LOUISVILLE, KENTUCKY—After a four day trial, Matthew S. Stepp, age 40, of Shepherdsville, Kentucky, was found guilty today of eight counts of mail fraud and three counts of trafficking in counterfeit goods, United States Attorney Russell M. Coleman announced.
“What might appear on its face to be an esoteric white collar prosecution is, in fact, an all-out effort to keep kids and families safe” said U.S. Attorney Russell Coleman “This office will continue to work with our federal law enforcement partners to protect Americans from counterfeit personal safety equipment and companies from theft of their intellectual property.”
Martin H. Nguyen, the former General Counsel of BRG Sports – which owned one of the helmet manufacturers victimized by the defendant – stated “This is a sterling example of industry and government collaborating for the public benefit. The private and public sectors should remain constantly vigilant in both enforcement of intellectual property rights and protection of consumers.”
Stepp was charged with conducting a scheme to defraud consumers by marketing and selling high-end, counterfeit bicycle helmets on eBay between May 2014 and November 2014. Stepp had purchased the counterfeit helmets for pennies on the dollar from Ali Express, a Chinese website. Stepp was also charged with three counts of trafficking in counterfeit goods for selling counterfeit Specialized, Giro, and Catlike helmets on eBay.
During trial, representatives from Specialized testified that in mid-October 2014 they realized that Stepp was marketing Chinese counterfeit Specialized S-Works Prevail bicycle helmets for sale, and that Stepp was the first American distributor of Chinese counterfeit Specialized bicycle helmets on eBay. Concerned for customer safety, Specialized immediately notified eBay and the National Intellectual Property Rights Coordination Center (NIPRCC), who immediately contacted Homeland Security Investigations in Louisville. A search warrant was executed at Stepp’s home on November 6, 2014, where 45 counterfeit helmets were seized. Additional packages containing counterfeit helmets that Stepp had placed in the mail for delivery were also seized from the Post Office.
During trial, the United States introduced evidence showing that Stepp purchased counterfeit Specialized S-Works Prevail, Giro Aeon, and Catlike Whisper bicycle helmets on Ali Express for between $50 and $70, and sold those helmets on eBay for upwards of $150. The retail value of the helmets was over $200. Sample counterfeit Specialized and Giro helmets seized from Stepp were tested to see if they satisfied Consumer Product Safety Commission safety standards. The counterfeit helmets were found not to contain roll cages or the internal reinforcements that are standard in high-end authentic Specialized and Giro bicycle helmets. When placed on a head form and dropped onto a testing surface at approximately 11 miles per hour, the counterfeit helmets broke into pieces during impact testing, resulting in direct contact between the head forms and the testing surface. Testimony at trial revealed that a consumer wearing one of the counterfeit helmets and suffering a similar impact might suffer a fractured skull, brain damage, or death.
Stepp will be sentenced by United States District Court Judge Claria Horn Boom in Louisville on September 10, 2014 at 10 a.m. The case was investigated by the Department of Homeland Security/Homeland Security Investigations, and the United States Postal Inspection Service, and was prosecuted by Assistant United States Attorneys Daniel P. Kinnicutt and David R. Weiser, and paralegal Elizabeth Fauxpoint.