International Business

Virginia Company to Pay $8.82 Million Criminal Penalty for FCPA Violations

By FCPA, International Business

Data Systems & Solutions LLC (DS&S), a company based in Reston, Va., that provides design, installation, maintenance and other services at nuclear and fossil fuel power plants, has agreed to pay an $8.82 million criminal penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA).

The department filed a two-count criminal information in the Eastern District of Virginia charging DS&S with conspiring to violate, and violating, the FCPA’s anti-bribery provisions.

According to court documents, DS&S paid bribes to officials employed by the Ignalina Nuclear Power Plant, a state-owned nuclear power plant in Lithuania, to secure contracts to perform services for the plant.   To disguise the scheme, the bribes were funneled through several subcontractors located in the United States and abroad.   The subcontractors, in turn, made repeated payments to high-level officials at Ignalina via check or wire transfer.

The department also filed a deferred prosecution agreement with DS&S.   Under the terms of the agreement, the department will defer prosecution of DS&S for two years.   In addition to the monetary penalty, DS&S agreed to cooperate with the department, to report periodically to the department concerning DS&S’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations.   If DS&S abides by the terms of the deferred prosecution agreement, the department will dismiss the criminal information when the agreement’s term expires.

The agreement acknowledges DS&S’s extraordinary cooperation, including conducting an extensive, thorough and swift internal investigation; providing to the department extensive information and evidence; and responding promptly and fully to the department’s requests.   In addition, DS&S has engaged in extensive remediation, including terminating the officers and employees responsible for the corrupt payments; instituting a more rigorous compliance program; enhancing its due diligence protocol for third-party agents and subcontractors; strengthening its ethics policies; providing FCPA training for all agents and subcontractors; and establishing heightened review of most foreign transactions.


California Man Pleads Guilty to Illegal Exports to Iran, Faces up to 20 years in Prison

By Export, International Business, ITAR

A California man pleaded guilty in Federal Court in Chicago to a felony charge stemming from his efforts to illegally export missile components from the United States to Iran, via the United Arab Emirates. The defendant, Andro Telemi, 42, of Sun Valley, Calif., pleaded guilty to one count of attempting to export defense articles on the U.S. Munitions List from the United States without a license or approval from the U.S. Department of State in violation of the Arms Export Control Act.

U.S. District Judge Samuel Der-Yeghiayan set sentencing for Oct. 30. Telemi faces a maximum penalty of 20 years in prison a $250,000 fine. Telemi pleaded guilty without entering into a plea agreement with the government.

“Our national security is threatened when anyone attempts to illegally export restricted military components that could fall into the wrong hands,” Mr. Hartwig said. “HSI will continue to aggressively investigate individuals and organizations who would seek to sell sensitive technology at the expense of our own security.”

Telemi, a naturalized U.S. citizen from Iran, also known as “Andre Telimi,” and “Andre Telemi,” was indicted in December 2009, along with co-defendant Davoud Baniameri, 39, of Woodland Hills, Calif. A superseding indictment in July 2010 charged Baniameri, Telemi and a third defendant, Syed Majid Mousavi, an Iranian citizen living in Iran. Baniameri pleaded guilty last year and was sentenced to 51 months in federal prison. Mousavi, also known as “Majid Moosavy,” remains a fugitive and is believed to be in Iran.

According to Telemi’s guilty plea and court records, sometime before Aug. 17, 2009, Baniameri contacted Telemi and requested his assistance in purchasing and exporting to Iran via Dubai 10 connector adapters for the TOW and TOW2 anti-armor missile systems. Telemi agreed and over the next month, they negotiated the purchase of 10 connector adaptors for $9,450 from a company in Illinois, which unbeknownst to them, was controlled by law enforcement. In September 2009, after Baniameri made a down payment to the Illinois company, he arranged for Telemi to pay the remaining balance and take possession of the connector adaptors in California. Telemi knew that he needed to obtain a license from the U.S. government to export the connector adaptors, and at no time did he or anyone else obtain, or attempt to obtain, such a license.


PRACTICAL TIP: Top ROI for Your Legal Dollars

By Blog, Customs IP Enforcement, Export, FCPA, Foreign Trade Zones (FTZ), Grab Bag, Import, Intellectual Property, International Business, International IP, Internet / eCommerce, ITAR, News

Based on our experience, some of the best uses of resources on legal advice and assistance for businesses and entrepreneurs (from a “bang for your buck” perspective) are:

  • Succession Planning. This includes buy-sell and similar provisions in company documents to deal with death, divorces, and other departures of co-owners, and also includes an updated estate plan such as a will and advance directives to ensure your legacy.

The benefits one can obtain from these legal mechanisms and protections, which generally cost less than $2,000, can pay for themselves many times over.


Tulsa Company Resolves FCPA Violations and Agrees to Pay $2 Million Penalty

By FCPA, International Business

The NORDAM Group Inc., a provider of aircraft maintenance, repair and overhaul (MRO) services based in Tulsa, Okla., has entered into an agreement with the Department of Justice to pay a $2 million penalty to resolve violations of the Foreign Corrupt Practices Act (FCPA).

According to the agreement, NORDAM, its subsidiaries and affiliates paid bribes to employees of airlines created, controlled and exclusively owned by the People’s Republic of China in order to secure contracts to perform MRO services for those airlines.  The bribes were paid both directly and indirectly to the airline employees.  In an effort to disguise the bribes, three employees of NORDAM’s affiliate entered into sales representation agreements with fictitious entities and then used the money paid by NORDAM to those entities to pay bribes to the airline employees.

