Over $76 Million in Counterfeit Cisco Hardware and Labels Seized
WASHINGTON, Feb. 28 /PRNewswire-USNewswire/ -- Assistant Attorney
General Alice S. Fisher of the Criminal Division, Assistant Director James
Finch of the FBI's Cyber Division, Assistant Secretary Julie L. Myers, U.S.
Immigration and Customs Enforcement (ICE), Commissioner W. Ralph Basham,
U.S. Customs and Border Protection (CBP), and Inspector Peter Goulet of the
Royal Canadian Mounted Police (RCMP) today announced the results to date of
an ongoing international enforcement initiative between the United States
and Canada that targets the illegal distribution of counterfeit network
hardware manufactured in China.
This ongoing initiative has resulted in more than 400 seizures of
counterfeit Cisco network hardware and labels with an estimated retail
value of more than $76 million. It is being led by ICE, CBP and the FBI
working in conjunction with the Criminal Division's Computer Crime &
Intellectual Property Section, U.S. Attorney's Offices across the country,
and the RCMP.
The initiative targets the illegal importation and sale of counterfeit
network hardware, in particular network routers, switches, network cards
and modules manufactured by Cisco. By intercepting the counterfeit hardware
at ports of entry and dismantling illegal supply chains in the U.S., the
operation has achieved significant successes in protecting the public from
the risk of network infrastructure failures associated with these
counterfeits.
"Counterfeit network hardware entering the marketplace raises
significant public safety concerns and must be stopped. This initiative
shows that through collaboration among law enforcement agencies and
prosecutors worldwide, we can achieve dramatic enforcement results and
protect public safety," said Assistant Attorney General Alice S. Fisher of
the Criminal Division. "It is critically important that network
administrators in both private sector and government perform due diligence
in order to prevent counterfeit hardware from being installed on their
networks."
The FBI named its portion of this ongoing initiative Operation Cisco
Raider -- an international, coordinated investigation of 15 cases involving
nine FBI field offices. The FBI worked closely with law enforcement
partners including ICE, Defense Criminal Investigative Service, General
Services Administration, Department of the Interior, Internal Revenue
Service, and the RCMP. Over the last two years, Operation Cisco Raider has
resulted in 36 search warrants that identified approximately 3,500
counterfeit network components with an estimated retail value of over $3.5
million, and has led to a total of ten convictions and $1.7 million in
restitution.
"This operation illustrates the importance of working closely with our
partners in both law enforcement and the private sector," said FBI
Assistant Director James Finch. "Cisco Systems Incorporated specifically
deserves praise for their level of cooperation in this initiative. We will
continue these efforts to aggressively investigate counterfeit goods in
order to protect U.S. consumers and corporations."
ICE and CBP opened a total of 28 investigations in 17 separate field
offices since 2005; eight of those investigations were worked jointly with
the FBI and several with the RCMP. ICE agents have conducted 115 seizures
of counterfeit Cisco products having an estimated retail value of $20.4
million. ICE investigations have led to six indictments and four felony
convictions to date. CBP has made 373 seizures of counterfeit Cisco network
hardware since 2005, and 40 seizures of Cisco labels for counterfeit
products. All together, ICE and CBP seized more than 74,000 counterfeit
Cisco network components and labels with a total estimated retail value of
more than $73 million.
"Crimes like these threaten international commerce, national security
and the very safety of our citizens," said Julie L. Myers, Homeland
Security Assistant Secretary for ICE. "Throughout this investigation, the
cooperation and partnership that we received from Cisco Systems, our law
enforcement colleagues, and Chinese counterparts are a clear example of the
results that can be realized through industry, interagency and
international cooperation."
"The success of this operation demonstrates our commitment to work
jointly with our law enforcement partners, as well as the private sector,
to stop international trafficking in counterfeit items and protect our
consumers and businesses from these dangerous goods," stated CBP
Commissioner W. Ralph Basham.
Today in Toronto, Canada, the RCMP charged two individuals and a
company with distributing large quantities of counterfeit network
components to companies in the United States via the Internet. The RCMP
seized approximately 1,600 pieces of counterfeit network hardware with an
estimated value of $2 million. This prosecution resulted from a joint
initiative between the RCMP, FBI, ICE, and CBP that was aimed at disrupting
the flow of counterfeit Cisco networking components in North America.
