Chinese man sentenced for role in local scam

SAN DIEGO — A 33-year-old Chinese citizen was sentenced to 36 months in prison today for serving as the primary Chinese supplier of a yearslong conspiracy to import counterfeit goods into the United States. Hongwei “Nick” Du was sentenced by Judge M. James Lorenz for conspiring to traffic in counterfeit goods and related money laundering charges. The Court imposed sentence based on Du’s role as purchasing agent and supplier of an Imperial Valley business run by Spanish citizen Octavio Cesar Sana, who was sentenced to 41 months in custody in July.

Sana’s business, “Flexqueen.com,” sold at least $3.2 million of counterfeit cell phone components for years over the internet, and briefly from a store front repair business in downtown San Diego. Du operated as Sana’s largest source of supply and Chinese purchasing agent, securing $1.5 million of counterfeit cell phone parts for Flexqueen from manufacturers in Shenzhen, China.

Du was arrested Feb. 3, 2015, at the Imperial Valley Airport. He was meeting with Sana and others to coordinate further counterfeit trafficking ventures. Du had brought sample counterfeit cell phone parts with him to the meeting, although he recognized that they might be seized by U.S. Customs.

The investigation leading to Du and Sana’s arrests was spearheaded by Homeland Security Investigations (HSI) and the Internal Revenue Service, Criminal Investigations. HSI executed a series of nationwide searches in connection with the arrests, including those in Tampa, Florida; Brownsville, Texas; Boston, Massachusetts; Atlanta, Georgia; Pittsburgh, Pennsylvania; Nashville, Tennessee; and San Diego and Imperial counties. These searches resulted in the seizure of more than 55,000 counterfeit items, and additional criminal charges and convictions in several jurisdictions.

According to the plea agreement, since 2007, Sana’s businesses sold approximately $6.5 million of cell phone parts and accessories to businesses and consumers throughout the United States. In turn, Sana paid approximately $3.1 million to Du. Sana and Du have admitted that roughly half of those parts were counterfeits.

Du, Sana, and other co-conspirators repeatedly evaded U.S. Customs and Border Protection’s ability to detect, inspect and intercept their imported counterfeit goods. For example, Du would cover the merchandise with “protective stickers” strategically placed to obscure the products’ infringing trademarks, and include phony invoices with much lower declared values to deflect attention from authorities and avoid import duties. Du also paid special Chinese shipping agents an additional surcharge for branded goods to avoid attention from Chinese customs officials.

Du was also ordered to forfeit $1.5 million, as well as the cellular telephone seized at his arrest, and to pay a fine of $10,000.

“The vast international tide of counterfeit goods compromises our nation’s import controls and threatens consumers, businesses, and the economy,” said U.S. Attorney Laura E. Duffy. “International merchants of counterfeit goods should beware: they are not immune from criminal penalties if they sell their products into the United States.” U.S. Attorney Duffy observed that, in 2015 alone, U.S. Customs and Border Protection (CBP) interdicted an estimated $1.35 billion of counterfeit goods in roughly 28,865 seizures.

Duffy commended the close coordination between the investigating agencies — the Department of Homeland Security, Homeland Security Investigations; the Internal Revenue Service, Criminal Investigations; and the U.S. Postal Inspection Service — during the lengthy investigation of this case. The Department of Justice’s Office of International Affairs also provided invaluable assistance.