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Intellectual Property Rights
03/08/2018

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4 individuals indicted, arrested for trafficking counterfeit goods

Defendants face a forfeiture allegation more than $3 million

SAN JUAN, Puerto Rico –Three women and one man were arrested Wednesday and charged with mail and wire fraud conspiracy, mail fraud, trafficking in counterfeit goods, introducing misbranded articles into interstate commerce, distribution of a controlled substance, international money laundering, and smuggling. This investigation was conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) special agents, working jointly with the U.S. Food and Drug Administration’s (FDA) Office of Criminal Investigations (OCI), the U.S. Postal Inspection Service, U.S. Customs and Border Protection (CBP) and the Puerto Rico Department of Treasury.

According to the indictment, defendants Carlos Enrique Velázquez-Gines, Mayra Evelise Gines-Otero, Noriam Ivette Flores-Deleon and Vanessa Marrero-Hernández marketed and sold numerous purported dietary supplements for male enhancement or weight loss in violation of the Federal Food, Drug, and Cosmetic Act (FDCA) to American consumers. The products were sold through online stores on platforms such as eBay.com and Bonanzo.com, using seller names “lostchildinpr” and “deleon1988.” The products listed in the indictment include: XXXplosion, Power, Hard Ten Days, Zhansheng Weige, ExtenZe, ExtenZe Plus, La Pepa Negra, Lang Yi Hao, FX3000, Shark Extract, Black Storm, USA Power, Plant Vigra, Para Hombres Paradise, Jack Rabbit, Rhino 12 Titanium, Rhino 69, African Black Ant, Paradise Ultra Plus, Figa XP, U-fit, Natural Max Slimming Advanced Appetite Reducer, and Natural Max Slimming Advanced Fat Burner.

Many of the counterfeit male-enhancement pills, unbeknownst to customers, contained the active pharmaceutical ingredient sildenafil, found in popular and well-known products such as “Viagra” and “Cialis.” Defendants also sold counterfeit condoms. Male latex condoms are medical devices under the FDCA.

The defendants also sold counterfeit Kylie Cosmetics brand products, including lipstick kits. Lipstick is a cosmetic under the FDCA. Analysis of the purported Kylie Lip Kit distributed by defendants was conducted by the FDA and the manufacturer; both confirmed the lipstick and its labeling were counterfeit.

From on or about Oct. 3, 2013, the defendants purchased from overseas suppliers located in China and imported into the United States counterfeit or misbranded dietary supplements, latex condoms and makeup, in violation of the FDCA. In an effort to evade detection by law enforcement, when ordering the illegal products from China, defendants had the packages shipped to a trans-shipper located in Miami, Florida, who would then repackage and/or relabel the parcels and send them to defendants in Puerto Rico.

Defendants mailed numerous packages to customers across the United States through the U.S. Postal Service containing counterfeit and/or misbranded products. They used a residence in Villa Blanca, Manatí, as a warehouse to store and distribute the unlawful products they purchased from overseas suppliers. The defendants also distributed wholesale quantities of the counterfeit and/or misbranded products imported from overseas to wholesale buyers. Defendant Carlos Enrique Velázquez-Gines, initiated numerous wire transfers of funds to overseas suppliers to pay for the unlawful products purchased and imported by the defendants.

“These defendants sold counterfeit and misbranded medical devices, as well as counterfeit and misbranded male-enhancement pills. Some of these medications contained drugs that the consumers were not aware of and could cause danger to their health, including heart attacks or strokes,” said Rosa Emilia Rodríguez-Vélez, U.S. attorney for the District of Puerto Rico. “The U.S. Attorney’s Office will continue to work with the FDA to protect the public from adulterated and misbranded products, and to ensure that dietary supplement sellers provide accurate information about their products.”

“Americans must have confidence that the FDA-regulated products they use are authentic, safe and properly labeled,” said Justin D. Green, special agent in charge, FDA OCI’s Miami Field Office. “We remain fully committed to aggressively pursuing those who place unsuspecting U.S. consumers at risk by distributing illegal drugs, devices or cosmetics.”

“The trafficking of counterfeit goods is simply illegal and in some cases, as this, it becomes a problem of public health and safety and at times threatens national security,” said Orlando Baez, the acting special agent in charge who oversees HSI operations throughout Puerto Rico and the U.S. Virgin Islands. “This illegal activity represents a triple threat as it delivers substandard and often dangerous goods into the economy, rob citizens of good-paying jobs, and generate proceeds that are often funneled back into other criminal enterprises. HSI will continue to work with its enforcement partners to combat the distribution of counterfeit products especially those who that endanger public health.”

Consumers can contact the FDA’s MedWatch program at 1-800-FDA-1088 to report suspected serious adverse events, product quality problems, or product use errors associated with the use of an FDA-regulated product, as well as suspected counterfeit medical products.

The defendants face a forfeiture allegation of nearly $3.7 million, six properties or homes, two bank accounts, one PayPal account, and three certificates of deposit. If convicted, the defendants face a maximum possible sentence of 30 years for the conspiracy charges, 10 years for trafficking counterfeit goods, three years for introducing and receiving misbranded products in interstate commerce. Velázquez-Gines also faces up to 20 years in prison for international money laundering and 20 years for smuggling. The case is being prosecuted by Assistant U.S. Attorney Edward Veronda.

To attack the illegal importation of counterfeit goods in Puerto Rico, ICE and CBP, launched Jan. 27, the San Juan Trade Enforcement Coordination Center (TECC). The San Juan TECC is the first federal partnership of its kind in Puerto Rico and 10th in the nation to combat fraudulent foreign trade. The center will identify, inspect and investigate foreign trade suspected of being fraudulently introduced into Puerto Rico. It will initially focus on identifying violations in the areas of misclassification, under evaluation, free trade zone fraud, free trade agreement fraud, transshipment, trade-base money laundering and broker compliance. The center will pursue both criminal and civil violations.

The HSI-led National Intellectual Property Rights Coordination Center (IPR Center), made up of 23 different federal agencies and four international agencies, and oversees enforcement activities targeting the trafficking of counterfeit goods. Last fiscal year, HSI and its sister agency, U.S. Customs and Border Protection, made more than 28,000 seizures involving counterfeit goods with an estimated value of almost $1.4 billion. The International Anti-counterfeiting Counterfeiting Coalition estimates intellectual property crime costs U.S. businesses several hundred billion dollars a year in lost revenues.   

Anyone with information about the sale counterfeit cosmetics can visit the IPR Center website at IPRCenter.gov to submit a tip. Reports can also be made to the HSI tip line at 1-866-DHS-2-ICE. 

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Last Reviewed/Updated: 10/16/2018