WASHINGTON – Three defendants pleaded guilty today to charges of conspiracy, smuggling, Lacey Act violations, money laundering and tax fraud for their roles in the international illegal trafficking of rhinoceros horn. All of the defendants were charged in February 2012 as part of “Operation Crash,” a nationwide U.S. Fish and Wildlife Service crackdown on those involved in the black market trade of endangered rhinoceros horn.
The guilty pleas were announced by Ignacia S. Moreno, Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice; André Birotte Jr., U.S. Attorney for the Central District of California; and Dan Ashe, Director of the Department of the Interior’s U.S. Fish and Wildlife Service (FWS).
Vinh Chung “Jimmy” Kha, 49, and Felix Kha, 26, both of Garden Grove, Calif., each pleaded guilty to five felony counts related to their roles in the smuggling conspiracy. Win Lee Corp., owned by Jimmy Kha, pleaded guilty to two felony counts charging smuggling and Lacey Act trafficking.
Two other defendants linked to the Khas – J in Zhao Feng, 45, of China and Jarrod Wade Steffen, 32, of Hico, Texas – previously pleaded guilty to federal charges in Los Angeles related to rhino horn trafficking.
In their plea agreements, Jimmy and Felix Kha each admitted purchasing White and Black rhinoceros horn in interstate and intrastate commerce, knowing that animals were protected by federal law as endangered and threatened species. Both defendants stated that they purchased the horns in order to export them overseas to be sold and made into libation cups or traditional medicine. Both acknowledged making payments to Vietnamese customs officials to ensure clearance of horn shipments sent to that country. In addition, Jimmy and Felix Kha each admitted to failing to pay income tax owed in 2009 and 2010.
In an earlier plea agreement, which was filed with the court on Aug. 15, 2012, Feng admitted to fraudulently and knowingly attempting to smuggle a black rhinoceros horn, an endangered species, from the United States to China. Steffen, who used money provided by the Khas to buy horns for them, pleaded guilty on June 14, 2012, to charges of conspiracy, smuggling, Lacey Act violations and money laundering.
“The Khas conspired to violate numerous federal laws, including those enacted by Congress to protect endangered species like the rhinoceros, a species that faces extinction in our time,” said Assistant Attorney General Ignacia S. Moreno. “This prosecution and continuing investigation should send a clear message that we will vigorously investigate and prosecute those who are involved in this egregious and illegal trade.”
“It is unconscionable that a species as ancient and majestic as the African Black Rhino has been hunted to the brink of extinction by unscrupulous profiteers,” said U.S. Attorney André Birotte Jr. “The rhino horn smuggling ring dismantled by Operation Crash contributed to the soaring increase in the trade of rhino horns both domestically and internationally and this illegal trade leads directly to increased poaching of the species in the wild. Operation Crash represents a giant step forward in the global fight to save a beautiful species like the Black Rhino from extinction.”
“These individuals were interested in one thing and one thing only – making money,” said FWS Director Dan Ashe. “They didn’t care about the law or about driving a species to the brink of extinction. We will continue to aggressively investigate and pursue traffickers who threaten the future of rhinos and other imperiled species.”
Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth. They have no known predators other than humans. All species of rhinoceros are protected under United States and international law, and all black rhinoceros species are endangered.
Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets. Nevertheless, the demand for rhinoceros horn and black market prices have skyrocketed in recent years due to the value that some cultures have placed on ornamental carvings, good luck charms or alleged medicinal purposes, leading to a decimation of the global rhinoceros population. As a result, rhino populations have declined by more than 90 percent since 1970. South Africa, for example, has witnessed a rapid escalation in poaching of live animals, rising from 13 in 2007 to a record 448 rhinos in 2011. As of Aug. 27, the total for 2012 stood at 339 rhinos, with a predicted loss of 515 by year end if current poaching rates continue.
