Centreville Woman Convicted in Counterfeit Computers Scheme

A Centreville woman was convicted, along with a Frederick, Md., man, by a federal jury May 24 for her role in a scheme to import and sell counterfeit Cisco computer networking equipment.

U.S. Attorney Neil H. MacBride said that in addition to a conspiracy conviction, Chun-Yu Zhao of Centreville was convicted of 15 additional counts, including importation fraud, trafficking in counterfeit goods and labels, false statements to law enforcement, false statements in naturalization and money laundering. She was acquitted on one count of false statements and one count of money laundering. 

The jury reached its verdict after a 12-day trial and nearly four days of deliberations.  The jury returned a verdict regarding the forfeiture of numerous assets associated with Zhao, including two Porsches, one Mercedes, seven bank accounts containing more than $1.6 million, and four homes and three condominiums with a total value of more than $2.6 million.

“Zhao operated the U.S. headquarters of a Chinese company that was in the business of stealing intellectual property and defrauding customers,” said U.S. Attorney MacBride.  MacBride said investigators tracked Zhao down despite numerous false names and addresses used by the woman to fly beneath the radar for many years.  “Zhao’s days of taking in millions of dollars from unsuspecting U.S. consumers and businesses are over,” he said.

According to the evidence introduced at trial, Zhao, Donald H. Cone of Frederick, Md., and Zhao’s family members in China operated a large-scale counterfeit computer networking equipment business under the name of Han Tong Technology (Hong Kong) Limited.  Zhao and her associates used a number of sophisticated schemes to defraud U.S.-based purchasers through a Virginia-based company called JDC Networking Inc. 

JDC Networking Inc. altered Cisco products by using pirated software, and created labels and packaging in order to mislead consumers into believing the products it sold were genuine Cisco products. To evade detection, Zhao used various names and addresses in importation documents, and hid millions of dollars of counterfeit proceeds through a web of bank accounts and real estate held in the names of her family members in China.

Sentencing for Cone is scheduled for Aug. 19 at 9 a.m. Zhao is scheduled to be sentenced on Aug. 26 at 9 a.m. At sentencing, the defendants face a maximum sentence of five years in prison and a $250,000 fine on the conspiracy charge. 

Zhao also faces 20 years in prison and a $250,000 fine for each count of importation and sale of improperly declared goods, as well as 20 years in prison and a $500,000 fine or twice the value of the property involved in the transaction for money laundering. She faces a maximum of 10 years in prison on each count of trafficking in counterfeit goods and a $2 million fine. On the false statement in naturalization charge, she faces 10 years in prison and a $250,000 fine. Finally, she faces 10 years in prison and a fine of $250,000 or twice the amount of the transaction on the charge of monetary transactions with criminally derived proceeds.

The conviction is part of a larger effort led by the Department of Justice Task Force on Intellectual Property.