A New York-based hardware reseller must serve 30 months in prison for trafficking and selling bogus Cisco Systems gear.
Charles Lacy-Thompson, former owner of Coletronic Computer, was recently sentenced by U.S District Judge Stephen C. Robinson in White Plains Federal Court to serve the 30-month-term and also pay $2.2 million in forfeiture and restitution, according to the United States Attorney, Southern District of New York.
"This was a crime of pure greed," Robinson told the court, according to the Hudson Valley, N.Y. Journal News. "This was an individual who could have done things the right way. The only consequence of that is that he would have been less rich."
The majority of Coletronic's sales came from the knock-off gear. In 2005, the company had $3.9 million in sales. Sales ballooned to $4.9 million in 2006, the Journal News reported.
Lacy-Thompson, of Briarcliff Manor, was originally indicted on October 24, 2007 and pleaded guilty on April 30.
According to the U.S. Attorney's Office, from 2003 to 2007 Lacy-Thompson "engaged in a scheme to transport computer equipment and packaging bearing counterfeit Cisco marks."
The U.S. Attorney said Lacy-Thompson imported generic items from China that resembled Cisco transceivers, devices used to transmit and receive data across networks; as well as packages of white stickers bearing the model numbers of transceivers manufactured by San Jose, Calif.-based Cisco.
The 52-year-old Lacy-Thompson and others would then market and sell the phone gear as Cisco products to customers in the U.S. and Europe through Coletronic, which was based out of Ossining, N.Y.
As part of his plea agreement, Lacy-Thompson has agreed to forfeit $2.2 million in cash and property to the U.S. He has also made payments in back taxes of over $972,000 to the IRS and $211,000 to State of New York.
Earlier this year, the FBI announced it is cracking down on channel partners selling counterfeit Cisco gear from China into the U.S. government, an investigation that as of May had uncovered 3,500 pieces of phony Cisco gear, worth roughly $3.5 million, including Cisco routers, switches, Gigabit interface converters and WAN interface cards.
The bogus gear sales, the FBI said, could pose a security threat to the government agencies that have bought it.
The investigation, dubbed Operation Cisco Raider, is a multi-agency criminal probe spearheaded by the FBI in February, targeting the bogus Chinese hardware. According to a leaked FBI presentation, which was not intended for public consumption, fake Cisco gear was bought by several federal agencies, such as the U.S. Air Force, Marine Corp., Navy, the FAA and the FBI itself, along with non-government bodies like defense contractors, universities and financial institutions. The gear was sold by both authorized and unauthorized Cisco resellers.
At the time, a Cisco spokesman said Cisco has conducted extensive testing on counterfeit gear and has never turned up a software or hardware modification that opened devices to security vulnerabilities. Cisco said counterfeiting activities are pursued for profit, not as a means of infiltrating a network.
"and#91;Counterfeitingand#93; is a top customer satisfaction issue for us, and we take it very seriously," the Cisco spokesman said at the time.
Cisco has urged 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 vendor's Cisco Brand Protection team monitors its channels closely to try to curb sales of fake hardware, he added.
Jennifer Hagendorf-Follett contributed to this article.