Two convicted in U.S. over counterfeit Cisco gear

A federal jury found that the two persons had altered product labels to defraud U.S. customers

A U.S. federal jury convicted two people this week over a scheme to import and sell counterfeit Cisco-branded networking equipment, the Department of Justice said on Thursday.

The jury found Chun-Yu Zhao of Virginia guilty of conspiracy and 15 other counts related to import fraud and counterfeit labeling, the department said in a statement. Zhao ran the U.S. headquarters of a Chinese company that stole intellectual property and defrauded customers, the statement said, citing U.S. Attorney Neil MacBride.

Zhao took millions of dollars from unsuspecting U.S. consumers and businesses, MacBride said.

The counterfeit case is part of a wider justice department effort to fight a growing number of intellectual property crimes. Authorities in the U.S. and Canada have been looking into import fraud involving China since 2005.

The jury's Tuesday verdict also convicted a second suspect, Donald Cone of Maryland, of conspiracy, the statement said.

Cone, Zhao and Zhao's family members in China had operated a "large-scale counterfeit computer networking equipment business" under the name Han Tong Technology (Hong Kong), the justice department said. Zhao and others working with her had defrauded U.S. buyers through a company in Virginia called JDC Networking.

JDC Networking used pirated software to alter Cisco products and falsify labels, the department said. Zhao used different names and addresses on import documents and hid millions of dollars of counterfeit proceeds through bank accounts and property under the names of family members in China, the statement said.

Each suspect faces a maximum sentence of five years in prison and a US$250,000 fine for conspiracy when sentenced as scheduled in August. Zhao could also get decades more prison time and more than $2 million in additional fines for the other charges, the justice department said.

As of May 2010, efforts to stop counterfeit networking hardware in the U.S. had led to 30 felony convictions and seizures of $143 million worth of fake Cisco hardware.

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