Member of Largest Counterfeit Goods Conspiracy Ever Charged Sentenced to 46 Months in Prison

NEWARK—A member of a massive, international counterfeit goods conspiracy was sentenced today to 46 months in prison for his role in the scheme, U.S. Attorney Paul J. Fishman announced.

Ming Zheng, a/k/a “Uncle Mi,” 48, of New York, previously pleaded guilty before U.S. District Judge Esther Salas to an information charging him with a conspiracy to launder money. Judge Salas imposed the sentence today in Newark federal court.

According to documents filed in this case and statements made in court:

From November 2009 through February 2012, Zheng’s co-defendants ran one of the largest counterfeit goods smuggling and distribution conspiracies ever charged by the Department of Justice. The defendants and others conspired to import hundreds of containers of counterfeit goods—primarily handbags, footwear, and perfume—from China into the United States in furtherance of the conspiracy. These goods, if legitimate, would have had a retail value of more than $300 million.

Zheng was a money launderer who was introduced to undercover special agents (collectively, the UCs) by co-defendants who were running the counterfeiting operation. Conspirators obtained cash from the UCs, purportedly the proceeds of gambling and other unlawful activities. These other conspirators then provided the money to Zheng. For every $50,000 in cash the UCs provided, Zheng and others would return approximately $42,500—via wire transfers from banks in China—into a bank account set up by the UCs. When other conspirators received money from the UCs to be laundered, one of the conspirators would then contact Zheng, who in turn contacted a Chinese-based conspirator, and transferred the money to locations in China. Then the money (less the laundering fee) was transferred from Fujian, China, to a bank in Guangzho, China, where it was subsequently withdrawn and physically transported via courier to a bank in Hong Kong. The final transfer was from the bank in Hong Kong to the UCs’ bank account. Zheng was therefore instrumental in each of the money laundering transactions—he received the cash from other conspirators and caused it to be transferred overseas in furtherance of the laundering process.

U.S. Attorney Fishman praised special agents of Immigration and Customs Enforcement, Homeland Security Investigations (ICE-HSI), under the direction of Special Agent in Charge Andrew M. McLees, and special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to today’s sentencing.

The government is represented by Assistant U.S. Attorneys Andrew Pak and Zach Intrater of the Computer Hacking and Intellectual Property section of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark and Nicholas Grippo of the U.S. Attorney’s Office in Trenton.

Last Defendant Sentenced for Counterfeiting Guitars

PHILADELPHIA—Randy Gray, 27, of Fort Worth, Texas, was sentenced today for his role in a scheme to traffic in counterfeit guitars carrying the marks of C.F. Martin and Company Guitars, Guild Guitars Incorporated, and Gibson Guitar Corporation. The counterfeit goods bore marks that were identical with and substantially indistinguishable from genuine marks in use and registered for those goods on the principal register in the United States Patent and Trademark Office and which are found on genuine guitars and the use of which was meant to deceive. The scheme resulted in 165 counterfeit guitars being sold to unsuspecting pawn shops, which paid a total of approximately $56,000 for the items.
Gray is one of four defendants charged in the case, each of whom pleaded guilty. In addition to one day in jail and three years of supervised release, the judge ordered the following: Gray was ordered to pay $7,617 in restitution; co-defendant Bruce Alford, 41, of Fort Worth, Texas, was ordered, on December 5, 2013, to pay $8,701 in restitution and a $100 special assessment; co-defendant Josh Davis, 39, of Galveston, Texas, was ordered, on January 15, 2014, to pay $22,047.60 in restitution and serve six months of home confinement; and co-defendant Romeo Rondeau, 44, of Fort Worth, Texas, was ordered, on November 7, 2013, to pay $7,133.93 in restitution and serve six months of home confinement.
The case was investigated by the FBI-Allentown Resident Agency and was prosecuted by Assistant United States Attorney John Gallagher.

