9 members plead guilty in largest-ever counterfeit goods conspiracy

NEWARK, N.J. — Nine members of a massive, international counterfeit goods conspiracy have admitted their roles in the scheme. The guilty pleas resulted from an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the FBI.

Hai Dong Jiang and Fei Ruo Huang, both 37, of Staten Island, N.Y.; Hai Yan Jiang, 34, of Richardson, Texas; Xiance Zhou, 39, and Jian Chun Qu, 33, both of Bayside, N.Y.; and Ming Zheng, 48, of New York, pleaded guilty Friday before U.S. District Judge Esther Salas in Newark federal court.

Yan Jiang, Ruo Huang and Dong Jiang pleaded guilty to one count of conspiracy to traffic in counterfeit goods. Xiance Zhou and Qu pleaded guilty to one count of conspiracy to structure money. Zheng pleaded guilty to conspiracy to launder money.

Wei Qiang Zhou, 38, of Brooklyn, N.Y., pleaded guilty Dec. 3, Patrick Siu, 41, of Richardson, Texas, pleaded guilty Dec. 4, and Da Yi Huang, 43, of Staten Island, pleaded guilty Dec. 11, all before Judge Salas in Newark federal court, to one count of conspiracy to traffic in counterfeit goods.

"These nine individuals are linked to numerous containers of counterfeit goods that were smuggled into the United States. The sale of counterfeit items not only take jobs from hard working Americans, but the illicit funds generated also support other criminal activity," said Andrew McLees, special agent in charge of HSI Newark. "HSI is committed to guarding American industry from counterfeiters like Hai Dong Jiang."

According to court documents, from November 2009 through February 2012, the defendants ran one of the largest counterfeit goods smuggling and distribution conspiracies ever charged by the U.S. 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 as part 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. Other conspirators controlled the importation of the counterfeit goods into the United States and distributed them once they 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 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.

Several undercover special agents were introduced to the conspirators. They purported to have unspecified "connections" at the port, which allowed them to release containers and pass them through to the conspirators. The conspirators paid the undercover special agents for these services.

In total, during the course of this investigation, the conspirators provided the undercover special agents more than $2 million.

The special agents 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.

Sentencing for the conspirators is set for March 2014.