ICE and CBP's "Operation Red Zone" Seizes $13.6 Million Worth of Counterfeit NFL Merchandise

Speaking at a National Football League (NFL) news conference Thursday, January 31, 2013, U.S. Immigration and Customs Enforcement (ICE) Director John Morton and NFL Vice President for Legal Affairs Anastasia Danias announced the record-breaking results of a nationwide enforcement operation. The initiative, dubbed 'Operation Red Zone,' commenced Sept. 1, 2012, and targeted international shipments of counterfeit merchandise as it entered the United States. Authorities targeted warehouses, stores, flea markets, online vendors and street vendors selling counterfeit game-related sportswear and tickets throughout the country.

Fake jerseys, ball caps, T-shirts, jackets and other souvenirs are among the counterfeit merchandise and clothing confiscated by teams of special agents and officers from ICE's Homeland Security Investigations (HSI), U.S. Customs and Border Protection (CBP), U.S. Postal Inspection Service, and state and local police departments around the country - all in partnership with the NFL and other major sports leagues.

"The Super Bowl is one of the nation's most exciting events. Organized criminals are preying on that excitement, ripping consumers off with counterfeit merchandise and stealing from the American businesses who have worked hard to build a trusted brand," said Morton. "The sale of counterfeit jerseys and other sports items undermines the legitimate economy, takes jobs away from Americans and fuels crime overseas. No good comes of counterfeiting American products - whether NFL jerseys, airbags, or pharmaceuticals - and we must go after the criminals behind it."

'Hard goods' seizures

Special agents from HSI and officers with CBP operated in multiple teams with the NFL and law enforcement agencies throughout the nation to identify illegal shipments imported into the U.S., as well as stores and vendors selling counterfeit trademarked items. With only days left before Super Bowl XLVII, these teams have already seized more than 160,000 items of phony Super Bowl-related memorabilia along with other counterfeit items for a total take of more than $13.6 million. Due to the increased activity of counterfeiting operations around the world, this year the operation began Sept. 1, 2012, and will continue through Feb. 6, 2013.

"We're delighted to once again partner with federal law enforcement to help combat the influx of counterfeit merchandise," said Danias. "We are grateful for their tireless efforts to keep counterfeiters from illegally profiting off of the fans' enthusiasm for their team and the Super Bowl and from hurting the local businesses that play by the rules."

"In collaboration with the NFL and our (Department of Homeland Security) partners, we are providing critical support in the effort to protect consumers from counterfeit goods," said Robert C. Gomez, director of field operations in Atlanta and New Orleans for CBP. "The enforcement of iintellectual property rights is a national agency priority, and our CBP officers and import specialists are actively working to intercept these products. Counterfeit merchandise hurts our economy and, in many cases, presents safety issues. It is a potential source of funding illegal activities that present a threat to our national security."

Arrests

In September 2012, HSI Boston - assisted by HSI Providence - executed a search warrant at a residence in Warwick, R.I. HSI seized 226 boxes of counterfeit goods containing 4,016 sports jerseys with a manufacturer's suggested retail price (MSRP) of $724,340 and approximately $477,000 worth of additional counterfeit goods, as well as $130,057 in U.S. currency and checks. The owner of the home was subsequently arrested and is currently facing federal charges of trafficking in counterfeit goods and smuggling.

In November 2012, HSI Indianapolis special agents responded to a call from Indiana State Fairgrounds Security that an individual at the Indianapolis International Fest was selling items suspected to be counterfeit. Upon arriving at the festival, the special agents were able to verify the goods to be counterfeit and seized 1,319 counterfeit sports ball caps from the individual with an MSRP of $30,095 and approximately $7,600 worth of additional counterfeit goods. HSI arrested the man for illegally trafficking in counterfeit merchandise. 

Twenty-one other individuals were arrested in partnership with state and local law enforcement
agencies on state charges at locations around the country.

Website seizures

Furthering HSI's efforts to combat the international counterfeiting supply chain and piracy online, special agents seized a total of 313 websites identified to be selling counterfeit merchandise.

The website seizures during Operation Red Zone are the next iteration of Operation In Our Sites, a long term law enforcement initiative targeting counterfeiting and piracy on the Internet. The 313 websites have been seized by law enforcement, and are now in the custody of the federal government. Visitors to these websites will find a seizure banner that notifies them that the domain name has been seized by federal authorities and educates them that willful copyright infringement is a federal crime. Since the launch of Operation In Our Sites in June 2010, the ICE HSI-led Intellectual Property Rights (IPR) Center has seized a total of 2,061 domain names.

HSI has continued to work closely with payment processor PayPal to identify bank accounts being used to facilitate the transfer of money to these illegal operations. To date, PayPal and HSI have identified and seized more than $66,000 in assets in these accounts.

"PayPal and eBay Inc. pride ourselves in going above and beyond in the fight against the illegal online trafficking of counterfeit goods by partnering with law enforcement and rights owners globally, and as part of providing safe and trusted payments and commerce platforms," said Tod Cohen, eBay's vice president and deputy general counsel of government relations.

Operation Red Zone continues

Operation Red Zone will continue this weekend at the Super Bowl, throughout the New Orleans-area and around the nation.

The operation was spearheaded by the IPR Center in coordination with the Department of Justice's Computer Crime and Intellectual Property Section and five U.S. Attorneys' Offices, including the District of Maryland, District of New Jersey, District of Colorado, Eastern District of Louisiana and the District of Utah.

The IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. Working in close coordination with the Department of Justice Task Force on Intellectual Property, the IPR Center uses the expertise of its 21 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to intellectual property theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety and the U.S. economy.

New Jersey Men Arrested for Distributing Counterfeit Viagra

Two New Jersey men were arrested Wednesday, January 23, 2013, in North Bergen, N.J., for distributing 9,600 pills of counterfeit Viagra. The counterfeit Viagra had a suggested retail price of $130,000. This case is being investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the Hudson County (N.J.) Sheriff's Office.

Yousef M. Awawda, 34, of West New York, N.J., and Abdul J. Kazan, 27, of Haledon, N.J., were arrested for selling counterfeit Viagra. Both individuals are being charged with possession and trafficking of counterfeit pharmaceuticals.

On Jan. 23, HSI special agents along with Hudson County detectives conducted an operation in which Awawda allegedly sold counterfeit Viagra pills to an undercover officer. At the time of his arrest, Awawda was in possession of 9,600 counterfeit Viagra pills.

Subsequent to Awawda's arrest, HSI special agents and detectives arrested Kazan, who was Awawda's alleged supplier.

Both men are detained on a $100,000 bond.

New York Jewelry Wholesaler Pleads Guilty to Forging CBP Seal

A jewelry wholesaler has pleaded in federal court to forging the seal of a U.S. government federal agency. The guilty plea is the result of an investigation by U.S. Immigration and Customs Enforcement's (ICE) Office of Professional Responsibility (OPR) and the Internal Revenue Service, Criminal Investigation (IRS-CI).

Tejas Mehta, 36, was arrested Aug. 5, 2012, by OPR and IRS special agents for forging the seal of U.S. Customs and Border Protection (CBP). CBP is a component of the U.S. Department of Homeland Security.

Mehta, the owner of Saritijediam Inc., doing business as Design Trends, is a jeweler who conducts business in Manhattan's diamond district. He used the fraudulent CBP seal to allegedly steal hundreds of thousands of dollars from his business associates and other diamond and precious stones wholesalers.

According to court documents, Mehta received diamonds, jewelry and precious stones from other wholesalers under consignment. Once in his possession, he would sell the jewels. Instead of giving the proceeds to the owner of the merchandise as he agreed to do, he would falsely claim that he could not return or sell the merchandise because it had been seized by federal authorities.

Mehta defrauded three victims by accepting hundreds of thousands of dollars in precious stone diamonds.

Mehta then allegedly made excuses and did not return the stones or any funds from the sale of the diamonds. He told the victim's attorney that the stones had been seized by federal authorities. He used the fraudulent seal to falsely state that the diamonds, precious stones and jewelry – which were consigned to him – had been seized by CBP.

This case is being prosecuted by the U.S Attorney's Office, Southern District of New York.

HSI Seizes $100,000 of Counterfeit Goods

U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) seized more than $100,000 of counterfeit cosmetics, designer handbags and electronics after executing a search warrant at a Conway home Jan. 16, 2013. The U.S. Postal Inspection Service and the Conway Police Department assisted HSI with the investigation leading to the seizure.

"Counterfeit products cost law-abiding Americans their jobs and allow criminals to fund illegal activities with black market sales," said Special Agent in Charge of HSI New Orleans Raymond R. Parmer Jr. "Counterfeit cosmetics are a particular danger to the public because of the potential to ingest harmful substances that might be present in an unregulated product."

 Parmer oversees a five-state area of responsibility including Arkansas, Alabama, Louisiana, Mississippi and Tennessee.

HSI Little Rock began its investigation after receiving information from the U.S. Postal Inspection Service regarding multiple suspicious packages addressed to Vanchello Craig, 33, originating from overseas. On Oct. 22, HSI Little Rock subsequently found two parcels containing counterfeit items in Craig's home during a consensual search of the premises.

On Jan. 14, HSI Little Rock learned Craig was the recipient of another suspicious package. HSI conducted an inspection of the parcel pursuant to its border search authority and discovered additional counterfeit items destined for Craig.

Texas Child Predator Sentenced for Enticing a Minor

A south Texas man was sentenced Wednesday, January 23, 2013, to 11 years and three months in federal prison for enticing a minor, announced U.S. Attorney Kenneth Magidson, Southern District of Texas.

This case was investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), with the assistance of the Pharr Police Department (PD).

Teofanes Salas-Campos, 40, Mission, Texas, was sentenced by U.S. District Judge Randy Crane to 135 months in prison. He pleaded guilty Sept. 17, 2012 that he intended to have sex with a minor for money. After he completes his prison term, Salas-Campos will also serve a five year term of supervised release, and will be required to register as a sex offender.

During Wednesday's court hearing, evidence presented indicated that Salas-Campos had taken a photograph of the victim on her cell phone which showed sexually explicit conduct. The sentence was enhanced because the minor victim was only 14 years old at the time, and because there was a commission of a sex act.

According to court documents, in April 2012, Pharr PD contacted HSI concerning the solicitation of a minor for sexual purposes. Special agents recovered a cellular telephone that was being used by a 14-year-old girl to receive messages from men requesting sex in exchange for money. Posing as the minor, special agents began conversing with the unknown men via text messages on the cellphone.

During this investigation, two others were arrested and charged separately with enticing a minor. Felipe de Jesus Ponce-Torres, 24, of Mexico, previously pleaded guilty before U.S. District Court Judge Micaela Alveraz who sentenced him in November 2012 to 10 years in prison. Jose Luis Garcia-Saldivar, 28, also of Mexico, pleaded guilty before Chief U.S. District Court Judge Ricardo H. Hinojosa, and will be sentenced May 9.

In their respective guilty pleas, all three men admitted they intended to have sex with an individual whom they believed was a minor, and that they were going to pay the minor between $80 and $100.

All three men have been and will remain in custody.

Assistant U.S. Attorneys Kimberly Ann Leo and Juan Villescas, Southern District of Texas, prosecuted this case.

Indiana Man Sentenced for Child Exploitation

A man from Indiana was sentenced Tuesday, January 22, 2013, to serve 34 years and four months in federal prison for attempted coercion and enticement (to engage in unlawful sexual activity with a minor child), and distributing child pornography.

This sentence was announced by U.S. Attorney John Walsh, and U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Kumar Kibble.

Following his prison sentence, Steven Raines, 35, of Fort Wayne, Ind., was also ordered by U.S. District Court Judge R. Brooke Jackson to serve a life time on supervised release. Raines appeared at the hearing in custody, and was remanded immediately after.

Raines was first charged by Criminal Complaint July 2, 2012. He was indicted by a federal grand jury in Denver July 9. He pleaded guilty Oct. 24. And he was sentenced Jan. 22.

According to the stipulated facts contained in the plea agreement, on April 1, 2012, an HSI special agent based in Glenwood Springs, Colo., was chatting online in an undercover capacity. Specifically, the special agent's undercover persona was that of a single mother of two daughters under the age of 16. The undercover special agent (undercover) entered a chat room, accessible by anyone, whose topic focused on sex with children. While in the chat room, the undercover engaged in a chat with an individual who expressed interest in having sex with the undercover and her two minor children. The individual went on to say that he had been searching for 20 years for someone like the undercover who would provide sexual access to her children, and that he discovered that he was a "pedo" when he was 15. He also said that he had been previously accused of molesting a child to whom he had access, and that he previously attempted to meet someone like the undercover in person, but the person failed to show up.

The individual continued chatting and emailing with the undercover by using his smart phone for the next three months. He told the undercover that he did not have a computer. Eventually investigators identified the individual as 35-year old Steven Raines, who lived in Fort Wayne, Ind. As the chats between Raines and the undercover progressed, Raines began to send pictures, some of which depicted child pornography. Eventually Raines and the undercover began to make plans for him to travel to Colorado in order to have sex with, or rape, the two young girls. The defendant's main interest, however, was the child who was under the age of 6. He discussed wanting to father a child with the undercover. Raines also discussed other children he knew from church or his neighborhood, in whom he had a sexual interest and with whom he attempted to have some sort of contact.

As the travel plans were finalized, Raines stated that he was going to bring his child pornography collection with him to Colorado in order to "teach" the girls, and stated an interest in producing child pornography with the undercover and the two minor girls. The content of the child pornography he was bringing featured mostly prepubescent females engaged in sexual acts and included sadistic or masochistic conduct. During the communications between Raines and the undercover, he made statements about both of his children, and about sexually molesting a minor child to whom he had access, and that he produced images of child pornography of him sexually abusing that child.

The defendant began his travel to Colorado June 29, 2012. He sent texts to the undercover throughout the trip. On June 30, near Topeka, Kan., the defendant's van broke down. He rented a vehicle to complete his journey. On June 30, the defendant arrived at a residence in Garfield County, Colo., which was the address provided to him by the undercover. After arriving, he was taken into custody. Special agents and officers seized Raines' cell phone, which has the capacity to take photographs and video. The phone contained about 130 still images and 84 videos of child pornography. During a lawful search of Raines' home, special agents and officers found various discs containing child pornography. The National Center for Missing & Exploited Children identified 23 known series of child pornography featuring real child victims among the images the defendant had on his cell phone and in his email.

