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Date: 05-02-2024
Case Style:
Case Number: 3:22-cr-00464
Judge: Peter G. Sheridan
Court: The United States District Court for the District of New Jersey (Mercer County)
Plaintiff's Attorney: The United States Attorney’s Office in Trenton
Defendant's Attorney: Barry M. Kazan
Description:
CEO of Dozens of Companies Sentenced to 78 Months in Prison for Massive Scheme to Traffic in Fraudulent and Counterfeit Cisco Networking Equipment
A Florida resident and dual citizen of the United States and Turkey was sentenced to 78 months in prison for running an extensive operation over many years to traffic in fraudulent and counterfeit Cisco networking equipment.
Onur Aksoy, aka “Ron Aksoy” and “Dave Durden,” 40, of Miami, Florida, pleaded guilty before U.S. District Judge Peter G. Sheridan on June 5, 2023, to two counts of an indictment charging him with conspiring with others to traffic in counterfeit goods, to commit mail fraud, and to commit wire fraud (Count 1); and mail fraud (Count 4). Judge Sheridan imposed the sentence on May 1, 2024, in Trenton federal court.
“Through an elaborate, years-long scheme, Aksoy created and ran one of the largest counterfeit-trafficking operations ever,” Attorney for the United States Khanna said. “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. Yesterday’s sentence, made possible by the investigation and prosecution of this Office and our Department and agency partners, now brings Aksoy to justice and holds him accountable for the breathtaking scale of his operation.”
“Aksoy sold hundreds of millions of dollars’ worth of counterfeit computer networking equipment that ended up in U.S. hospitals, schools, and highly sensitive military and other governmental systems, including platforms supporting sophisticated U.S. fighter jets and military aircraft,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Criminals who flood the supply chain with low-quality networking equipment from China and Hong Kong harm U.S. businesses, pose serious health and safety risks, and compromise national security. This case—one of the largest counterfeit trademark cases ever prosecuted in the United States—demonstrates the Criminal Division’s commitment and capacity to prosecute the most complex counterfeiting schemes and bring the perpetrators to justice.”
“Protecting the integrity of the supply chain for everyday consumers, government agencies, and our warfighters remains a top priority for Homeland Security Investigations,” HSI Los Angeles Special Agent in Charge Eddy Wang said. “My office and our partners will continue to work diligently to remove counterfeit products that adversely affect public health and safety from the stream of commerce and hold the offenders accountable.”
“Mr. Aksoy’s sentencing brings closure to his yearslong greed-driven scheme that wasted U.S. taxpayer dollars and degraded our nation’s military readiness when he and his companies knowingly defrauded the Department of Defense by introducing counterfeit products into its supply chain that routinely failed or did not work at all,” Bryan D. Denny, Special Agent in Charge of the DoD Office of Inspector General, Defense Criminal Investigative Service, Western Field Office, said. “In doing so, he sold counterfeit Cisco products to the DoD that were found on numerous military bases and in various systems, including but not limited to U.S. Air Force F-15 and U.S. Navy P-8 aircraft flight simulators.”
“This case should serve as a warning to those who attempt to sell counterfeit goods to the U.S. government,” Special Agent in Charge Greg Gross of the Naval Criminal Investigative Service Economic Crimes Field Office said. “NCIS is committed to safeguarding the Department of Navy acquisition programs that enhance fleet readiness.”
“Companies should be honest in their dealings with the government,” GSA Deputy Inspector General Robert C. Erickson said. “GSA OIG special agents are committed to working with investigative partners to hold accountable fraudsters who sell counterfeit equipment to the United States.”
According to documents filed in this case and statements made in court:
Onur Aksoy, 40, of Miami, ran at least 19 companies formed in New Jersey and Florida, as well as approximately 15 Amazon storefronts and at least 10 eBay storefronts (collectively, the “Pro Network Entities”), that imported from suppliers in China and Hong Kong tens of thousands of low-quality, modified computer networking devices with counterfeit Cisco labels, stickers, boxes, documentation, and packaging, all bearing counterfeit trademarks registered and owned by Cisco, that made the goods falsely appear to be new, genuine, and high-quality devices manufactured and authorized by Cisco. The devices had an estimated total retail value of hundreds of millions of dollars. The Pro Network Entities generated over $100 million in revenue, and Aksoy received millions of dollars for his personal gain.
