Nine Admit Guilt in Largest Counterfeit Goods Conspiracy Ever Charged
|U.S. Attorney’s Office December 13, 2013|
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.