A Laguna Hills man made his initial court appearance Wednesday on federal charges alleging he oversaw a scheme that smuggled counterfeit Apple and Samsung cell phone components from China that were sold in the United States, generating tens of millions of dollars in revenue.
Chan Hung Le, 44, who, was arrested Tuesday, is charged with conspiracy to defraud the United States, conspiracy to traffic in counterfeit goods, conspiracy to illegally import merchandise, conspiracy to commit mail fraud and wire fraud, and aggravated identity theft, according to the U.S. Attorney’s Office.
Bail was set at $500,000 for Le, who is due back in court on May 20 for a post-indictment arraignment.
According to the affidavit in support of the criminal complaint, Le and his wife own EZ Elektronix, a company now based in Irvine that allegedly imported counterfeit electronics products — screens and other cell phone parts — from China into the United States.
Starting in June 2010, Le and several co-conspirators, including his relatives and employees, smuggled counterfeit goods and employed various tactics to avoid scrutiny from authorities in the United States, Hong Kong and China, the affidavit alleges.
The complaint further alleges that Le attempted to conceal the scheme by using multiple business names and addresses, as well as virtual offices and post office boxes, in at least three U.S. states. Once the counterfeit products arrived, Le and his co-conspirators distributed the parts to the public through various online stores that falsely claimed the parts were genuine, federal prosecutors allege.
In October 2011 and February 2012, law enforcement-executed search warrants at the EZ Elektronix office resulted in the seizure of about 7,200 counterfeit iPhone parts and 11,700 other counterfeit cell phone parts that had a retail value of more than $1.7 million, the affidavit alleges.
In response to the search warrants, Le allegedly changed his importation practices by having the counterfeit goods sent to mail drops he set up in Texas and Oklahoma under the names of two fictitious companies and one of his employees. After the bogus parts were sent to the mail drops, they were shipped to Southern California under a new business name — Pac-Depot Inc. — while legitimate merchandise was shipped directly to EZ Elektronix, the affidavit alleges. By using those methods, Le ensured that the shipments containing counterfeit goods would be inspected at a different port of entry in the United States and would not be associated with him or his company, prosecutors allege.
In 2016, one of Le’s admitted suppliers, Hongwei “Nick” Du, pleaded guilty in San Diego federal court to conspiring to traffic in counterfeit goods and related money laundering charges, according to the U.S. Attorney’s Office. In his plea agreement, Du admitted to selling Le at least $18.7 million worth of cellular telephone and electronic components for resale from China into the United States, and that about half of the goods was counterfeit merchandise bearing the trademarks of Apple, Samsung, Nokia and other companies.
If convicted of all charges, Le faces up to 45 years in federal prison on the conspiracy charges, plus a mandatory two-year consecutive sentence for the aggravated identity theft charge, according to the U.S. Attorney’s Office.
>> Want to read more stories like this? Get our Free Daily Newsletters Here!Follow us: