SAN DIEGO – Imperial Valley businessman Octavio Cesar Sana, a Spanish national with legal U.S. residency, pleaded guilty today to running a years-long conspiracy to traffic in millions of dollars of counterfeit Chinese cell phone parts.
Sana pleaded guilty before U.S. Magistrate Judge William Gallo to conspiring to traffic in counterfeit goods and related money laundering charges. According to the plea agreement, Sana sold at least $3.2 million worth of counterfeit Chinese cell phone parts through businesses he has operated since 2007—including through a website called “Flexqueen.com.”
Sana was arrested February 3, 2015 at the Imperial Valley Airport, along with Chinese national Hongwei Du. Du has also been charged with conspiracy to traffic in counterfeit goods.*
Sana admitted in his plea agreement that he and Du were attending meetings in the United States to set up further counterfeit trafficking ventures. The two were arrested in connection with a multi-year investigation spearheaded by Homeland Security Investigations (HSI) and the Internal Revenue Service, Criminal Investigations. HSI executed a series of searches nationwide coordinated with the arrest of Sana and Du, including Tampa, Florida; Brownsville, Texas; Boston, Massachusetts; Atlanta, Georgia; Pittsburgh, Pennsylvania; Nashville, Tennessee; and Orange, San Diego and Imperial counties in California. These searches resulted in the seizure of more than 55,000 counterfeit items, and additional criminal charges in several jurisdictions.
According to the plea agreement, 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 counterfeits, 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 to detect, inspect and intercept their imported counterfeit goods. An example of such deception included shipping merchandise with “protective stickers” strategically placed to obscure the products’ infringing trademarks. The plea agreement also explains that Sana and Du utilized a dedicated shipping channel for branded goods to avoid attention from Chinese customs officials.
In the United States, Sana admitted that he supervised at least four other individuals who worked at his businesses distributing counterfeit merchandise, including Angela Vela, who also pleaded guilty to separate charges in federal court in El Centro today before Judge Peter Lewis. Sana admitted wiring more than $3.1 million to a bank account in Hong Kong to pay for that merchandise and other items, and acknowledged that at least $3.2 million of merchandise sold by his business since 2007 was fake.
Sentencing for both defendants is scheduled for January 4, 2016 at 8:30 a.m. before U.S. District Judge M. James Lorenz.
As part of his plea agreement, Sana has agreed to forfeit $3.2 million, along with 18 cell phones, 13 computers, and 2 hard drives seized the day of his arrest, and the two website domain names used by his businesses to sell the counterfeits.
“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.” U.S. Attorney Duffy observed that trafficking in counterfeit goods is a profitable and growing criminal industry; U.S. Customs and Border Protection (CBP) reported that in 2014 alone, it intercepted an estimated $1.2 billion of counterfeit goods in more than 23,000 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.
“The sale of counterfeit goods not only robs legitimate companies of billions in revenue every year, it also hurts the men and women who depend on those businesses for their livelihoods,” said David Shaw, Special Agent in Charge for HSI San Diego. “Beyond that, intellectual property theft poses a very real public safety threat, by generating proceeds for organized crime and introducing substandard, often dangerous goods into the commerce chain.”
“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.”
Du, the remaining defendant, is next scheduled to appear in court on November 2, 2015.