Houston Importer Convicted of Trafficking in Counterfeit Merchandise (July 20, 2004)
DOJ Seal
July 20, 2004

Department Of Justice
Southern District of Texas
United States Attorney
Michael T. Shelby
John Yembrick
Public Affairs Specialist
(212) 637-2600

Houston Importer Convicted of Trafficking in Counterfeit Merchandise

Contact AUSA: Michael B. Kusin

Phone: 713-567-9389

(HOUSTON, TX) United States Attorney Michael Shelby announced today Zheng Xiao Yi, 34, a Chinese national, was convicted by a jury's verdict of six counts of trafficking in counterfeit merchandise. Each count of conviction carries a maximum statutory penalty of 10 years imprisonment and a $2 million fine. Zheng, who has been held in federal custody without bond, will remain in federal custody pending his sentencing scheduled for October 18, 2004.

Indicted in January 2004, Zheng, the owner of XYZ Trading Corp., located at 7018 Harwin Drive, Houston, Texas, was charged with trafficking and attempting to traffic in merchandise imported from China carrying counterfeit trademarks. The counterfeit trademarks were alleged to be identical with or substantially indistinguishable from genuine trademarks registered to The Gillette Company, Underwriters Laboratories Inc., Marvel Enterprises, Inc., and Nike Inc., including Duracell batteries and flashlights, Spider-Man figures, extension cords and power- strips and Nike slippers.

The jury's verdict, which was returned late yesterday afternoon, brought to an end a four day trial during which the United States presented its evidence proving that Zheng, a Harwin Drive importer and wholesaler, trafficked in counterfeit goods imported from China between August 2003 and November 2003.

Testimony during trial established that a load of Zheng's merchandise was seized in August 2003 after inspectors noticed that the contents of a container shipped from China to XYZ Trading Corp., Zheng's showroom and warehouse, did not match the packing list. Thereafter, the Bureau of Immigration and Customs Enforcement opened an investigation that resulted in the seizure of a second cargo container and the execution of a search warrant on November 7, 2003 at Zheng's place of business.

The testimony proved and the jury's verdict found that Zheng had imported over $300,000 worth of counterfeit goods, including electrical extension and power cords that bore counterfeit UL certification marks, counterfeit Duracell batteries, Spider-man toys, and Nike sandals.

In addition to convicting Zheng of all six counts of the indictment, the jury's verdict also announced special findings.

The jury found Zheng had substantially harmed the reputations of Underwriters Laboratories, The Gillette Company, the owner of Duracell battery trademarks, Nike, and Marvel Entertainment, the owner of Spider-Man trademarks, by trafficking in counterfeit versions of their trademarked products.

Additionally, based upon testimony during trial that proved none of the electrical cords seized from Zheng passed the Underwriters Laboratories tests required to earn UL certification, and videotape clips showing the counterfeit cords sold by Zheng bursting into flames when tested under household conditions, the jury found that, by selling counterfeit UL extension cords, Zheng had consciously and recklessly ignored the risk of serious bodily injury to the public.

The jury also heard evidence that Zheng, who was arrested on November 7 th when authorities learned that he was the subject of an outstanding immigration warrant, attempted to bribe his way to freedom after being placed in custody.

The charges against Zheng are the result of a six month investigation conducted by agents of the United States Immigration and Customs Enforcement (ICE), which began in August 2003 after the random examination of a shipping container consigned to XYZ Trading Corporation was found to contain counterfeit merchandise. The random inspection was conducted by inspectors of the Bureau of Customs and Border Protection (BCBP). The investigation concluded in November 2003 following the execution of a search warrant at Zheng's Harwin Street business. AUSA Michael B. Kusin was the principal prosecutor on the case.


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