ConnectZone.com, LLC owner Daniel Oberholtzer will spend 37 months in federal prison and his company must forfeit $716,778 after he conspired with a Chinese company to produce counterfeit Cisco Systems network products later sold on websites operated by ConnectZone as genuine products.
The forfeiture is for selling counterfeit products, advertising the sale of network products promoted as Cisco products, according to U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations.
The company obtained its counterfeit products from multiple foreign sources including the Shanghai, China-based Shenzhen Xiewei Electronic, LTD, according to a ICE and Seattle-Tacoma Border Enforcement Security Task Force investigation.
ICE said the evidence included numerous emails sent between the conspirators as they ran their scheme including emails describing a plan for “Operation Cisco” in which the defendants laid out their plan to obtain counterfeit Cisco products. To evade detection, investigators said the defendants mislabeled the counterfeit shipments as “samples.”
The U.S.-based conspirators falsely advertised the counterfeit goods as genuine and offered it for sale at a much lower price than genuine Cisco equipment, ICE said.
In total, four people and two companies ended up charged in the indictment returned in January 2013. Defendant Edward Vales received a sentence June 13 of two years probation and five months’ home confinement for mail fraud. Lance Wilder ended up convicted of conspiracy to traffic in counterfeit goods, two counts of mail fraud and four counts of trafficking in counterfeit goods following an April 7 jury trial. Wilder will undergo sentencing July 25. Their Chinese co-conspirator Mao Ming, aka BoB Mao, remains at large, according to ICE.
At sentencing, U.S. District Judge Richard A. Jones said because of the poor quality of the counterfeit producdgts, Oberholtzer “had no idea what might happen when the counterfeit Cisco products he sold failed.” Judge Jones said the sentence of 37 months should “send a message to anyone else thinking about being involved in counterfeit goods.”
Innovation and our economy demand that the intellectual property of businesses be protected,” said Jenny Durkan, U.S. Attorney. “Here, the defendants used the hard earned brands of others and slapped it on inferior products.”
“Counterfeiting high dollar goods can be very lucrative for enterprising criminals,” said Brad Bench, HIS Seattle special agent in charge. “Their illicit activities ultimately come at the expense of trademark owners and consumers. They don’t contribute to research and development and the knockoffs they sell generally don’t match the quality and safety of genuine items.”