Romanian Citizens Arrested and Charged with Laundering $1.4 Million in Proceeds from Jewelry Thefts and Covid Fraud
Assistant U.S. Attorneys Nicholas W. Pilchak (619) 546-9709 and Mark W. Pletcher (619) 546-9714
NEWS RELEASE SUMMARY – May 11, 2016
SAN DIEGO – A Chinese citizen pleaded guilty today to selling at least $1.5 million of counterfeit cell phone parts to an Imperial County business as part of a years-long conspiracy.
Hongwei “Nick” Du, a Chinese national, pleaded guilty today before U.S. District Judge M. James Lorenz to conspiring to traffic in counterfeit goods and related money laundering charges. According to the plea agreement, Du sold at least $1.5 million worth of counterfeit Chinese cell phone parts from Shenzhen to Spanish national Octavio Cesar Sana, in order to supply Sana’s former business, “Flexqueen.com.”
Du was arrested on February 3, 2015 at the Imperial Valley Airport. Du had traveled to the United States from Shenzhen in order to meet with Sana and others to coordinate further counterfeit trafficking ventures. Du arrived for the meeting bearing samples of counterfeit Apple iPhone components. According to emails that Du had sent before his arrival, he brought the iPhone samples despite concerns about clearing customs because they were “copy ones” with “apple logo.”
The investigation leading to Du and Sana’s arrests was spearheaded by Homeland Security Investigations (HSI) and the Internal Revenue Service, Criminal Investigations. HSI executed a series of nationwide searches in connection with the arrests, including those in Tampa, Florida; Brownsville, Texas; Boston, Massachusetts; Atlanta, Georgia; Pittsburgh, Pennsylvania; Nashville, Tennessee; and Orange, San Diego and Imperial counties in California. These searches resulted in the seizure of more than 55,000 counterfeit items, and additional criminal charges in several jurisdictions.
According to the plea agreement, since 2007, Sana’s businesses sold approximately $6.5 million in cell phone parts and accessories to businesses and consumers throughout the United States. In turn, Sana paid approximately $3.1 million to Du, his primary Chinese supplier. Du admitted that roughly half of those parts were counterfeit. Sana pled guilty to similar charges in September 2015.
Du also admitted in his plea agreement that he and his co-conspirators used extensive methods to frustrate the ability of U.S. Customs and Border Protection to detect, inspect and intercept their imported counterfeit goods, such as shipping merchandise with “protective stickers” strategically placed to obscure the products’ infringing trademarks. The plea agreement also explains that Du and Sana utilized a dedicated shipping channel for branded goods to avoid attention from Chinese customs officials.
As part of his plea agreement, Du has agreed to forfeit $1.5 million.
“Trafficking in counterfeit goods threatens consumers and the marketplace,” said U.S. Attorney Laura E. Duffy. “Customers buying trademarked products for their personal devices should be able to have confidence that the products aren’t sophisticated forgeries.” U.S. Attorney Duffy noted that the counterfeit goods business is booming; U.S. Customs and Border Protection (CBP) reported that in 2014 alone, it intercepted an estimated $1.2 billion of counterfeit goods in more than 23,000 seizures.
Duffy commended the close coordination between the investigating agencies—the Department of Homeland Security, Homeland Security Investigations; the Internal Revenue Service, Criminal Investigations; and the U.S. Postal Inspection Service—during the lengthy investigation of this case. The Department of Justice’s Office of International Affairs also provided invaluable assistance.
“This investigation underscores HSI’s commitment to pursuing transnational criminals seeking to exploit the U.S. economy,” said Dave Shaw, special agent in charge for ICE HSI in San Diego. “I commend the work by HSI and our federal law enforcement partners for their outstanding efforts that uncovered a counterfeit scheme which threatened the U.S. marketplace and defrauded consumers.”
“As previously alleged, the defendants ran a sophisticated multi-million dollar counterfeit and money laundering scheme whose reach stretched from China to the Imperial Valley. Counterfeit cellphone parts imported from China were sold to the American consumer with U.S. Dollars going back to China in an effort to promote their counterfeit goods trafficking venture,” stated acting Special Agent in Charge Anthony J. Orlando with IRS Criminal Investigation. “Today’s plea demonstrates that IRS CI will remain an integral part of the U.S. Government’s commitment to maintaining the integrity of the international financial system.”
Du will appear for sentencing on August 15 at 9 a.m. before Judge Lorenz. Octavio Sana is set to be sentenced by Judge Lorenz on May 23, 2016.
DEFENDANT Case No. 16-cr-00930
Hongwei Du 33 years old Shenzhen, People’s Republic of China
Conspiracy to Traffic in Counterfeit Goods - 18 U.S.C. § 371
Maximum penalty: 5 years’ imprisonment and $250,000 fine
Money Laundering Conspiracy – 18 U.S.C. § 1956(h)
Maximum penalty: 20 years’ imprisonment and $500,000 fine
Case No. 15-cr-612-L
Angela Rose Vela 36 years old El Centro, CA
Case No. 15-cr-2316-L
Octavio Cesar Sana 42 years old El Centro, CA
Homeland Security Investigations
Internal Revenue Service – Criminal Investigations
U.S. Postal Inspection Service