Member of Massive Counterfeit Goods Conspiracy Sentenced to 38 Months in Prison

NEWARK—A member of a massive, international counterfeit goods conspiracy was sentenced today to 38 months in prison for his role in the scheme, U.S. Attorney Paul J. Fishman announced.
Ning Guo, 40, of the People’s Republic of China, previously pleaded guilty before U.S. District Judge Esther Salas to an information charging him with one count of conspiracy to traffic in counterfeit goods and one count of money laundering conspiracy. Judge Salas imposed the sentence today in Newark federal court.
Two other conspirators have already been sentenced, and two await sentencing. Yi Jian Chen, 53, and Hui Huang, 33, both of Brooklyn, each previously pleaded guilty to one count of conspiracy to traffic in counterfeit goods and await sentencing. Jian Zhi Mo, 45, of Flushing, New York, and Yuan Feng Lai, 28, of New York City, each previously pleaded guilty to one count of conspiracy to traffic in counterfeit goods and were each sentenced to 14 months of home confinement.
According to documents filed in this case and statements made in court:
From August 2008 through February 2012, the defendants ran an international counterfeit goods smuggling and distribution conspiracy. The defendants and others imported more than 35 containers of counterfeit goods—primarily cigarettes, handbags, and sneakers—into the United States from China. These goods, if legitimate, would have had a retail value of more than $300 million.
The conspirators sought help in importing counterfeit goods into the United States and used a corporation to import the goods through Port Newark-Elizabeth Marine Terminal in Elizabeth, New Jersey. This corporation was actually a front company set up by law enforcement to act as an importer. The conspirators imported the counterfeit goods using fraudulent customs paperwork, which, among other things, falsely declared the goods within the containers.
Certain conspirators controlled the importation of the counterfeit goods into the United States. Some conspirators managed the distribution of counterfeit goods once they arrived in the United States. Others paid individuals they believed controlled an importation company with connections at the port. In fact, these individuals were undercover law enforcement agents.
Some conspirators acted as wholesalers for the counterfeit goods, supplying retailers who sold counterfeit goods to customers in the United States. A number of conspirators, including Guo, also engaged in a money laundering conspiracy to disguise and conceal the source of what they believed to be the profits of certain unlawful activity, moving this money through banks in the United States, China, and elsewhere to disguise the sources of the funds.
Law enforcement introduced several undercover special agents to the conspirators. These undercover agents purported to have connections at the port, which allowed them to obtain containers that were on hold, get them released, and pass them through to the conspirators. The conspirators paid the undercover agents more than $900,000 for these “services.”
Undercover agents recorded dozens of phone calls and in-person meetings with various conspirators. The investigation also utilized several court-authorized wiretaps of telephones and electronic communications.
Guo’s primary role was to transport and store imported counterfeit merchandise for the conspirators after it arrived at the port. He was also involved in the actual importation of the goods from China. Guo communicated with the undercover agents in numerous recorded calls and meetings about importing counterfeit goods from China and clearing the goods through customs. Guo was also involved in an international money laundering scheme through which he and others laundered the proceeds of the counterfeit goods smuggling scheme.
In addition to the prison term, Guo is subject to deportation.
U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, and special agents of Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Andrew M. McLees, for the investigation leading to today’s sentencing.
The government is represented by Assistant U.S. Attorneys Andrew Pak and Zach Intrater of the Computer Hacking and Intellectual Property section of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark and Nicholas Grippo of the U.S. Attorney’s Office in Trenton.

Florida Man Charged in Federal Counterfeit Case for Trafficking Bogus Automotive Devices ‘Reverse Engineered’ in China

