Nixa Woman Pleads Guilty to $80 Million Fraud Scheme to Sell Counterfeit Cell Phone Parts
Operated Web Sites, Springfield Store That Sold Counterfeits from China
SPRINGFIELD, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a Nixa, Mo., woman pleaded guilty in federal court today to selling more than $80 million worth of counterfeit cell phone components over the Internet and at a Springfield, Mo., store.
Sherrie Householder, 59, of Nixa, waived her right to a grand jury and pleaded guilty before U.S. Magistrate Judge David P. Rush to a federal information that charges her with one count of mail fraud, one count of money laundering and one count of tax evasion.
By pleading guilty today, Householder admitted that she received more than $80 million from the sale of counterfeit items over approximately three years, from Dec. 3, 2012, to Jan. 14, 2016.
Householder managed and operated Flash Technology, LLC, also known as Flash Tech, a business that sold cell phone components (such as replacement screens, lithium batteries, weight scales, phone cases and internal circuitry) over the Internet and at a Springfield store. Householder represented that the cell phone components were manufactured by legitimate companies – including Apple, Samsung, LG, Microsoft, Android, Dell, Blackberry, ASUS, Acer, Kindle, HTC, Motorola, Nokia, Sony, ZTE and others. Although each part contained trademarks and markings that made it appear the legitimate holder of the trademark had manufactured the parts, and although Householder used the trademarks and logos of these companies on her Web sites, the components were actually counterfeit.
Wang “Frank” Lou, a Chinese citizen, owned Flash Tech, while Householder managed the company’s activities in the United States. Lou shipped the cell phone component parts to Householder. Nearly 5,000 international shipments were sent to Flash Tech from China.
Federal agents from Homeland Security Investigations (HSI) and Customs and Border Protection conducted numerous border inspections of these shipments. All of the items shipped from Lou to Householder and inspected by federal agents were determined to be counterfeit. At least nine separate shipments, each with multiple packages, were inspected and ultimately confiscated after it was determined that the shipments contained counterfeit cell phones and counterfeit component parts. Agents conferred with industry experts and determined that the total value of the counterfeit merchandise seized during their inspections totaled $359,539. After each shipment was seized, the agencies issued letters of notification to Householder at Flash Tech advising her that the items being shipped to her company were counterfeit and were seized by federal agents. Even though Householder received these written notifications, she still continued to sell the counterfeit items at her Springfield stores and over the Internet.
After the initial seizure of counterfeit items, Householder caused future shipments from Lou to be sent to different names and addresses, then re-routed delivery to Flash Tech, in an attempt to avoid the seizure of additional shipments.
On Feb. 2, 2016, search warrants were simultaneously executed at Householder’s Nixa residence and at the Flash Tech store in Springfield. At each location, thousands of cell phones, electronics and component parts were seized. After seizing these items, agents and company experts determined that all of the items were counterfeit. The total amount of items seized was worth approximately $5.5 million and filled two large moving trucks.
Householder also admitted that she failed to pay any taxes between 2013 and 2015 on her total salary of $642,109. Householder failed to report her total income of $114,362 for 2013, $255,259 for 2014 and $279,959 for 2015. As a result, Householder owes $151,838 in back taxes. In addition to the federal income taxes owed, Householder also owes the Missouri Department of Revenue $32,743 for her failure to pay state income taxes for 2013 through 2015.
Householder must forfeit to the government $556,938 seized from various PayPal, Amazon and bank accounts, numerous desktop and laptop computers, iPads, hard drives, computer and cell phone components and a money judgment of $8,866,069.
Under federal statutes, Householder is subject to a sentence of up to 35 years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.
This case is being prosecuted by Assistant U.S. Attorney Patrick Carney. It was investigated by Homeland Security Investigations and IRS-Criminal Investigation.