Two Individuals Plead Guilty To Importing And Selling Hazardous And Counterfeit Toys

Yesterday, at the federal courthouse in Brooklyn, New York, two Queens, New York residents pled guilty today in connection with importing more than 100,000 hazardous and counterfeit children’s toys from China for sale in the United States.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Loretta E. Lynch of the Eastern District of New York, Special Agent in Charge James T. Hayes Jr. of Homeland Security Investigations (HSI) New York, Director Robert E. Perez of Customs and Border Protection (CBP) New York Field Operations, Chairman Elliott Kaye of the Consumer Product Safety Commission (CPSC) and Commissioner William J. Bratton of the New York City Police Department (NYPD) made the announcement.

“In a criminal twist on a toy story, the defendants made millions importing dangerous, knock-off toys that put children in harm’s way,” said Assistant Attorney General Caldwell. “The defendants used a continuously shifting series of corporate entities in an effort to stay one step ahead of law enforcement. But their game has now come to an end. The Department of Justice is committed to stopping those who would smuggle hazardous, counterfeit goods into the United States.”

“For eight years, the defendants lined their pockets while putting at risk the health of our children by smuggling dangerous and copyright-infringing toys into the United States. Today’s guilty pleas signify the end of this dangerous pipeline from China. We will continue to be vigilant and prosecute those who would smuggle dangerous and unlawful items into our country and neighborhoods,” said U. S. Attorney Lynch. Ms. Lynch extended her grateful appreciation to the HSI Intellectual Property Rights Group and the NYPD and thanked the Consumer Product Safety Commission and Customs and Border Protection for their assistance.

“The United States has some of the strongest toy standards and lowest lead limits in the world, specifically to keep children safe,” said CPSC Chairman Kaye. “We have no more important mission than protecting children. For that reason, the CPSC will continue to work with our federal partners to enforce toy safety requirements at the ports and in the marketplace.”

“The defendants in this case endangered thousands of American children by manufacturing for sale counterfeit toys made with unsafe amounts of lead and other hazardous chemicals,” said Special Agent in Charge Hayes Jr. “HSI focuses its efforts to protect intellectual property, first and foremost, on those counterfeit goods that present health and safety hazards to consumers.”

Chenglan Hu, 52, and Hua Fei Zhang, 53, of Bayside, New York, pleaded guilty in connection with importing children’s toys with copyright-infringing images and counterfeit trademarks of popular children’s characters, as well as unsafe lead levels, small parts that presented risks of choking or ingestion, easily-accessible battery compartments, and other potential hazards. Hu and Zhang were the last of nine defendants to plead guilty in this investigation; Guan Jun Zhang, Jun Wu Zhang, and five corporations – Family Product USA Inc., H.M. Import USA Corp., ZCY Trading Corp., Zone Import Corp. and ZY Wholesale Inc. – previously pleaded guilty to Consumer Product Safety Act (CPSA) and trademark counterfeiting charges. In pleading guilty to trafficking in hazardous consumer goods in violation of CPSA, Hu and Zhang also agreed to forfeit $700,000 and more than 120,000 unsafe children’s toys. The government previously seized three luxury vehicles and six bank accounts, and filed lis pendens against two real properties owned by Zhang in Queens, New York.

According to court filings and facts presented at the plea hearings, from July 2005 through January 2013, Hu, Zhang and the other individual defendants used the companies they owned to import toys from China and sell them from a storefront and warehouse in Ridgewood, New York, and other locations in Brooklyn and Queens. According to court documents, CBP seized toys imported by the defendants from shipping containers entering the United States from China on thirty-three separate occasions. Seventeen of the thirty-three seizures contained toys prohibited from import into the United States because of excessive lead content, excessive phthalate levels, small parts that presented risks of choking, aspiration or ingestion, and easily-accessible battery compartments. Sixteen of the thirty-three seizures contained toys bearing copyright-infringing images and counterfeit trademarks, including a wide variety of popular children’s characters, such as Winnie the Pooh, Dora the Explorer, SpongeBob SquarePants, Betty Boop, Teenage Mutant Ninja Turtles, Power Rangers, Spiderman, Tweety, Mickey Mouse, and Pokémon, as well as those from movies such as “Cars,” “Toy Story” and “High School Musical.”

Hu, Zhang and the other individual defendants changed their use of the companies, sometimes even forming new companies, and alternated their formal titles in order to conceal their continued importation and distribution of the hazardous and counterfeit toys.

Hu and Zhang pleaded guilty before U.S. Magistrate Judge James Orenstein of the Eastern District of New York.

The case was prosecuted by Assistant U.S. Attorneys William P. Campos and Claire Kedeshian of the Eastern District of New York and Senior Counsel Evan Williams of the Criminal Division’s Computer Crime and Intellectual Property Section. The case was jointly investigated by the HSI Intellectual Property Rights Group and the NYPD, through its participation in the New York Border Enforcement Security Taskforce, with the assistance of CPSC and CBP.