The solution; is just as complex as the problem.
In our last blog, we concluded Intellectual Property (IP) theft was not a victimless crime, and shopping from the back of vans could be a dangerous proposition. Now let’s discuss what’s being done to combat this problem, faced with the advent of digital technology and often lax unenforceable international laws where much of IP theft occurs. While some estimates suggest criminal convictions for intellectual property violations have increased, the number of actual convictions is relatively low, and the likelihood of the offenders receiving a prison sentence is even significantly lower. Therefore, it is not uncommon for these matters to be investigated by private security firms like ISA and DFI, and handled civilly, where civil copyright infringement is a strict liability offense.
In the United States, investigating IP crimes has been entrusted to the FBI. But let’s face it, when deciding to allocate limited resources between disrupting a Terrorist group or a counterfeit Nike Sneaker operation, well, you know where I’m going with this. One of ISA’s Co-founders, a retired FBI Special Agent, led the FBI’s investigative efforts against IP theft for the FBI. During her career as an FBI Special Agent, she was able to bring several cases before the U.S. Attorney’s office for successful federal prosecution. This was despite the fact, as mentioned, many IP theft cases are often enforced primarily through civil action, in lieu of criminal prosecution. This is often due to their international nexus and lax international laws or a lack of international cooperation.
Three cases that were successfully prosecuted by ISA’s Investigators, resulting in the dismantlement of these criminal enterprises, highlight the unique capabilities and experience of our team of Investigators. So, what about those stories we promised you in our last blog. OK, not really stories “this week” but a few examples. We promise, we’ll have many interesting stories to share with you going forward, but now, back to our examples for this week:
The case of U.S. vs. CHEN SUN involved approximately USD 90 million in counterfeit music CDs sold in various stores throughout the United States. The subjects manufacture the fake CDs using machines smuggled in from China to the United States. The CDs were duplicated, shipped to Panama for packaging, and subsequently labeled as toys to bypass Customs for shipping back to the U.S. The subjects were indicted for violating copyright and trademark laws, and their criminal enterprise was dismantled.
Another investigation targeted the growing problem of counterfeit computer software, which represented a retail value of USD 1.5 million. The subjects who created a legitimate company bundled several counterfeit software programs together and sold them as a package. The legitimate packages, which would have retailed for $10,000, were sold for $50. The owners and the company were indicted for violating copyright and trademark laws. Eventually, in the face of overwhelming evidence, the owners pled guilty to trademark violations and were sentenced to 1 year in federal prison. “WAIT”, $50, for $10,000 worth of software, “I’ll take that deal; which alley did you say that van was parked behind”? Not so fast, with the threats we face from cyber intrusions today, introducing counterfeit software to your company network or home computer could end up costing you a lot more than $10,000.
The case of U.S. vs. RUSSOLILLO involved counterfeited high-end hair care products with a retail value of USD 5 million. This case highlighted the dangers of counterfeit products entering the commerce. Samples tested by the Environmental Protection Agency determined the products contained dangerous bacteria levels, resulting in scalp infections. The owners and their company were charged with more than 20 counts of conspiracy, trademark, Customs, FDA, and EPA violations. Facing ten years in prison, Russolillo provided the names of his co-conspirators, which resulted in eight additional indictments and the locations of caches of additional counterfeit merchandise. Due to his cooperation, Russolillo was allowed to enter into a plea agreement and was sentenced to 2 1/2 years in federal prison and ordered to pay restitution to the victim companies, plus court fees.
Each of these investigations involved our highly experienced investigators using sophisticated investigative techniques. In 2021, International Security Alliance (ISA) and Development Fraud Investigations (DFI) combined their investigative expertise to form a strategic alliance, assuring all our client’s business and security needs would be successfully met. This merger of resources and experience makes us unmatched at identifying business vulnerabilities, conducting professional investigations, and developing innovative solutions at highly cooperative rates. Our consultants are corporate and security experts with diverse backgrounds from U.S. and U.K. Law Enforcement Agencies and Fortune 500 Companies. Our international footprint, which covers over 65 countries, distinguishes our expert consultants as uniquely equipped to operate in any environment, regardless of the complexities faced in today’s global environment.
Let us show you how to protect your corporate reputation and keep your profits in “your” company.