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Press Release

East Bay CEO And Corporation Plead Guilty To $5.4 Million Wire Fraud Conspiracy

For Immediate Release
U.S. Attorney's Office, Northern District of California

OAKLAND – David Tung and Concord Farms, Inc. pleaded guilty in federal court in Oakland today to conspiracy to commit wire fraud and wire fraud, announced Acting United States Attorney Brian J. Stretch and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan Spradlin.

In pleading guilty, Tung, 73, formerly of Hillsborough, admitted that while serving as Concord Farms’ Chief Executive Officer, he conspired to carry out a scheme to defraud the United States out of approximately $5.4 million of duties owed on imported items, namely produce items such as gourmet mushrooms.  On its website, Concord Farms, based in Union City, once claimed to be one of the largest importers and growers of gourmet mushrooms in the United States, with multiple business locations operating in California and New York.

Duties are taxes assessed on the value of imported items.  The duties accrue when the items arrive at a United States port of entry. 

Tung and Concord Farms carried out the scheme by creating fraudulent invoices that undervalued Concord Farms’ imports and then caused those fraudulent invoices to be transmitted through unknowing customs brokers to the U.S. Customs and Border Protection (CBP), who relied on the invoices in assessing the amount of import duties owed by the defendants.  In order to carry out part of the scheme, Tung conspired with a Concord Farms employee to use computer file templates and photocopy machines to create some of the fraudulent undervalued invoices that were transmitted to CBP.  Through the scheme, Tung and Concord Farms were able to avoid the full payment of duties actually owed on the imported items since approximately 2001.

Tung and Concord Farms were indicted by a federal Grand Jury on January 29, 2015.  They were charged with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and with ten counts of wire fraud, in violation of 18 U.S.C. § 1342.  Under the plea agreement, Tung and Concord Farms pleaded guilty to conspiracy to commit wire fraud and to one substantive count of wire fraud. 

Tung is currently released on a bond in the amount of $250,000.

The defendants’ sentencing hearing is scheduled for May 6, 2016, at 9:30 a.m. before the Honorable Jon S. Tigar, U.S. District Judge, in Oakland.  Tung faces a maximum statutory penalty of 20 years in prison, and a fine of $250,000, plus restitution for each alleged violation of 18 U.S.C. § 1349 (conspiracy to commit wire fraud) and 18 U.S.C. § 1343 (wire fraud).  Concord Farms faces a fine of $500,000 and five years of probation for each alleged violation.  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Wade M. Rhyne is prosecuting the case with the assistance of Katie Turner and Noble Hughes.  The prosecution is the result of an investigation by the Department of Homeland Security, Homeland Security Investigations.

Updated April 19, 2017

Topics
Financial Fraud