Woman Sentenced to 38 Months for Import & Sale of Counterfeits to U.S. Gov't
U.S. Immigration and Customs Enforcement has announced that Stephanie McCloskey, an administrator for VisionTech Components, LLC, has been sentenced to 38 months in prison for her role in a scheme in which she and others imported counterfeit integrated circuits from China and Hong Kong and sold them to the U.S. Navy, defense contractors and others, marketing some of the products as "military-grade."
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(An integrated circuit is a high-tech device, incorporated into a computer board, which acts as a switch. Integrated circuits control the flow of electricity in the goods or systems into which they are incorporated. They are used in a variety of applications, including industrial, consumer electronics, transportation, infrastructure, medical devices and systems, spacecraft, and military.)
Pleaded Guilty in Nov 2010 to Conspiracy to Traffic Counterfeit Goods, Mail Fraud
McCloskey pleaded guilty in November 2010 to a federal charge of conspiracy to traffic in counterfeit goods and to commit mail fraud and subsequently cooperated with authorities. As part of her plea agreement, she agreed to forfeit a total of approximately $166,141 in salary she earned as an administrator for VisionTech, and could also be ordered to pay as much as $578,062 in restitution. ICE notes this is the first federal prosecution in a case involving the trafficking of counterfeit integrated circuits.
Conspired to Import Circuits from China, Hong Kong w/ Counterfeit "Military Grade" Marks
According to the government's evidence, between December 6, 2006 and August 18, 2010, McCloskey, Shanon Wren1, owner of VisionTech Components, LLC, and others, imported from China and Hong Kong approximately 59,540 integrated circuits bearing counterfeit marks, including military-grade markings, valued at approximately $425,293.
("Military-grade" integrated circuits are sold at a higher price than those of commercial or industrial-grade because of the special temperature and vibration-tolerance testing required by legitimate manufacturers. Such devices are tested to function at extreme temperatures (hot and cold) and/or withstand extreme vibration.)
Advertised Counterfeit Circuits as Name-brand, Trademark-Protected Goods
The defendants advertised name-brand, trademark-protected integrated circuits as "available" on the website www.visiontechcomponents.com, when, in fact, they acquired the devices from China and Hong Kong and imported them into the U.S. through various ports of entry. From about January 2007 through December 2009, they generated approximately $15.8 million in gross receipts through VisionTech Components from the sales of counterfeit integrated circuits
Received Numerous Customer Complaints that Circuits Did Not Function
There were numerous customer complaints regarding the counterfeit integrated circuits that were sold through VisionTech by Wren, McCloskey, and others. McCloskey was aware of these complaints, in which the customers represented that the devices were counterfeit. McCloskey also was aware of complaints in which the customers reported that the integrated circuits they had purchased from VisionTech did not function.
Laid Foundation for IPR Center Initiative Targeting Counterfeits in Gov't Supply Chains
This case laid the foundation for the National Intellectual Property Rights Coordination (IPR Center)-led "Operation Chain Reaction," a comprehensive initiative targeting counterfeit items entering the supply chains of the Department of Defense and other U.S. government agencies.
1Wren, who pleaded not guilty to charges in this case, died in May 2011.