less Employee
By Matthew
Russell Lee
SDNY COURTHOUSE,
Nov 15 – A businessman accused
of defrauding the U.S.
government of over $1 million
in customs fees on children's
clothing from China, Joseph
Bailey, on June 6 was brought
in shackles into the U.S.
District Court
for the
Southern
District of
New York Magistrates
Court. Inner City Press was
the only media there.
The
government agreed to a $1
million bond; his wife Lisa
and his nearly identical son
Morris, in the gallery, were
given his medicines in a
plastic bag.
Since
then, the case has been
repeatedly adjourned, with the
adjournment memo-endorseds
being virtual the only
documents in the docket: from
June to September, from
September to October, and and
October to November 13 at 3:30
pm. Inner City Press went to
this long delayed conference
before SDNY Judge William H.
Pauley, with only one other
person in the gallery, and
heard Bailey's attorney ask
for permission for Bailey to
travel to Florida for
Thanksgiving.
But now a
trial date has been set by
Judge Pauley: February 3,
2020, with all 404B material
to be produced by January 13
and a final pre-trial
conference on January 31. What
are Bailey's defenses? What
will the exhibits be? Bailey's
September 4 letter for an
adjournment referred over 16
gigabytes of discovery
material. Inner City Press
will stay on this case,
include as motions are filed.
The case is US v. Bailey,
19-cr-412 (Pauley). And here
are the details: "Minute Entry
for proceedings held before
Judge William H. Pauley,
III:Status Conference as to
Joseph Bailey held on
11/13/2019 ( Replies due by
1/31/2020., Responses due by
1/24/2020, Final Conference
set for 1/31/2020 at 02:00 PM
before Judge William H. Pauley
III.) Defendant present with
attorneys Sharon McCarthy,
Esq. and Michael Sardar, Esq.
AUSAs Dina McLeod and Dominika
Tarczynska present. Court
Reporter present. Defense to
file motions by December 13,
2019. Government to file
opposition by January 6, 2020.
Reply due by January 15, 2020.
Parties to file joint request
to charge by January 29, 2020.
Government to provide 404(b)
material by January 13, 2020.
Motions in Limine due by
January 17, 2020. Opposition
due by January 24, 2020. Reply
due by January 31, 2020. Final
Pretrial Conference scheduled
for January 31, 2020 at 2:00
p.m. Jury selection and trial
scheduled for February 3,
2020." Watch this site.
Some, or
at least one, who worked for
Bailey before his arrest find
it important to point out they
are no longer there. Inner
City Press received such a
call and dropped a name from
the story. Then a second call.
So we run this, from "Erica
Rothbard... You wrote an
article about Joseph Bailey
and the customs fraud
case. I am mentioned in
that article as still being
employed by Joseph
Bailey. I have not been
with the company since July
and I do not want to be
associated with his
crimes. can you please
retract my name from this
article?" Had already done it
before the second call; but if
the desire it to go further,
now it's done.
Meanwhile,
at least as of 6 pm on
November 13, Bailey remains listed as CEO of
Stargate, along with Eli
Serouya; [then was the name of
a person who has written to
Inner City Press to say they
left the firm as soon as
Bailey was arrested; Serouya
and Greco have apparently
remained] and Clemy Greco:
"Joseph is 2nd generation in
the apparel industry. He
learned the business from the
ground up, including packing
boxes and loading trucks. When
he was 17 he took his first
trip overseas to learn the ins
and outs of apparel sourcing.
The Bailey family was one of
the apparel pioneers in China
and Bangladesh; before they
became major exporters. Joseph
has extensive experience in
outerwear, swim, denim,
layette and sportswear. He
also has experience in sales,
merchandising and sourcing and
travels overseas extensively
to find the best fabrics for
the best product and cost."
Cost - ah, there's the rub.
Back on June 6
there was a brief dispute
before Magistrate Judge
Gabriel W. Gorenstein about
about Bailey's passport, set
to expire in six months. His
lawyer said he might need to
hold on to it to apply for a
new one. The government did
not impose its usual "no new
applications" condition, but
did request that the still
valid but expiring passport be
turned over unless Bailey
needs it for an interview for
renewal.
He
was allowed to go renew it,
with a lawyer from Kostelanetz
& Fink.
After the
presentment the U.S.
Attorney's Office issued a
press release, including: "The
conduct in this matter was
first brought to the attention
of federal law enforcement by
a whistleblower who filed a
lawsuit under the False Claims
Act.... From in or about 2007
to in or about 2015, BAILEY
and other employees of
STARGATE engaged in a scheme
fraudulently to understate the
value of goods imported into
the United States.
During the charged time
period, STARGATE purchased
much of its merchandise from a
manufacturer located in China
(“Manufacturer-1”).
Starting shortly after
STARGATE began doing business
with Manufacturer-1 in 2007,
through approximately 2010,
BAILEY and others at STARGATE
engaged in a double-invoicing
scheme by which STARGATE would
receive two sets of invoices
from Manufacturer-1 for the
same shipment of goods.
One invoice, referred to as
the “pay by” invoice, was
significantly higher and
reflected the actual price
paid by STARGATE for the
goods. The second
invoice reflected a
significantly lower price for
the goods and was presented to
CBP. This allowed
STARGATE to pay a fraudulently
lower amount of customs
duties.
In approximately
2010, BAILEY and other
employees of Stargate began a
new variation of the customs
fraud scheme, involving
invoices for “sample” goods,
by which Manufacturer-1 would
send two separate sets of
invoices for a given shipment
that together reflected the
true price STARGATE actually
paid to Manufacturer-1 for a
particular shipment of
clothing. The first
invoice, typically entitled
the “commercial invoice,”
described the goods purchased
and was submitted to
CBP. The second invoice
purportedly reflected amounts
paid by STARGATE for “sample”
goods and was not submitted to
CBP. Sample goods are
not subject to customs
duties.
BAILEY is
charged with one count of
conspiracy to commit wire
fraud, which carries a maximum
sentence of 20 years in
prison, one count of wire
fraud, which carries a maximum
sentence of 20 years in
prison, and one count of
falsely effecting the entry of
goods into the United States,
which carries a maximum
sentence of two years.
The maximum potential
sentences in this case are
prescribed by Congress and are
provided here for
informational purposes only,
as any sentencing of the
defendant will be determined
by the judge. BAILEY,
STARGATE, and RIVSTAR are also
charged with civil claims
under the False Claims Act,
through which the Government
may recover treble damages and
civil penalties arising from
his conduct."
But how
much might the whistleblower
get? Watch this site, @InnerCityPress
and the new @SDNYLIVE.
***
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