Cisco Fraudster Must Pay $100M, Serve Jail Time For Selling $1B In Counterfeit Gear

A CEO of a number of tech companies has been sentenced in federal court for running what officials are calling “one of the largest counterfeit-trafficking operations ever.” Onur Aksoy was convicted of selling counterfeit Cisco equipment, with some of the phony gear being deployed in classified information systems, combat and non-combat operations of the U.S. Navy, U.S. Air Force, and U.S. Army, as well as hospitals and schools, according to the U.S. Department of Justice.

A Miami-based CEO of a number of tech companies has been sentenced in federal court to more than six years in prison for running an extensive operation selling counterfeit Cisco equipment to many buyers, with some of the fake gear ending up in United States government systems and classified information systems.

Onur Aksoy, also known as Ron Aksoy and Dave Durden, pleaded guilty in June 2023 to reselling illegitimate Cisco products for an estimated retail value of more than $1 billion through 19 different companies, as well as 15 Amazon storefronts and at least 10 eBay storefronts from around 2013 to 2022, according to the U.S. Department of Justice. The companies and storefronts were known collectively as Pro Network Entities.

As part of Aksoy’s plea agreement, he must pay Cisco and his other victims $100 million in restitution.

Aksoy’s charges include conspiring with others to traffic in counterfeit goods, mail fraud, and wire fraud. Aksoy was sentenced on Wednesday in federal court in New Jersey.

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“Through an elaborate, years-long scheme, Aksoy created and ran one of the largest counterfeit-trafficking operations ever,” said Vikas Khanna, attorney for the U.S. “His operation introduced tens of thousands of counterfeit and low-quality devices trafficked from China into the U.S. supply chain, jeopardizing both private-sector and public-sector users, including highly sensitive U.S. military applications like the support platforms of U.S. fighter jets and other military aircraft.”

The fraudulent gear found its way into combat and non-combat operations of the U.S. Navy, U.S. Air Force, and U.S. Army, including within platforms supporting the F-15, F-18, and F-22 fighter jets, AH-64 Apache attack helicopter, P-8 maritime patrol aircraft, and B-52 Stratofortress bomber aircraft, according to the Department of Justice.

In addition to governmental systems, the illegitimate gear, which often begin performing poorly or fail entirely once installed, also ended up in a number of U.S. hospitals and schools, according to the Justice Department.

Askoy’s fraudulent activity came onto U.S. authorities and Cisco’s radar ten years ago in 2014 when his counterfeit shipments were seized, and he was ordered to stop. Aksoy later relied on Chinese suppliers to carry out his operation. These suppliers would often use older or lower-model Cisco products, including some that had been previously discarded, and modify the shoddy gear to appear refurbished or new while loading pirated Cisco software on the hardware.

“At times, the counterfeit products would simply fail or otherwise malfunction, causing substantial damage to their users’ networks and operations and, in some cases, costing their users tens of thousands of dollars,” investigators wrote in court documents on the case.

Khanna in a statement said that the sentence brings Aksoy to justice and holds him accountable for the “breathtaking scale” of his counterfeit operation.

"We applaud the decisive action taken by the U.S. Department of Justice and all of the U.S. law enforcement agencies involved for their investigative actions, the successful indictment, and the diligent work that led to today's outcome. The successful conclusion of this case, resulting from a complex investigation and strong collaboration with state and federal law enforcement, highlights Cisco's ongoing commitment to protecting our valued customers, legitimate authorized Cisco channel partners, and maintaining the integrity and quality of Cisco products and services," Cisco spokesperson Robyn Blum told CRN via email.

The San Jose, Calif.-based tech giant in recent years has struggled with counterfeit and gray market activity, especially as COVID-19-related supply chain challenges and material shortages slowed manufacturing and shipping.

Gray market products, which is gear sold legally outside the brand’s permission by unauthorized dealers, as well as fake and altered Cisco products, are undercutting legitimate business for channel partners to the tune of $1.2 billion a year, Cisco told CRN in 2022. The economic loss to solution providers as a whole exceeds $100 billion a year, according to the nonprofit Alliance for Gray Market and Counterfeit Abatement.