A CASE OF COUNTERFEIT AND NATIONAL SECURITY!

On 1-21-09, The FBI announced the arrests of two Southern California men on charges of exporting controlled items to the People’s Republic of China without a license, trafficking in counterfeit goods, and conspiracy to traffic in counterfeit goods. Michael Ming Zhang of Rancho Cucamonga, California, and Policarpo Coronado Gamboa, of Foothill Ranch, California, were charged in two separate indictments last week and arrested. Participating in the arrests were agents with the FBI; U.S. Department of Commerce’s Bureau of Industry and Security - Office of Export Enforcement; U.S. Defense Criminal Investigative Service – Office of Inspector General; U.S. Postal Inspection Service; U.S. Immigration and Customs Enforcement (ICE); and deputies from the Orange County Sheriff’s Department, as well as a team from Investigative Consultants.

According to an indictment returned by a federal grand jury in Los Angeles on January 13th, 2009, Michael Ming Zhang allegedly exported U.S. Department of Commerce (DOC) controlled electronic components to his company’s Shenzhen branch office in the People’s Republic of China (PRC), and to a transshipment point company, Fangyuan Electronics Ltd. (Fangyuan), in the PRC and Hong Kong.

It is illegal to export Department of Commerce-controlled electronic items to the PRC without an export license for specified end-users. The items, known as dual-use technology, are controlled by the Department of Commerce for export to the PRC for national security reasons since they have civilian and military applications. Among the illegal exports were components manufactured by Vetronix Research Corporation in the U.S, whose technology is currently used in the U.S. Army’s battle tanks.

The indictment further alleges that Zhang knowingly and intentionally trafficked in counterfeit Cisco electronic components bearing counterfeit marks from the PRC for distribution in the United States. The indictment alleges that Zhang imported and trafficked a total of at least 4,300 counterfeit Cisco computer networking components in at least 25 separate transactions with an estimated retail market value of more than $3.3 million.

The second indictment alleges that Zhang and co-defendant, Coronado Gamboa, conspired to import Sony electronic components bearing counterfeit marks from the PRC for distribution in the United States. Coronado Gamboa allegedly conspired with Zhang to purchase the counterfeit Sony electronic components in at least 10 separate transactions. The components were then sold in the U.S. and around the world.