NEWARK – Nine members of a massive, international counterfeit goods conspiracy have admitted their roles in the scheme, U.S. Attorney Paul Fishman announced.
Hai Dong Jiang, 37, and Fei Ruo Huang, 37, both of Staten Island; Hai Yan Jiang, 34, of Richardson, Texas; Xiance Zhou, 39, and Jian Chun Qu, 33, both of Bayside, N.Y.; and Ming Zheng, 48, of New York, pleaded guilty today before U.S. District Judge Esther Salas in Newark federal court.
Dong Jiang, Ruo Huang, and Yan Jiang pleaded guilty to informations charging them each with one count of conspiracy to traffic in counterfeit goods. Xiance Zhou and Qu pleaded guilty to informations charging them each with one count of conspiracy to structure money. Zheng pleaded guilty to an information charging him with a conspiracy to launder money.
Wei Qiang Zhou, 38, of Brooklyn, pleaded guilty Dec. 3, Patrick Siu, 41, of Richardson, Texas, pleaded guilty Dec. 4, and Da Yi Huang, 43, of Staten Island, pleaded guilty Dec. 11, all before Salas in Newark federal court, to informations charging them each with one count of conspiracy to traffic in counterfeit goods.
According to documents filed in this case and statements made in Court: From November 2009 through February 2012, the defendants ran one of the largest counterfeit goods smuggling and distribution conspiracies ever charged by the Department of Justice. The defendants and others conspired to import hundreds of containers of counterfeit goods – primarily handbags, and footwear, and perfume – from China into the United States in furtherance of the conspiracy. These goods, if legitimate, would have had a retail value of more than $300 million.
The counterfeit goods were manufactured in China and smuggled into the United States through containers fraudulently associated with legitimate importers, with false and fraudulent shipping paperwork playing a critical role in the smuggling scheme. Some of the conspirators created and managed the flow of false shipping paperwork between China and the United States, and supervised the importation of counterfeit goods, and others controlled the importation of the counterfeit goods into the United States.
Other conspirators managed the distribution of counterfeit goods once those goods arrived in the United States. After importation, the counterfeit goods were delivered to warehouses, and distributed throughout New York, New Jersey, and elsewhere. Certain conspirators paid large amounts of cash to undercover law enforcement officers to assist in the removal of counterfeit goods from the port.
Some conspirators acted as wholesalers for the counterfeit goods, supplying retailers who sold counterfeit goods to customers in the United States. Other conspirators were money structurers, who arranged for cash to be wired to China in amounts small enough to avoid applicable financial reporting requirements, to evade detection of the smuggling scheme and related proceeds.
Law enforcement introduced several undercover special agents (collectively, the UCs) to the conspirators. The UCs purported to have unspecified “connections” at the port, which allowed the UCs to release containers that were on hold, and pass them through to the conspirators. The conspirators paid the UCs for these “services.” In total, during the course of this investigation, the conspirators provided the UCs more than $2 million.
UCs recorded dozens of phone calls and in-person meetings with various conspirators. The investigation also utilized several court-authorized wiretaps of telephones and electronic communications.
The conspiracy to traffic in counterfeit goods count to which Da Yi Huang, Hai Dong Jiang, Hai Yan Jiang, Fei Ruo Huang, Patrick Siu, and Wei Qiang Zhou pleaded guilty is punishable by a maximum potential penalty of 10 years in prison and a fine of $2 million.
The money laundering count to which Zheng pleaded guilty is punishable by a maximum potential penalty of 20 years in prison and a fine of $500,000 or twice the gain or loss caused be the offense.
The structuring conspiracy to which Zhou and Qu pleaded guilty is punishable by a maximum potential penalty of 5 years in prison and a fine of $250,000.
Sentencing for Siu and Qiang Zhou is scheduled for March 17. Sentencing for Qu, Zhou and Zheng is scheduled for March 24. Sentencing for Hay Yan Jiang, Hai Dong Jiang and Fei Ruo is scheduled for March 25.
Fishman praised special agents of Immigration and Customs Enforcement Homeland Security Investigations, under the direction of Special Agent in Charge Andrew McLees, and special agents of the FBI, under the direction of Special Agent in Charge Aaron Ford, for the investigation leading to the guilty pleas.
The government was represented by Assistant U.S. Attorneys Andrew Pak and Zach Intrater of the Computer Hacking and Intellectual Property section of the Economic Crimes Unit of the U.S. Attorney’s Office in Newark and Nicholas Grippo of the U.S. Attorney’s Office in Trenton.