Operation Crash (named for the term used to describe a herd of rhinoceros) is an ongoing effort to detect, deter and prosecute those engaged in the illegal killing of rhinoceros and the unlawful trafficking of rhinoceros horns. The investigation is being led by the Special Investigations Unit of the FWS Office of Law Enforcement and involves a nationwide task force of FWS special agents focused on rhino trafficking.
The first superseding information, plea agreements and statements made during court proceedings document the following facts:
During the conspiracy, beginning in January 2010 and continuing to February 2012, Felix Kha would contact Steffen and others regarding individuals located throughout the United States who were willing to sell white or black rhinoceros horn. On various dates, Jimmy Kha met with others who traveled to Long Beach, Calif., from various locations to provide compensation for previous rhinoceros horn purchases and shipments and to provide money to fund future purchases and shipments of rhinoceros horn. Jimmy and Felix Kha received, bought, sold and facilitated the transportation of black rhinoceros horn, prior to exportation, knowing that such rhinoceros horn was intended for exportation and that it was illegal under U.S. law to do so. Jimmy Kha paid, on average, between $5,000 to $7,000 per pound of rhinoceros horn. The black and white rhinoceros horn acquired by the defendants has a fair market value between, at a minimum, $1 million to $2.5 million.
Feng attempted to export a black rhinoceros horn, which he had obtained from the Khas, from the U.S. to China, by concealing the horn at the bottom of a package. The package, which was deposited with the U.S. Postal Service, contained a single black rhinoceros horn concealed under a layer of chocolates, cigarettes, biscuits, candy, sponges and packing materials. F eng falsely declared on a U.S. Postal Service Customs Declaration that the package contained “handcraft decorations” with a value of $25, “chocolate” with a value of $46, and “candy” with a value of $15.
As a supplier for the Khas, Steffen bought and mailed dozens of rhino horns to the pair and made at least 10 trips to California to pick up payment and collect money for additional purchases. On the last of these trips, Transportation and Security Administration officers, acting at the FWS’s request, stopped Steffan and two travel companions at the airport in Long Beach before they boarded their homebound flight and retrieved $337,000 from their luggage.
In February 2012 at the time of the arrest of Jimmy and Felix Kha, FWS agents seized, among other items, rhinoceros mounts, rhinoceros horns, an additional $1 million in cash, approximately $1 million in gold ingots, jewelry, watches, precious stones, a 2009 BMW 759 Li Sedan and a 2008 Toyota Forerunner.
Jimmy and Felix Kha each pleaded guilty to one count of conspiracy (maximum penalty of five years in prison), one count of smuggling goods from the United States (maximum penalty of ten years in prison), one count of Lacey Act trafficking (maximum penalty of five years in prison), one count of money laundering (maximum penalty of twenty years in prison), and one count of tax evasion (maximum penalty of five years in prison). Win Lee Corp. faces additional penalties, including fines totaling up to $1 million. Under the terms of their plea agreements, all of the items recovered from their residence, person, and Jimmy Kha’s business will be forfeited. In addition, Felix Kha will pay a tax fraud penalty and assessment of approximately $109,000, and Jimmy Kha will pay a tax fraud penalty and assessment of $76,000.
Jimmy and Felix are scheduled to be sentenced by U.S. District Judge Christina A. Snyder on Dec. 10, 2012 at 2:30 p.m. Feng will be sentenced on Oct. 10, 2012, and Steffen will be sentenced on Oct. 15, 2012.
U.S. Attorney Birotte Jr. and Assistant Attorney General Moreno commended FWS and its partners for their outstanding work on this investigation. Assisting agencies included the U.S. Postal Inspection Service, the Internal Revenue Service Criminal Investigations, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
The case is being handled by the U.S. Attorney’s Office for the Central District of California and the Environmental Crimes Section of the U.S. Department of Justice’s Environment and Natural Resources Division. Assistant U.S. Attorneys Joseph O. Johns and Dennis Mitchell and Shennie Patel, a Trial Attorney with the Environmental Crimes Section, are in charge of the prosecution.