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Intellectual Property Rights and Commercial Fraud
06/19/2014

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Member of $300 million counterfeit conspiracy sentenced to federal prison

NEWARK, N.J. — A member of a massive, international conspiracy responsible for importing counterfeit goods from China worth a retail value of $300 million was sentenced Friday to more than three years in federal prison. The sentence follows an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the Federal Bureau of Investigation and U.S. Customs and Border Protection (CBP).

Hai Dong Jiang, aka Jimmy, aka Dong, 37, of Staten Island, New York, previously pleaded guilty before U.S. District Judge Esther Salas in Newark federal court to one count of conspiracy to traffic in counterfeit.

"Criminals who illegally import and sell counterfeit products do significant harm to the United States by stealing revenue from legitimate businesses that pay taxes, create jobs and support our national economy," said Special Agent in Charge Andrew McLees of HSI Newark. "Counterfeiting is a serious crime for HSI, as the profits of these illegal black-market items are routinely diverted to support further criminal activity such as drug trafficking, money laundering and in some cases even potential terrorism."

According to court documents and statements, from November 2009 through February 2012, Dong Jiang and his co-defendants ran one of the largest counterfeit goods smuggling and distribution conspiracies ever prosecuted by the Department of Justice. The defendants and others conspired to import hundreds of containers of counterfeit goods – primarily handbags, 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.

Dong Jiang served as one of the directors of the smuggling scheme. Dong Jiang ordered counterfeit merchandise from China; negotiated shipments of counterfeit goods from China; arranged for payment for that merchandise and supervised the distribution of that merchandise in and around the New York/New Jersey area.

In addition to the prison term, Dong Jiang will serve two years of supervised and forfeit cash and property as described in the plea agreement.

The HSI-led Intellectual Property Rights Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. Working in close coordination with the Department of Justice Task Force on Intellectual Property, the IPR Center uses the expertise of its 21-member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to intellectual property theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety and the U.S. economy.

For more information on the IPR Center please visit www.IPRCenter.gov.

HSI encourages the public to report intellectual property rights violations and related information by calling at 1-866-DHS-2ICE or by visiting www.ICE.gov/tips. For more information, visit www.ice.gov.

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Last Reviewed/Updated: 09/23/2014