LOS ANGELES—A Florida man was charged today with trafficking in counterfeit electronic engine control devices manufactured and marketed by a Southern California company for use in modified Honda and Acura vehicles.
Marc Heera, 24, of Sunrise, Florida, was charged with one count of trafficking in counterfeit goods, an offense that carries a statutory maximum penalty of 10 years in federal prison. The charge is contained in a criminal information filed this morning in United States District Court.
Federal prosecutors today also filed a plea agreement in which Heera agreed to plead guilty to the felony offense of selling counterfeit circuit boards that are installed in engine control units to boost performance. In the plea agreement, Heera admits that he reverse-engineered, manufactured, advertised, and sold approximately 86 counterfeit Hondata K-Pro and S300 devices, which are aftermarket devices manufactured and sold by the Torrance-based Hondata Inc.
In the plea agreement, Heera admits that, beginning in 2009, he arranged for Hondata’s K-Pro and S300 devices to be reverse-engineered. Investigators believe that Heera had the devices reverse engineered in China, and he then paid an unknown Chinese company to build some of the devices. Heera also manufactured counterfeit circuit boards at his workplace, which contained Hondata’s proprietary software. The counterfeit devices bore Hondata’s trademarked name, as well as counterfeit serial numbers. Heera also admitted creating counterfeit packaging, labels, instructions, and compact discs for the devices.
Heera, using the online screen name Maddman7887, then advertised and sold the counterfeit K-Pro and S300 devices over the Internet, he admitted in the plea agreement. To avoid detection, Heera installed the counterfeit K-Pro devices into used ECUs or instructed the customers to send their ECUs to him for installation. Heera specifically admitted selling 62 counterfeit K-Pro devices and 24 counterfeit S300 devices, generating approximately $58,000 in income. If the products had been genuine, they would have had a retail value of approximately $74,000.
Heera has agreed to appear in federal court in Los Angeles for an arraignment on March 24.
The investigation in this matter was conducted by the Federal Bureau of Investigation.

Wine Dealer Rudy Kurniawan Convicted in Manhattan Federal Court of Creating and Selling Millions of Dollars in Counterfeit Wine

Preet Bharara, the United States Attorney for the Southern District of New York, announced that wine dealer Rudy Kurniawan was found guilty today by a jury in Manhattan federal court for engaging in a scheme to manufacture and sell counterfeit bottles of purportedly rare and expensive wine for millions of dollars. Kurniawan was also convicted of a scheme to fraudulently obtain a $3 million loan from a financing company. He was convicted following a one-week jury trial before U.S. District Judge Richard Berman.
Manhattan U.S. Attorney Preet Bharara said, “Rudy Kurniawan perpetrated a vintage fraud scheme, not only peddling counterfeit wine, but concocting, bottling, and labeling what he foisted on his victims. As the jury found in its verdict today, Kurniawan was also the author of a fictional tale that enabled him to defraud a lender out of $3 million. He now stands to pay for his fraud with time behind bars in a federal prison.”
According to evidence at trial and documents previously filed in Manhattan federal court:
The Counterfeit Wine Scheme
Kurniawan has been a collector of fine and rare wines and rose to become one of the most prominent and prolific dealers in the United States of purportedly rare and expensive wine. From 2004 through 2012, he engaged in a systematic scheme to defraud wine collectors and others by selling and attempting to sell numerous counterfeit bottles of purportedly rare and expensive wine. Kurniawan manufactured counterfeit bottles of rare and vintage wine at his home in Aracadia, California, operating what was, in effect, a counterfeit wine laboratory. Kurniawan mixed and blended lower-priced wines so that they would mimic the taste and character of rare and far more expensive wines; poured his creations into empty bottles of rare and expensive wines that he procured from various sources; and created a finished product by sealing the bottles with corks and outfitting the bottles with counterfeit wine labels he created. Kurniawan then sold and attempted to sell these counterfeit bottles of wine at auctions and in direct sales to wealthy wine collectors. Kurniawan earned millions of dollars through the sale of these counterfeit bottles of wine.
The Scheme to Defraud a Lender
Kurniawan also devised and carried out a scheme to fraudulently obtain a $3 million loan from a financing company located in New York City that specialized in extending loans that are secured by valuable collectibles, such as art and wine. Kurniawan obtained the loan by providing false information to, and concealing material information from, the financing company, including falsely omitting approximately $7.4 million in outstanding loans, falsely representing his annual expenses, and falsely representing that he was a permanent resident of the United States when he had no legal immigration status in the United States and had, in fact, been ordered by an immigration court to leave the country years earlier.

