Online Reseller of Rare Nike Sneakers Pleads Guilty to Trafficking in Counterfeit Goods and Money Laundering

PORTLAND, Ore. – On Friday, June 30, 2017, former online sneaker retailer James Pepion appeared before U.S. Magistrate Judge Stacie F. Beckerman to plead guilty to charges of trafficking in counterfeit goods and money laundering under a plea agreement he negotiated with the United States. The maximum sentence for trafficking in counterfeit goods is 10 years in prison and a fine of up to $2 million (or twice the defendant’s proceeds, whichever is greater). The maximum sentence for money laundering is 20 years in prison and a fine of $500,000 (or twice the value of the property involved in the money-laundering scheme, whichever is greater).

Pepion offered rare Nike sneakers and similar merchandise for sale on the website Get-Supplied.com and through related businesses, including Supplied, Inc., and SwagSupply, Inc. using online platforms such as Instagram, eBay, and Shopify. Though Pepion acquired many of the limited-edition sneakers he resold through legitimate channels, he also imported counterfeit versions of some sneakers directly from black market sources in China, selling them as authentic Nike footwear to unwitting buyers. These fraudulent sales triggered numerous complaints to Nike as well as to Pepion.

Between June 2013 and September 2015, Pepion wired $174,460.00 to sellers in China, almost all of which was for counterfeit shoes and packaging. Pepion combined the proceeds of the sales of these counterfeit Nike sneakers with the proceeds of sales of authentic sneakers in various financial accounts in order to conceal the illegal source of much of his income.

Under the terms of Pepion’s plea agreement, he waived indictment by a federal grand jury and agreed to forfeit nearly $200,000 – including $92,000 seized from financial accounts at the same time federal agents executed a search warrant on his home and business in April 2016. The agreement provides that the government shall urge the court to impose a sentence of at least 18 months in federal prison.

“Oregon is at the center of athletic footwear design and technology for consumers around the globe, and Nike is a leader in the field,” said Billy J. Williams, United States Attorney for the District of Oregon. “It is essential to a safe and fair marketplace that consumers can trust that merchandise bearing the trademarks and insignias of respected companies like Nike are actually produced in compliance with those companies’ standards.” U.S. Attorney Williams emphasized that “the U.S. Attorney’s Office and Homeland Security Investigations will continue to work together to identify and prosecute vendors who seek to undermine that trust and to profit unjustly by smuggling and reselling counterfeit goods.”

This case was investigated by special agents of U.S. Immigration and Customs Enforcement Homeland Security Investigations (HSI) and Internal Revenue Service Criminal Investigations (IRS CI) and is being prosecuted by Ryan W. Bounds and Julia Jarrett, Assistant United States Attorneys for the District of Oregon.