Two Chinese Nationals Facing Federal Indictment for Conspiracy to Traffick in Counterfeit Goods and Mail Fraud
Allegedly Conspired to Import, Smuggle, and Sell Counterfeit Pandora Jewelry, Ray-Ban Sunglasses, and other Consumer Goods to Obtain More Than $2 Million
Baltimore, Maryland – A federal grand jury has indicted Xiaoying Xu, age 34, a Chinese citizen, and Yiwen Zhu, age 34, a Chinese citizen and legal permanent resident of the United States, both residing in Covina, California, on a federal conspiracy charge, mail fraud, and trafficking in counterfeit goods. The indictment was returned on April 23, 2019, and the defendants were arrested today.
The indictment was announced by United States Attorney for the District of Maryland Robert K. Hur; Acting Special Agent in Charge Jennifer L. Moore of the Federal Bureau of Investigation, Baltimore Field Office; Acting Special Agent in Charge Cardell T. Morant of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Baltimore; Postal Inspector in Charge Peter R. Rendina of the U.S. Postal Inspection Service - Washington Division; and Casey Durst, Director of Field Operations, U.S. Customs and Border Protection - Baltimore Field Office.
“These defendants allegedly imported counterfeit goods from China and sold them as legitimate merchandise using the registered trademarks of legitimate companies.” said U.S. Attorney Robert K. Hur. “Those who traffick in counterfeit goods are committing a crime which results in American jobs lost, American business profits stolen, and American consumers tricked into receiving substandard products.”
According to the 13-count indictment, from about August 2016 until approximately April 2019, Xu and Zhu conspired with others to defraud e-commerce customers by importing and selling counterfeit consumer goods, specifically Pandora jewelry and Ray-Ban sunglasses. The indictment alleges that the defendants used their residence and offices in El Monte and Alhambra, California, as destination points for shipments of counterfeit goods shipped from Hong Kong and China. Xu and Zhu allegedly repackaged the counterfeit goods, then mailed them to unsuspecting customers throughout the United States who believed they had purchased authentic goods.
The defendants allegedly used fraudulent accounts set up with e-commerce marketplace companies to sell the counterfeit goods, misrepresenting to customers that they were authentic. Xu and Zhu obtained funds from the victims of the counterfeit scheme through fraudulently acquired customer accounts opened in the names of other people at a global online payment company. The online payment company sent the victims’ money to Xu and Zhu by electronic transfer to bank accounts or by check, which the defendants then cashed at ATMs. The indictment alleges that the defendants then transferred the proceeds of the scheme from their bank accounts to other bank accounts opened in the names of other Chinese nationals.
If convicted, the defendants face a maximum sentence of five years in prison for conspiracy to commit mail fraud and traffick in counterfeit goods; a maximum of 20 years in prison for each of six counts of mail fraud; and a maximum of 10 years in prison for each of six counts of trafficking in counterfeit goods. The defendants are expected to have an initial appearance in U.S. District Court in the Central District of California. No court appearance has been scheduled yet in Maryland.
An indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.
United States Attorney Robert K. Hur commended the FBI, HSI, U.S. Postal Inspection Service, and U.S. Customs and Border Protection, in Maryland and in Los Angeles, California; Seattle, Washington; and Tampa, Florida for their work in the investigation. Mr. Hur thanked Assistant U.S. Attorneys Martin J. Clarke and Peter J. Martinez, who are prosecuting the case.
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