* * *

Kurniawan, 37, of Arcadia, California, was convicted of one count of mail fraud, which carries a maximum sentence of 20 years in prison, and one count of wire fraud, which also carries a maximum sentence of 20 years in prison.
Mr. Bharara praised the outstanding work of the FBI’s Art Crime Team and its New York and Los Angeles Field Offices.
This case is being handled by the Office’s Complex Frauds Unit. Assistant U.S. Attorneys Jason P. Hernandez and Joseph Facciponti are in charge of the prosecution.

Nine Admit Guilt in Largest Counterfeit Goods Conspiracy Ever Charged

NEWARK, NJ—Nine members of a massive, international counterfeit goods conspiracy have admitted their roles in the scheme, U.S. Attorney Paul J. Fishman announced.
Hai Dong Jiang, 37, and Fei Ruo Huang, 37, both of Staten Island, New York; Hai Yan Jiang, 34, of Richardson, Texas; Xiance Zhou, 39, and Jian Chun Qu, 33, both of Bayside, New York; and Ming Zheng, 48, of New York, pleaded guilty today before U.S. District Judge Esther Salas in Newark federal court. Dong Jiang, Ruo Huang, and Yan Jiang pleaded guilty to informations charging them each with one count of conspiracy to traffic in counterfeit goods. Xiance Zhou and Qu pleaded guilty to informations charging them each with one count of conspiracy to structure money. Zheng pleaded guilty to an information charging him with a conspiracy to launder money.
Wei Qiang Zhou, 38, of Brooklyn, New York, pleaded guilty December 3, 2013; Patrick Siu, 41, of Richardson, Texas, pleaded guilty December 4, 2013; and Da Yi Huang, 43, of Staten Island, pleaded guilty December 11, 2013, all before Judge Salas in Newark federal court, to informations charging them each with one count of conspiracy to traffic in counterfeit goods.
According to documents filed in this case and statements made in court:
From November 2009 through February 2012, the defendants ran one of the largest counterfeit goods smuggling and distribution conspiracies ever charged by the Department of Justice. The defendants and others conspired to import hundreds of containers of counterfeit goods—primarily handbags, footwear, and perfume—from China into the United States in furtherance of the conspiracy. These goods, if legitimate, would have had a retail value of more than $300 million.
The counterfeit goods were manufactured in China and smuggled into the United States through containers fraudulently associated with legitimate importers, with false and fraudulent shipping paperwork playing a critical role in the smuggling scheme. Some of the conspirators created and managed the flow of false shipping paperwork between China and the United States and supervised the importation of counterfeit goods, and others controlled the importation of the counterfeit goods into the United States.
Other conspirators managed the distribution of counterfeit goods once those goods arrived in the United States. After importation, the counterfeit goods were delivered to warehouses and distributed throughout New York, New Jersey, and elsewhere. Certain conspirators paid large amounts of cash to undercover law enforcement officers to assist in the removal of counterfeit goods from the port.
Some conspirators acted as wholesalers for the counterfeit goods, supplying retailers who sold counterfeit goods to customers in the United States. Other conspirators were money structurers who arranged for cash to be wired to China in amounts small enough to avoid applicable financial reporting requirements to evade detection of the smuggling scheme and related proceeds.
Law enforcement introduced several undercover special agents (collectively, the UCs) to the conspirators. The UCs purported to have unspecified “connections” at the port, which allowed the UCs to release containers that were on hold and pass them through to the conspirators. The conspirators paid the UCs for these “services.” In total, during the course of this investigation, the conspirators provided the UCs more than $2 million.
UCs recorded dozens of phone calls and in-person meetings with various conspirators. The investigation also utilized several court-authorized wiretaps of telephones and electronic communications.
Roles of the individual defendants:

