The evasive Mexican tire importer

by Mark Horstman, IA Group

A significant tire producer in South Korea shipped an order of USD 800.000 worth of car tires to Mexico. The invoices, however, remained unpaid. The South Korean tire producer requested IA’s office in Mexico to start an investigation to collect the outstanding debt.

IA’s investigators contacted the debtor, but the company seemed to be closed down; its phone numbers and email addresses were out of service. A further investigation showed that the Mexican company had established their entity only one year earlier with minimum capital required by law to be formally registered as an active business.

IA’s contacts at Mexico’s customs department confirmed that the debtor had not imported any goods after receiving the large tire order from South Korea. It appeared that the company had been set up for only a limited number of transactions and then informally closed shop, a common practice in Latin America.

IA’s lawyers visited the debtor’s two known addresses. One was located in Mexico City’s financial district and appeared to have only been briefly rented as a ‘virtual office space’ and had suddenly disappeared, still owing various months of rent. In another state, their second known address was a warehouse that the Mexican company had abandoned for over six months. IA found the names of the warehouse’s owners in the public register. Having visited them, they released the name of one of the debtor’s owners to our investigators.

After tracking down the owner, IA’s lawyers visited him, but he refused to cooperate. He denied any involvement and evaded all subsequent contact attempts. As debtor was ‘evasive ’ and not a ‘friendly’ (cooperating) debtor, IA’s investigators proceeded with Plan B.

The recovery operation started with research into public records in multiple cities and states, which discovered another company related to the same owner, IA’s team further found that the owner continued importing and selling car tires under a different name in another state. With this information, IA prepared a surprise visit...

IA’s team approached the owners of the second company. It was clear that their failure to cooperate would jeopardize their current business and would risk high legal fees and fines due to IA’s actions to file suit for fraudulent transactions through the debtor company. They were quick to accept IA’s lawyers’ offer to negotiate a deal.

IA had them settle for full payment of the USD 800.000 debt in 12 monthly installments to the Korean tire producer. This file was successfully closed.