Feds Tout Counterfeiter Busts, Grab $143 Million In Phony Cisco Gear


The U.S. Department of Justice on Thursday said that an ongoing investigation by several U.S. investigative branches into the distribution of counterfeit Cisco networking gear around the globe has netted 30 felony convictions and more than 700 hardware seizures with an estimated retail value of more than $143 million.

The operation, known as Operating Network Raider, is a joint effort by the Federal Bureau of Investigation (FBI), Immigration Customs Enforcement (ICE), U.S. Customs and Border Protection (CBP) and other investigators working in conjunction with U.S. Attorneys offices around the country.

According to the Department of Justice, the combined investigation has resulted in several fresh convictions. A judge in the Southern District of Texas on Thursday sentenced Ehab Ashoor, a Saudi citizen residing in Sugerland, Texas, to 51 months in prison and an order to pay $119,400 in restitution to Cisco. Ashoor was found guilty in January by a federal jury, the Department said, of procuring counterfeit parts from an online vendor in China with the intent to sell them to the U.S. Department of Defense.

Previously in January, another counterfeiter, Yongcai Li, was sentenced to 30 months in prison and ordered to pay $790,683 to Cisco in restitution. Li was convicted for trafficking counterfeit Cisco products as Gaoyi Tech, a Shenzhen-China based distributor that procured bogus Cisco gear in China and shipped it to the U.S., according to the Department of Justice.

"These cases involve greedy business hocking counterfeit and substandard hardware to any buyer -- whether it could affect the health and safety of others in a hospital setting or the security of our troops on the battlefield," said John Morton, assistant secretary for Homeland Security for ICE, in a statement.

According to the Department of Justice, the CBP has made 537 seizures of counterfeit Cisco network hardware since 2005, and 47 seizures of Cisco labels for counterfeit products. Together, ICE and CBP have, according to the report, seized 94,000 counterfeit Cisco network components with an estimated retail value of about $86 million.

The Department of Justice report also mentions seizures by the FBI and also foreign investigations in France, China and Canada that get it to the overall $142 million number it touts.

Overall, seizures of phony Cisco gear dropped by 75 percent between 2008 and 2009, the Department of Justice noted, but more than 50 of the seized shipments in that time were labeled as military-grade or aerospace-grade devices.

"Trafficking in counterfeit computer components is a problem that spans the globe and impacts most, if not all, major network equipment manufacturers," added Assistant Attorney General Lanny A. Breuer of the Department of Justice's Criminal Division. "As this operation demonstrates, sustained cooperation between law enforcement and the private sector is often a critical factor in disrupting and dismantling criminal organizations that threaten our economy and endanger public safety."

Cisco has fully cooperated and provided "exceptional assistance," the Department of Justice noted in its statement.

"Counterfeiting is a very serious issue that impacts the entire high-tech industry on a global level, and Cisco and other leading IT companies have been actively addressing this issue for several years now," said a Cisco spokesperson in an e-mailed statement to CRN. "We are pleased with the government's renewed efforts to tackle this challenge, and we plan to continue to' support authorities around the world to curb this ongoing problem. Our top priority is to deliver the highest-quality authentic Cisco products and services to customers worldwide."