Pennsylvania Man Pleads Guilty To Selling Counterfeit Goods, Including Counterfeit Military Goods

Baltimore, Maryland – Hao Yang, age 25, of Bloomsburg, Pennsylvania, pleaded guilty today to conspiracy to traffic in counterfeit goods and counterfeit military goods.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein and Special Agent in Charge William Winter of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

“The defendant imported counterfeit goods from China and fraudulently sold them as legitimate merchandise,” said U.S. Attorney Rod J. Rosenstein. “Counterfeit integrated circuits from China were falsely represented to be legitimate American-made parts.”

According to his plea agreement, from 2010 through the date of his arrest on June 19, 2013, Yang participated in a conspiracy to import and sell counterfeit goods and counterfeit military goods to customers in the United States. Yang and his co-conspirators created and operated several companies in Maryland, Pennsylvania, and elsewhere, to facilitate the conspiracy, including MS TECHNOLOGIES and AONE ELECTRONICS in Baltimore, Maryland; ABEST TECHNOLOGIES in China; and ARRCORD GROUP, SMC GROUP and SMOOTH LLC. The latter three companies were operated by Yang at his residence in Bloomsburg. Yang used his residence to warehouse the counterfeit goods, including counterfeit military goods, sent to him by his co-conspirators in China. He then shipped specific items to buyers in the United States based on the order information provided by his co-conspirators. Yang maintained numerous bank accounts to deposit his illegal commissions and make payments associated with his counterfeit activities. He also used the commissions he received from his co-conspirators to pay for living expenses and other purchases, including his 2010 Acura TSX sedan.

The counterfeit circuits received by Yang, a number of which were military-grade, were supplied by one specific co-conspirator located in China. This co-conspirator sold, or attempted to sell, the circuits to various individuals, companies and government agencies in the United States. Yang then distributed the counterfeit circuits, via his domestic businesses, to the buyers in the United States sometimes in repackaged form. The co-conspirator paid Yang a commission of $500 per month for his distribution services. To conceal the fact that the counterfeit circuits were being imported from China, Yang and his co-conspirator formed AARCORD GROUP to create the appearance that the co-conspirator’s company in China (from which the counterfeit circuits were being distributed) was actually based in the United States. By using counterfeit circuits, their malfunction or failure could likely have caused serious bodily injury or impaired military operations, personnel or national security.

Throughout the course of the conspiracy, Yang also obtained other counterfeit goods, including computer software, DVDs, and sports jerseys, from other co-conspirators in China and Hong Kong, which he then distributed in the United States. As was the case with the counterfeit circuits, Yang and these other co-conspirators concealed the fact that the goods they sold were counterfeit and produced in China and Hong Kong. Yang received commissions from these co-conspirators of $1,000 to $2,000 per month for his distribution services.

Between March 2011 and April 2013, Yang received hundreds of shipments from China and Hong Kong, including shipments involving integrated circuits. For example, in June 2012, Yang received two shipments of counterfeit military grade integrated circuits sent to ARRCORD Group at his residence and also received three shipments of other counterfeit goods, including DVDs and counterfeit computer software, sent to SMC Group at Yang’s residence. The Manufacturers Suggested Retail Price of the counterfeit DVDs and computer software was over $58,000.

As part of his plea agreement, Yang will be required to forfeit five bank accounts worth over $59,000, the 2010 Acura purchased with proceeds of the crime, and counterfeit computer software, DVDs, sports jerseys and other items with an approximate value of $280,720.

Yang faces a maximum sentence of 10 years in prison. U.S. District Judge J. Frederick Motz has scheduled sentencing for March 28, 2013 at 11:00 a.m.

United States Attorney Rod J. Rosenstein praised HSI Baltimore for their work in the investigation. Mr. Rosenstein thanked Assistant U.S. Attorney Christine Manuelian, who is prosecuting the case.