The devices the Pro Network Entities imported from China and Hong Kong were typically older, lower-model products – some of which had been sold or discarded – which Chinese counterfeiters then modified to appear to be genuine versions of new, enhanced, and more expensive Cisco devices. The Chinese counterfeiters often added pirated Cisco software and unauthorized, low-quality, or unreliable components – including components to circumvent technological measures added by Cisco to the software to check for software license compliance and to authenticate the hardware. To make the devices appear new, genuine, high-quality, and factory-sealed by Cisco, the Chinese counterfeiters added counterfeited Cisco labels, stickers, boxes, documentation, packaging, and other materials.
Fraudulent and counterfeit products sold by the Pro Network Entities suffered from numerous performance, functionality, and safety problems. Often, they would simply fail or otherwise malfunction, causing significant damage to their users’ networks and operations – in some cases, costing users tens of thousands of dollars. Customers of Aksoy’s fraudulent and counterfeit devices included hospitals, schools, and government agencies. Furthermore, a review by the government and its private-sector partners discovered numerous counterfeit devices originating from the Pro Network Entities being used in highly sensitive military and governmental applications – including classified information systems – some involving combat and non-combat operations of the U.S. Navy, U.S. Air Force, and U.S. Army, including 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.
Between 2014 and 2022, Customs and Border Protection (CBP) seized approximately 180 shipments of counterfeit Cisco devices being shipped to the Pro Network Entities from China and Hong Kong. In response to some of these seizures, Aksoy falsely submitted official paperwork to CBP under the alias “Dave Durden,” an identity that he used to communicate with Chinese conspirators. To avoid CBP scrutiny, Chinese conspirators broke the shipments up into smaller parcels and shipped them on different days, and Aksoy used fake delivery addresses in Ohio. After CBP seized a shipment of counterfeit Cisco products to Aksoy and the Pro Network Entities and sent a seizure notice, Aksoy often continued to order counterfeit Cisco products from the same supplier.
Between 2014 and 2019, Cisco sent seven letters to Aksoy asking him to cease and desist his trafficking of counterfeit goods. Aksoy responded to at least two of these letters by causing his attorney to provide Cisco with forged documents. In July 2021, agents executed a search warrant at Aksoy’s warehouse and seized 1,156 counterfeit Cisco devices with a retail value of over $7 million.
In addition to the prison term, Judge Sheridan sentenced Aksoy to three years of supervised release and fined him $40,000. Under terms of the plea agreement, the defendant has agreed to pay restitution of $100 million to Cisco and amounts to other victims that will be determined by the court at a later date..
Attorney for the United States Vikas Khanna and Acting Assistant Attorney General Argentieri credited special agents of HSI – Los Angeles, under the direction of Special Agent in Charge Wang; special agents of the U.S. Department of Defense, Defense Criminal Investigative Service (DCIS) Western Field Office, under the direction of Special Agent in Charge Denny; the General Services Administration Office of Inspector General (GSA-OIG), under the direction of Deputy Inspector General Erickson; the Naval Criminal Investigative Service (NCIS), Economic Crimes Field Office, under the direction of Special Agent in Charge Gross; special agents of Homeland Security Investigations, under the direction of Special Agent in Charge Anthony Salisbury of the HSI Miami Field Office; and special agents of Homeland Security Investigations Newark, under the direction of Acting Special Agent in Charge William S. Walker, with the investigation leading to the sentencing. The CBP Electronics Center of Excellence; the CBP Los Angeles National Targeting and Analysis Center; and the CBP Office of Trade, Regulatory Audit and Agency Advisory Services, Miami Field Office provided valuable assistance.
The government is represented by Assistant U.S. Attorney Andrew M. Trombly and Senior Trial Counsel Barbara Ward for the District of New Jersey and Senior Counsel Matthew A. Lamberti of the Criminal Division’s Computer Crime and Intellectual Property Section.
The government is represented by Assistant U.S. Attorney Andrew M. Trombly of the Cybercrime Unit in Newark, Senior Counsel Matthew A. Lamberti of the Department of Justice Computer Crime and Intellectual Property Section in Washington, D.C., and Senior Trial Counsel Barbara Ward of the Asset Recovery and Money Laundering Unit in Newark.
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