• Patrick Siu, a/k/a “Sam Huang,” facilitated the importation and distribution of counterfeit goods, by serving as the “hub” for communications between customs brokers, UCs, and the conspirators. Siu sent false and fraudulent shipping documents to UCs and customs brokers (including by interstate and international faxes and e-mails); engaged in conversations with UCs, customs brokers, and other conspirators in furtherance of the smuggling scheme; and created or caused to be created false and fraudulent identification documents.
• Hai Dong Jiang, a/k/a “Jimmy,” a/k/a “Dong,” served as one of the directors of the smuggling scheme. Dong Jiang ordered counterfeit merchandise from China; negotiated shipments of counterfeit goods from China; arranged for payment for that merchandise; and supervised the distribution of that merchandise in and around the New York/New Jersey area.
• Hai Yan Jiang, a/k/a “Yan,” served as one of the directors of the smuggling scheme. Yan Jiang made decisions regarding what kind of counterfeit goods should be manufactured; arranged for payment for counterfeit merchandise; supervised the distribution of that merchandise in and around the New York/New Jersey area; and interacted with wholesalers of counterfeit goods by arranging payments by the wholesalers to the directors of the scheme.
• Fei Ruo Huang, a/k/a “Emily,” a/k/a “Ah Yue,” was another director of the smuggling scheme. Ruo Huang coordinated the distribution of counterfeit merchandise once it arrived in the New York/New Jersey area. Ruo Huang directed merchandise to warehouses, where it was stored and then delivered to wholesalers.
• Da Yi Huang, a/k/a “Boss,” a/k/a “Da Nian,” was another director of the smuggling scheme. Da Yi negotiated pricing for counterfeit merchandise; made payments for the counterfeit merchandise; and participated in deciding which counterfeit products should be ordered from China.
• Wei Qiang Zhou’s primary role was to assist other conspirators in arranging for transportation of counterfeit merchandise.
• Xiance Zhou and Jian Chun Qu’s primary roles were to wire proceeds obtained from the smuggling scheme to accounts in China. Conspirators in the scheme dropped off large sums of money to Xiance Zhou and Qu and others—sums far in excess of $10,000 at a time. Xiance Zhou and Qu then divided these large sums into amounts of less than $10,000, deposited them into accounts they controlled to evade reporting requirements, and wired the money—in increments of less than $10,000—to China and elsewhere.
• Ming Zheng, a/k/a “Uncle Mi,” was a money launderer. Other conspirators obtained cash from UCs, which was purportedly the proceeds of gambling and other unlawful activities. These other conspirators then provided the money to Zheng. For every $50,000 in cash the UCs provided, Zheng and others would return approximately $42,500—via wire transfers from banks in China—into a bank account set up by the UCs. When other conspirators, including Ning Guo, received money from the UCs to be laundered, he would then contact Zheng, who in turn contacted a Chinese-based conspirator, and transferred the money to locations in China. Then, the money (less the laundering fee) was transferred from in Fujian, China, to a bank in Guangzho, China, where it was subsequently withdrawn and physically transported via courier to a bank in Hong Kong. The final transfer was from the bank in Hong Kong to the UCs’ bank account. Zheng was therefore instrumental in each of the money laundering transactions—he received the cash from other conspirators and caused it to be transferred overseas in furtherance of the laundering process.

The conspiracy to traffic in counterfeit goods count to which Da Yi Huang, Hai Dong Jiang, Hai Yan Jiang, Fei Ruo Huang, Patrick Siu, and Wei Qiang Zhou pleaded guilty is punishable by a maximum potential penalty of 10 years in prison and a fine of $2 million. The money laundering count to which Zheng pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a fine of $500,000 or twice the gain or loss caused be the offense. The structuring conspiracy to which Zhou and Qu pleaded guilty is punishable by a maximum potential penalty of five years in prison and a fine of $250,000. Sentencing for Siu and Qiang Zhou is scheduled for March 17, 2014. Sentencing for Qu, Zhou, and Zheng is scheduled for March 24, 2014. Sentencing for Hay Yan Jiang, Hai Dong Jiang, and Fei Ruo is scheduled for March 25, 2014.
U.S. Attorney Fishman praised special agents of Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), under the direction of Special Agent in Charge Andrew M. McLees, and special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford, for the investigation leading to the guilty pleas.
The government is represented by Assistant U.S. Attorneys Andrew Pak and Zach Intrater of the Computer Hacking and Intellectual Property section of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark and Nicholas Grippo of the U.S. Attorney’s Office in Trenton.