US agencies crack down on counterfeit networking hardware

The agencies have seized $US143 million worth of counterfeit equipment in Operation Network Raider

US agencies targeting the sale of counterfeit networking hardware have gotten 30 felony convictions, including a man attempting to sell fake networking equipment to the US Marine Corps, and seized $US143 million worth of fake Cisco hardware, the US Department of Justice said on Thursday.

The DOJ, U.S. Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement (ICE), and U.S. Customs and Border Protection (CBP) have conducted Operation Network Raider, which has made 700 separate seizures of networking equipment since 2005, the DOJ said.

In addition to the convictions and seizures, nine people are facing trial and another eight defendants are awaiting sentencing, the agencies said. There was a 75 percent decrease in seizures of counterfeit network hardware at U.S. borders from 2008 to 2009, CBP said.

Operation Network Raider seeks to protect computer networks and IT infrastructure in the U.S. from failures associated with counterfeit network hardware, including network routers, switches and network cards, the agencies said.

On Thursday, Ehab Ashoor, 49, a Saudi citizen residing in Sugarland, Texas, was sentenced in the U.S. District Court for the Southern District of Texas to just over four years in prison and ordered to pay $119,400 in restitution to Cisco Systems. On Jan. 22, a jury found Ashoor guilty of charges related to trafficking in counterfeit Cisco products, the DOJ said.

Ashoor purchased counterfeit Cisco Gigabit Interface Converters (GBICs) from an online vendor in China with the intention of selling them to the U.S. Department of Defense for use by Marine Corps personnel operating in Iraq, the DOJ said. The computer network for which the GBICs were intended is used by the Marine Corps to transmit troop movements, relay intelligence and maintain security for a military base west of Fallujah, Iraq, the DOJ said.

On Jan. 25, Yongcai Li, 33, a resident of China, was sentenced to two-and-a-half years in prison and ordered to pay $790,683 in restitution to Cisco Systems in U.S. District Court for the Central District of California. Li procured counterfeit Cisco products in China in response to orders and then shipped the products to the U.S., the DOJ said.

“Trafficking in counterfeit computer components is a problem that spans the globe and impacts most, if not all, major network equipment manufacturers," Assistant Attorney General Lanny Breuer, of the DOJ's Criminal Division, said in a statement. "We are intensely focused on bringing to justice those who engage in piracy and counterfeiting.”

ICE and CBP have seized more than 94,000 counterfeit Cisco networking devices and labels in the operation, the DOJ said.

“These cases involve greedy businessmen 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,” John Morton, assistant secretary of homeland security for ICE, said in a statement. “They pose a triple threat to our nation by stealing from our economy, threatening U.S. jobs and potentially putting the safety of our citizens at risk."

Tags networking hardwareNetworkingChinacisco

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Grant Gross

IDG News Service

3 Comments

Lone Wolf

1

I wonder if there is another aspect to this story, perhaps one where foreign agents (chinese or arabs) intended to sell hardware with modified software that captured encryption keys or had backdoors into the network?

Perhaps that is another reason of the fierce crackdown..

The Guy in the Know

2

This article is ultimate BS to scare the non-technical people of the USA. Justice was not served.

A "GBIC" is a properietary piece of plastic made by CISCO that slides into routers and switches. The GBIC typically has a fiber optic or copper ethernet port on it and the purpose of the GBIC is to connect a Cisco device to another device on a network.

Here's the deal. CISCO makes them proprietary so they can charge between $250-$1200 for a plug. That's all it is, a fancy plug that gets inserted into a Cisco device. Naturally, the Chinese manufacturers that ACTUALLY MAKE THE REAL CISCO GBICs get their friends at the factory down the street to make knock-offs to be sold at about $50 each.

What happens to our national security by using counterfeit GBICs? Nothing. What happens to their reliability by using counterfeit GBICs? It's just a simple chip that sends ONES and ZEROS...they work just fine.

So in closing, a big, brutal corporation has sent people to jail so they can maintain their monopoly by charging a fortune for a sub-assembly of their products that should cost $10. In a free market someone realized they could make and sell GBICs much cheaper and that in turn resulted in the DOJ going after the prosecution of free marketeers in order to protect the monopoly.

This is not about protecting intellectual property, it is about protecting outrageous pricing markups controlled by Cisco.

TS

3

To the above:

You're assuming the US govt pays full retail for anything. They don't.

You're also assuming that only GBICs were involved in all the cases. Huawei has already been caught stealing Cisco's intellectual property in the past.

If for yourself, or for your company (be sure to say "hey, I know this great Chinese counterfeiter" to your CIO), want to buy knockoffs, go right ahead. But they shouldn't be labeled as Cisco products.

That, my smart friends, is the point.

Companies are very willing to pay a premium for Cisco's gear and superior support because as the old saying goes "Nobody ever got fired for buying IBM". Cisco is the old IBM for networking gear. Or defend Chinese BackAlley Networking Ltd. after your gear fails. Choose your own fate.

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