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09/08/2009

Texas brothers plead guilty to selling counterfeit 'Cisco' computer products

Customers included federal agencies and U.S. military

HOUSTON - Two brothers entered guilty pleas on Tuesday for selling counterfeit "Cisco" products to federal agencies, the U.S. military and others. The guilty pleas were announced by U.S. Attorney Tim Johnson, Sothern District of Texas. The investigation was conducted by U.S. Immigration and Customs Enforcement (ICE).

Michael Edman, 38, and Robert Edman, 29, both formerly of Richmond, Texas, both plead guilty to one count of trafficking in counterfeit goods this morning before U.S. District Judge Vanessa Gilmore.

Cisco Systems is an American company that manufactures and sells computer hardware, such as network cards, that allows computers to network with other computers.

ICE agents began investigating in February 2006 when a customs officer at the Federal Express facility in Anchorage inspected a shipment from China containing 1,800 empty Cisco boxes and labels addressed to Robert Edman in Richmond. In shipping counterfeit computer goods, it is a known practice to send the more valuable parts separately from the counterfeit packaging. Therefore, if the counterfeit packaging is discovered only the packaging is seized and not the separately shipped and more valuable computer parts.

ICE agents delivered a package of empty Cisco boxes and labels to Robert's residence on Feb. 23, 2006. Based on this inspection and other information, a search warrant was executed. Robert Edman told agents he routinely purchased Cisco products from an individual in China who goes by the name "Tony." Bank records subsequently obtained during this investigation revealed that Robert Edman had wired Tony about $437,000 that year.

Edman's customers included the Marine Corps, Air Force, FBI, Federal Aviation Administration, Department of Energy, as well as defense contractors, universities, school districts and financial institutions. Michael Edman also operated a business using the name Syren that sold technology products. Michael provided a total of $69,000 in funding to Robert to buy counterfeit parts from "Tony" in China on two occasions after Michael had learned "Tony" was having shipments seized by customs.

In August 2005, Michael Edman obtained network cards from Robert to drop ship to the Bureau of Prisons (BOP). After the criminal investigation began, the BOP was able to retrieve some of these network cards and Cisco engineers confirmed the cards were counterfeit.

Sentencing is scheduled for Jan. 4, 2010. Each brother faces up to 10 years in prison and a fine up to $2 million. They remain free on bond pending sentencing.

The case is being prosecuted by Assistant U.S. Attorney Gregg Costa, Sothern District of Texas.