Cisco Channel At Center of FBI Raid On Counterfeit Gear

Channel partners selling counterfeit Cisco Systems networking equipment from China to the U.S. government are at the center of an operation by the Federal Bureau of Investigation that has uncovered $3.5 million in fake products.

The FBI has uncovered a widespread distribution network of counterfeit Cisco Systems networking equipment originating in China. It is concerned because some of this fake equipment -- including Cisco routers, switches, Gigabit interface converters and WAN interface cards -- could pose a security threat to the government agencies that have purchased it, according to an FBI presentation leaked on the Web.

The unclassified presentation highlighted Operation Cisco Raider, a multi-agency criminal investigation spearheaded by the FBI in February that targeted illegal distributors of counterfeit network hardware manufactured in China. That operation resulted in the recovery of 3,500 counterfeit network devices valued at $3.5 million, said James Finch, assistant director of the FBI's cyber division, in a statement Friday.

A Cisco spokesman said Cisco has conducted extensive testing on counterfeit gear and has never turned up a software or hardware modification that opened the device to security vulnerabilities.

Cisco believes counterfeiting activities are pursued for profit, not as a means of infiltrating a network.

"[Counterfeiting] is a top customer satisfaction issue for us, and we take it very seriously," the Cisco spokesman said.

Finch praised Cisco for cooperating with the operation. He noted that the presentation was provided to another federal government agency on January 11 and "was never intended for broad distribution or posting to the Internet."

According to the FBI presentation, fake Cisco gear was purchased by multiple federal agencies, including the U.S. Air Force, Marine Corp, Navy, Federal Aviation Administration and the FBI itself, as well as non-government agencies such as defense contractors, universities and financial institutions.

The equipment was procured by those agencies via both authorized and unauthorized Cisco resellers, according to the presentation, which features several slides showing the supply chain that brought fake equipment from China into the U.S through a variety of means, including domestic and foreign distributors, authorized and non-authorized Cisco partners and even eBay.

The FBI views the counterfeit gear as a potential security threat that could enable an enemy to cause systems failures or gain access to otherwise secure systems, according to the presentation. It also outlined instances where fake Cisco gear had led to network shutdowns and, in one case, had even caught on fire.

Cisco's solution to the problem is to urge customers to purchase through certified Cisco Gold and Silver partners, but the FBI says Gold and Silver partners have purchased counterfeit gear and sold it to government agencies and defense contractors.

Cisco takes action against channel partners that knowingly sell fake gear, the spokesman said, noting that some resellers have lost their contracts with Cisco because of it. The San Jose, Calif.-based vendor's Cisco Brand Protection team monitors its channels closely to try to curb sales of fake hardware, he added.

Through Operation Cisco Raider, the FBI and its partners conducted 15 investigations across nine FBI field offices, executing 39 search warrants. Criminal charges were brought against several of the channel companies involved.

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