SAN DIEGO – An Imperial Valley businessman pleaded guilty in federal court Thursday to a long-running conspiracy involving money laundering and the trafficking of millions of dollars of counterfeit cell phone parts.
Octavio Cesar Sana, a Spanish national with legal U.S. residency, admitted in a plea agreement that he sold at least $3.2 million worth of Chinese-made counterfeit cell phone parts through businesses he operated since 2007—including a website called “Flexqueen.com.”
Sana admitted in his plea agreement that he and co-conspirator Hongwei Du attended meetings in the United States to set up and expand their counterfeit trafficking ventures. The two were arrested Feb. 3 at the Imperial Valley Airport following an extensive investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Internal Revenue Service (IRS), Criminal Investigations.
“Trafficking in counterfeit goods threatens the integrity of the marketplace,” said U.S. Attorney, Laura E. Duffy. “Consumers who purchase sophisticated electronics equipment bearing a brand name trademark shouldn’t have to run the risk of being fleeced by a counterfeit.”
HSI special agents executed a series of search warrants throughout the U.S., resulting in the seizure of more than 55,000 counterfeit items and additional criminal charges in several jurisdictions. Du has also been charged with conspiracy to traffic in counterfeit goods.
According to court documents, since 2007, Sana’s businesses have sold approximately $6.5 million of cell phone parts and accessories to businesses and consumers throughout the United States. Sana admitted, however, that roughly half of those parts were counterfeit, sourced almost exclusively from China.
Sana also admitted in his plea agreement that he and his co-conspirators used extensive methods to frustrate the ability of U.S. Customs and Border Protection (CBP) to detect, inspect and intercept their imported counterfeit goods, including strategically placing “protective stickers” on products to obscure the infringing trademarks. The defendants also used a dedicated shipping channel for branded goods to avoid attention from Chinese customs officials.
Sana admitted he supervised at least four other individuals who worked at his U.S. businesses distributing counterfeit merchandise, including Angela Vela, who pleaded guilty to separate charges in federal court in El Centro Thursday. Sana further admitted wiring more than $3.1 million to a bank account in Hong Kong to pay for that merchandise and other items, acknowledging that at least $3.2 million worth of merchandise sold by his business since 2007 was counterfeit.
“IRS Criminal Investigation will continue to focus on keeping illicit proceeds out of U.S. banks,” said Special Agent in Charge Erick Martinez. “Today’s plea demonstrates the federal government is committed to maintaining the integrity of our financial system.”
The sentencing for defendants Sana and Vela is scheduled for Jan. 4, 2016, before U.S. District Judge M. James Lorenz. As part of his plea agreement, Sana agreed to forfeit $3.2 million, along with 18 cell phones; 13 computers; two hard drives seized the day of his arrest; and two website domain names used by his businesses to sell the counterfeits. Du, the remaining defendant, is next scheduled to appear in court Nov. 2.
In announcing the plea agreement, the U.S. Attorney observed that trafficking in counterfeit goods is a profitable and growing criminal industry. In 2014 alone, U.S. Customs and Border Protection (CBP) intercepted an estimated $1.2 billion of counterfeit goods in more than 23,000 seizures. The U.S. Attorney also commended the close coordination between the investigating agencies— HSI; IRS Criminal Investigations; and the U.S. Postal Inspection Service. The Department of Justice’s Office of International Affairs also provided invaluable assistance.