"Sexually exploiting children carries extraordinarily severe penalties - decades in federal prison, followed by a life term of supervised release," said U.S. Attorney John Walsh. "It is a top priority of the U.S. Attorney's Office and the Department of Justice to protect children by prosecuting predators such as Raines."

"This significant prison sentence removes another child predator from the streets for decades to come, which helps protect children everywhere," said Kumar C. Kibble, special agent in charge of HSI Denver. "Unfortunately, there are many predators like Steven Raines who pretend to lead normal lives. But our HSI special agents, partnering with other law enforcement agencies, go to extraordinary lengths to help protect and rescue these child victims, while also targeting and prosecuting those who prey on them."

This case was investigated by HSI and the Garfield County Sheriff's Office. HSI Indianapolis and the U.S. Attorney's Office in Fort Wayne, Ind., also played an important role in this investigation and prosecution.

Raines was prosecuted by Assistant U.S. Attorneys Michelle Heldmyer and ICE Special Assistant U.S. Attorney Lillian Alves, with support from Assistant U.S. Attorney Alecia Riewerts Wolak.

This investigation was part of Operation Predator, a nationwide HSI initiative to protect children from sexual predators, including those who travel overseas for sex with minors, Internet child pornographers, criminal alien sex offenders and child sex traffickers. HSI encourages the public to report suspected child predators and any suspicious activity through its toll-free hotline at 1-866-347-2423 or by completing its online tip form. Both are staffed around the clock by investigators.

Suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-843-5678.

HSI is a founding member and current chair of the Virtual Global Taskforce, an international alliance of law enforcement agencies and private industry sector partners working together to prevent and deter online child sexual abuse.

Seattle Company Indicted for Conspiracy to Traffic Counterfeit Goods

A Lynnwood electronics company, a China-based manufacturer and four individuals were indicted by a federal grand jury Thursday, January 17, 2013, for conspiracy to traffic in counterfeit goods, following a probe by the Seattle-Tacoma Border Enforcement Security Task Force (BEST), including U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

ConnectZone.com, LLC, its owner Daniel Oberholtzer, 50, of Lynwood, sales manager Warren Lance Wilder, 46, of Auburn, and production manager Edward Vales, 31, of Seattle, are alleged to have sold counterfeit network products bearing the trademark of Cisco Systems through their online store. They falsely advertised the knockoffs as genuine and offered them for sale at a much lower price than genuine Cisco products. Through the investigation, authorities learned the U.S.-based conspirators were responsible for arranging the manufacture of the counterfeit goods through Mao Mang, aka "Bob Mao," a representative for Shenzhen Xiewei Electronic, LTD of Shanghai, China. Both Mang and the company are also named in the indictment.

In addition to HSI, the other members of BEST that played a prominent role in the case included the Seattle Police Department, the Port of Seattle Police Department, with additional assistance provided by U.S. Customs and Border Protection Office of Field Operations (CBP OFO).

"Counterfeiting high dollar goods can be very lucrative for enterprising criminals," said Brad Bench, special agent in charge of HSI Seattle. "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."

The indictment alleges that Oberholtzer, Wilder and Vales would advise Mao and Xiewei Electronic, and other Chinese firms on how to manufacture products to look like genuine Cisco trademarked goods. In an attempt to evade U.S. customs officials, merchandise would be labeled "samples" when shipped to the United States. The indictment describes the various emails sent between the conspirators as they ran their scheme, including discussions on how to reverse-engineer products. In addition to the conspiracy count, the indictment also charges two counts of mail fraud and four counts of trafficking in counterfeit goods. Prosecutors believe Oberholtzer has been distributing counterfeit equipment from China since at least 1997.

"Protecting the intellectual property of American companies is critical to job growth and economic recovery – especially in our high tech industries," said U.S. Attorney Durkan. "I commend the dedicated investigators who uncovered this scheme."

Conspiracy to traffic in counterfeit goods is punishable by up to 10 years in prison and a $2 million fine. Mail fraud is punishable by up to 20 years in prison and trafficking in counterfeit goods is punishable by up to 10 years in prison. The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

BEST Seattle is comprised of full time members from HSI; CBP OFO; the U.S. Secret Service; the Port of Seattle Police Department; the U.S. Coast Guard Investigative Service; and the FBI. BEST Seattle investigates smuggling and related crimes and combats criminal organizations seeking to exploit vulnerabilities at the Seattle and Tacoma seaports and adjacent waterways. 

The case is being prosecuted by the U.S. Attorney's Office for the Western District of Washington.