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May 1, 2018Los Angeles, CA, United StatesIntellectual Property Rights and Commercial Fraud

Orange County electronics distributor charged with selling counterfeit integrated circuits with military and commercial uses

LOS ANGELES – The owner of PRB Logics Corporation, an Orange County-based seller of electronic components, was arrested Tuesday on federal charges alleging he sold counterfeit integrated circuits, some of which could have been used in military applications.

Rogelio Vasquez is charged in a 30-count indictment that alleges he acquired old, used and/or discarded integrated circuits from Chinese suppliers that had been repainted and remarked with counterfeit logos. The devices were further remarked with altered date codes, lot codes or countries of origin to deceive customers and end users into thinking the integrated circuits were new, according to the indictment. Vasquez then sold the counterfeit electronics as new parts made by manufacturers such as Xilinx, Analog Devices and Intel.

The investigation into Vasquez and PRB Logics is being conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Defense Criminal Investigative Service, and the National Reconnaissance Office, Office of Inspector General.

Vasquez, who is also known as “James Harrison,” 43, a resident of Orange Calif., was arrested without incident at his residence this morning by federal authorities. Vasquez is expected to be arraigned on the indictment this afternoon in U.S. District Court in Santa Ana.

The indictment charges Vasquez with nine counts of wire fraud, 20 counts of trafficking in counterfeit goods, and one count of trafficking in counterfeit military goods. The charge related to counterfeit military goods alleges that Vasquez sold eight integrated circuits that appeared to be manufactured by Xilinx, knowing that such goods were counterfeit military goods, “the use, malfunction, and failure of which were likely to cause serious bodily injury and death, the disclosure of classified information, impairment of combat operations, and other significant harm to a combat operation, a member of the Armed Forces, and to national security.”

The wire fraud charges allege that Vasquez instructed his Chinese suppliers to remark ICs and also instructed a testing laboratory in China to provide two versions of its report – one of which accurately showed integrated circuit test results and the second of which was a “sanitized version” that did not contain results of “any visual inspection and permanency or other marking tests, which would have revealed that the ICs were used, remarked and/or in poor condition.”

A federal grand jury returned the indictment on April 27. Federal prosecutors on April 23 filed an asset forfeiture complaint against $97,362 in cash seized from Vasquez’s residence in 2016. The asset forfeiture complaint outlines the investigation into counterfeit integrated circuits and notes, “The sale of counterfeit [integrated circuits] into the stream of commerce is a significant problem for the U.S. military, due to the increased risk of equipment failure from using salvaged, sub-standard, or wrong components.”

The charges of wire fraud and trafficking in counterfeit military goods each carry a statutory maximum sentence of 20 years in federal prison. Each count of trafficking of counterfeit goods carries a maximum possible penalty of 10 years in prison.

The criminal case is being prosecuted by Assistant U.S. Attorney Lisa E. Feldman of the Cyber & Intellectual Property Crimes Section. The complaint seeking the forfeiture of the seized funds was filed by Assistant United States Attorney Steven R. Welk, Chief of the Asset Forfeiture Section.