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Intellectual Property Rights and Commercial Fraud
09/03/2014

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2 Chinese citizens charged with trafficking counterfeit cellphone cases

BOSTON — Two Chinese citizens, living in Massachusetts, were charged Thursday with importing and reselling counterfeit cases for cell phones following an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

Zexiong Chen, 28, and Haotian Chen, 26, who are unrelated, were charged with trafficking in counterfeit goods. It is alleged that in February 2013, the defendants incorporated Max Wireless Group, Inc. as a vehicle for importing and reselling cellphone cases, many of which were counterfeit. Through Max Wireless, the two defendants allegedly imported counterfeit cellphone cases from China, sold a small percentage of them through their Wakefield, Massachusetts store,and sold the vast majority of them to individuals and companies who in turn resold them at retail locations. Many of these retail locations were kiosks in shopping malls, some of which were in Massachusetts.

In February 2014, Zexiong Chen was arrested at JFK International Airport in New York as he prepared to board a plane to China. He has been in custody since that time. Haotian Chen was also arrested in February and was conditionally released by the court.

According to the investigation, on 12 occasions from November 2012 through August 2013, U.S. Customs and Border Patrol officials inspected shipments the defendants imported from China to the United States and determined that these shipments contained counterfeit items. These 12 seizures included more than 10,000 counterfeit cellphone cases, bearing marks of manufacturers including: OtterBox, Speck, Kate Spade, Hello Kitty, Ferrari and LifeProof. On Sept. 4, 2013, federal agents searched the Max Wireless store and found more than 2,500 counterfeit cellphone cases and accessories.

The total of the manufacturers' suggested retail price (MSRP) for the authentic versions of all of the cellphone cases seized during the course of this investigation totaled more than $350,000, but the defendants paid far less for the cases and typically resold the cases for far less than MSRP.

"Counterfeit goods are of inferior quality, and the criminals who commit copyright infringement are stealing from Americans and harming legitimate businesses," said Bruce Foucart, special agent in charge of HSI Boston. "These criminals do not pay taxes, they do not provide health care and they do not pay pensions. They are parasites on the American economy."

The maximum sentence under the statute is 10 years in prison, followed by three years of supervised release and a fine of $2 million. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.

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Last Reviewed/Updated: 03/11/2016