"Counterfeit products greatly undermine the integrity of our economy,"
stated Inspector Peter Goulet, Officer in Charge of the RCMP Greater
Toronto Area Federal Enforcement Section. "In many cases the end users were
unaware that counterfeit products were being placed on their computer
networks, and depending on the function of those networks, this could cause
serious health and safety concerns."
Some of the cases involved with this initiative across the United
States include the following:
-- On February 14, 2008, in the Northern District of Georgia, Todd
Richard, 33, was sentenced to 36 months' imprisonment and ordered to pay
$208,440 in restitution to Cisco Systems, Inc., as a result of his
conviction for trafficking in counterfeit Cisco computer products. From
late 2003 until early 2007, Richard imported shipments of counterfeit Cisco
computer components from China, and separate shipments of counterfeit Cisco
labels. He then affixed the fake labels to the fake components and sold the
products on eBay, claiming that they were legitimate Cisco items. Richard
sold over $1 million worth of counterfeit Cisco products in this manner.
This case was investigated by ICE and prosecuted by the U.S. Attorney's
Office for the Northern District of Georgia.
-- On January 4, 2008, in the Southern District of Texas, a federal
grand jury returned an indictment charging Michael Edman, 36, and his
brother Robert Edman, 28, with trafficking in counterfeit Cisco products.
The indictment alleges that the Edmans purchased and imported the
counterfeit computer network hardware from an individual in China. They
later sold the counterfeit Cisco products to retailers of computer network
products throughout the United States. According to the indictment, the
Edmans shipped some of the counterfeit hardware directly to the Marine
Corps, Air Force, Federal Aviation Administration, FBI, defense
contractors, universities and financial institutions. These entities had
purchased the product from a computer retailer serving as a middleman,
which in turn purchased the products from the Edmans (a process known as
"drop shipping"). The case was investigated by ICE and is being prosecuted
by the U.S. Attorney's Office for the Southern District of Texas.
-- On April 17, 2007, in the Northern District of Texas, Mark Thomas
Geis, 37, was sentenced to five years in prison and ordered to pay $1.5
million in restitution to Cisco Systems Inc. as a result of his conviction
for conspiracy to traffic in counterfeit network hardware. The court found
that Geis, doing business as VARGlobal and conducting business via eBay,
conspired to traffic in approximately $4.2 million of counterfeit Cisco
hardware. This case was investigated by the FBI. Geis had previously been
convicted and sentenced to 46 months imprisonment in 2001 for conspiracy to
defraud Microsoft Corporation. The case was investigated by the FBI and
prosecuted by the U.S. Attorney's Office for the Northern District of
Texas.
The problem of trafficking in counterfeit computer components is a
global problem, as reflected by last week's announcement by the European
Union (EU) and U.S. officials of the first EU-U.S. customs joint operation
resulting in the seizure of more than 360,000 counterfeit computer parts
and integrated circuits. The joint initiative between the European
Commission Tax and Customs Directorate and CBP took place during a
three-week period in November and December of 2007. A probe in five
countries uncovered a pattern of trade in counterfeit networking equipment
and integrated circuits passed off as products from 40 of the world's
largest European, U.S., Japanese, and Korean technology companies. Most
arrived via air shipment from China, but some were also shipped from Taiwan
and Hong Kong.
U.S. law enforcement authorities continue to work with China's Ministry
of Public Security (MPS) to combat the manufacture and export of
counterfeit network hardware from China. This ongoing work is being
facilitated by the IP Criminal Enforcement Working Group of the U.S.-China
Joint Liaison Group for law enforcement, which is co-chaired by the
Criminal Division of the U.S. Department of Justice and the MPS. The
Working Group is dedicated to increasing cooperation in intellectual
property law enforcement efforts and pursuing more joint IP criminal
investigations with China.
The initiative announced today is part of a broader Department of
Justice initiative to combat all forms of intellectual property crime,
including economic espionage, copyright infringement, and trafficking in
counterfeit goods. This broader initiative has led to significant increases
in criminal enforcement over the past three years. Through the dedicated
efforts of U.S. Attorney's Offices and federal law enforcement across the
country, in FY2007, 287 defendants were convicted and sentenced on
intellectual property charges, representing a 35 percent increase over
FY2006 and a 92 percent increase over FY2005. Additionally, the Department
filed 217 intellectual property cases last year, representing a 7 percent
increase over cases reported in FY2006 and a 33 percent increase over cases
reported in FY2005.
Cisco Systems, Inc. has cooperated with U.S. and Canadian law
enforcement authorities and provided exceptional assistance throughout
these investigations.
The investigations are ongoing throughout the U.S.
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