June 20, 2012

“Operation: Long Distance Haul” Results in Three Arrests, Seizure of More than $2 Million in Counterfeit Cell Phones

More than 32,000 counterfeit phones seized in Nassau County and at JFK International Airport

MINEOLA, NY – Nassau County District Attorney Kathleen Rice was joined by Nassau County Police Sergeant Patrick Ryder, Special Agent in Charge James T. Hayes of Homeland Security Investigations in New York, and U.S. Customs and Border Protection, JFK Port Director Brian Humphrey to announce the results of “Operation: Long Distance Haul,” a multi-agency investigation that has resulted in three arrests and the seizure of more than $2 million worth of counterfeit Chinese cell phones.

The investigation was conducted by the DA’s Office, Nassau County Police Department, ICE Homeland Security Investigations, and U.S. Customs and Border Protection.

Arrested as a result of the investigation is Qiang Chen, 44, and Ye Zhang, 43, both of Syosset and doing business as AMAX International Group, Inc., and Robert Eisenberg, 28, of Manhattan, doing business as Cellular Wholesale USA, Inc. Chen is charged with five counts of Trademark Counterfeiting in the Second Degree. Zhang faces two counts of Trademark Counterfeiting in the Second Degree, and Eisenberg faces one count of Trademark Counterfeiting in the Second Degree. Each defendant faces up to four years in prison if convicted.

The charges could be upgraded to Trademark Counterfeiting in the First Degree depending on the ultimate number of counterfeit items and their retail value.

The investigation began in January 2012 when customs agents at JFK International Airport performing a random inspection of a shipment of cellular phones from China grew suspicious that the phones were not authentic due to their appearance and because they were shipped loose in cardboard boxes with no packaging. Agents removed several phones from the shipment and sent them to the respective companies they were labeled as, such as Motorola, HTC, LG, and Casio, for testing.

Analysis by the real manufacturers revealed that these phones were counterfeit, with numerous inconsistencies in the phones’ designs and the inferior technology and parts used in their construction.

Agents enlisted the assistance of the Nassau County DA’s Office in March, and allowed the shipment to reach its intended recipient, but flagged both the sender and recipient. Eight more pallets of counterfeit cell phones were sent via China Air to the same recipients between January and June.

The Nassau County Police Department’s Asset Forfeiture and Intelligence Unit tracked the phones from the airport to two warehouses in Plainview and Hicksville.

Search warrants were executed yesterday at the warehouses, as well as on a shipment at JFK, resulting in the seizure of more than 32,000 phones with a retail value of more than $2 million. The recipients would re-package and sell the counterfeit phones online or through legitimate cell phone wholesalers who were likely unaware they were receiving counterfeit goods.

Business records will be analyzed to determine what companies were duped by the counterfeit phones, and they will be contacted and warned to investigate their inventory.

“These scam artists knew that these phones were junk, knew that they were illegal, and knew that they were duping their customers, and the only thing they cared about was their profit,” Rice said. “Thanks to the collaborative efforts of the law enforcement agencies involved in this investigation, these three men will be held accountable for the damage they have done.”

“The defendants in this case allegedly sought to profit by providing the public with a substandard product. They also robbed manufacturers of their intellectual property, and robbed consumers of quality they come to expect and demand,” said James T. Hayes Jr. special agent in charge of HSI New York.“HSI and its law enforcement partners will remain vigilant of criminal organizations that try to circumvent our customs laws to smuggle cheap knock offs that impact our economy.”

“’Operation: Long Distance Haul’” is a great example of how effective Law Enforcement can be working in collaboration,” said Nassau County Police Commissioner Thomas Dale. “The Nassau County Police Department has a long history of enforcing Trademark Counterfeiting offenses. It's an economic crime, it hurts the regular cell provider and causes a burden on taxpayers and law enforcement. These counterfeit phones can cause health issues due to products not beingmanufactured to U.S. standards. I wouldlike the thank the hard work and dedication of the Nassau County District Attorney's Office, ICE Homeland Security Investigations in New York, andU.S. Customs and Border Protection.”

Deputy Chief Anne Donnelly and Assistant District Attorney Bena K. Varughese of the Rackets Bureau are prosecuting the case for the DA’s Office.

The charges are merely accusations and the defendants are presumed innocent until and unless proven guilty.