In addition to the monetary penalty, NORDAM agreed to cooperate with the department for the three-year term of the agreement, to report periodically to the department concerning NORDAM’s compliance efforts, and to continue to implement an enhanced compliance program and internal controls designed to prevent and detect FCPA violations.

The department entered into a non-prosecution agreement with NORDAM as a result of NORDAM’s timely, voluntary and complete disclosure of the conduct, its cooperation with the department and its remedial efforts.  In addition, the agreement recognizes that a fine below the standard range under the U.S. Sentencing Guidelines is appropriate because NORDAM fully demonstrated to the department, and an independent accounting expert retained by the department verified, that a fine exceeding $2 million would substantially jeopardize the company’s continued viability.

Additional information about the Justice Department’s FCPA enforcement efforts can be found Here.



Chester Speaks to North Texas Technology Entrepreneurs

By Export, International Business, News, Technology Transactions

J. F. (Jim) Chester, founding partner in the Dallas-based global business & technology law firm of CHESTER pllc, recently presented a seminar on the legal implications of doing business internationally to an audience of entrepreneurs and venture capitalists at an event sponsored by the North Texas Enterprise Center (NTEC).  Chester co-presented the seminar with Cesar Reyna, CEO of Trade Consulting Services, LLC (, an international trade consulting firm.

NTEC regularly holds informational seminars, such as the recent event presented by Chester, to introduce such topics to its stakeholders and entrepreneur partners and affiliates as part of its mission to promote innovation and emerging technologies in the North Texas region.

The title of the presentation, which was held at the NTEC headquarters in Frisco, Texas, was: “Going Global:  Common International Business & Trade Legal Issues.”  Subject Chester and Reyna discussed includes international contracting and payment considerations, import/export and other international trade regulations, ITAR, FCPA, and international civil litigation.

Jim Chester, founder and managing partner in CHESTER pllc, also teaches courses on International Trade Law and International Business Transactions at Baylor University Law School.

Of the event, Chester reports, “International business presents a number of opportunities for companies of all sizes, but involves a lot of risk, as well.  Although many of the NTEC companies represented in the audience are ‘pre-revenue’ or start-ups at relatively early stages, they are already thinking globally – which is exactly what they need to be doing.”

About CHESTER pllc

CHESTER pllc is a Dallas, Texas law firm providing comprehensive legal services to innovation-based companies doing business in the US, around the world, and on the web.  Its mission (and passion) is helping entrepreneurs and emerging companies solve problems and protect their interests. CHESTER pllc delivers value by providing business-savvy, cost-effective solutions to legal challenges.  The firm offers a wide array of business legal solutions, such as business entity formation (LLCs, corporations, etc.), trademarks and other intellectual property, technology transactions, contracts, ecommerce and dispute resolution.  Additional information about the firm and its attorneys may be found at

About NTEC

The North Texas Enterprise Center (NTEC) is a not-for-profit organization based in Frisco, Texas, that operates as a business accelerator – providing a broad spectrum of services and support to MedTech and CleanTech start-up companies.  NTEC, which was founded in 2002, has grown to become one of the largest technology start-up accelerators in the South Central U.S.  NTEC’s core mission is assisting entrepreneurs with the challenging task of starting and expanding a new, technology-based business venture.  The target result of that mission is local and regional economic development, new job creation and industry diversification.  For more information, please visit

Jim Chester Featured in July 2012 Issue of Texas Bar Journal

By Intellectual Property, International Business, International IP, News

Jim Chester, founding member of Dallas-based global business & technology law firm CHESTER pllc, was featured in the July 2012 issue of the Texas Bar Journal.  A recognized expert in international business and intellectual property law, Chester was asked to write an article discussing, “Protecting Intellectual Property in International Markets.”  In the article, he discusses the need for IP protection while suggesting actions to take when conducting business on a global scale.   The article is available for download from the Texas Bar website.

Advising clients regarding trademark, copyright, trade secret protection, licensing and enforcement in the U.S. and abroad, Chester represents clients before the U.S. Patent and Trademark Office (USPTO) and the U.S. Library of Congress (Copyright Office).  He also counsels companies on trade regulations involving customs, import and export laws which include International Traffic in Arms Regulations (ITAR) and the Foreign Corrupt Practices Act (FCPA).  Chester routinely represents clients before U.S. Customs & Border Protection U.S. Department of Commerce, U.S. Department of Defense Trade Controls, the Office of Foreign Asset Controls, the U.S. International Trade Administration, and other state, Federal and foreign governing agencies.  Chester is a licensed U.S. Customs Broker, and is admitted to practice law in Texas and Washington, D.C.

“For anyone conducting business outside of the U.S., the first stop in the protection process is to properly identify all IP assets,” Chester advises.  “Since all businesses make use of names, brands and logos (trademarks and service marks), designs, websites and software (copyright), inventions, ideas, and processes (patent and trade secrets) in some form, IP protection is essential when doing business outside the U.S.”

“Jim has a unique legal skill set combining international law with intellectual property expertise,” said Darin M. Klemchuk, a Dallas IP attorney and senior partner of Klemchuk Kubasta LLP.  “He has advised clients on business deals involving almost 100 countries, and has coordinated with foreign counsel on legal projects around the world.  Jim has also served as legal advisor to foreign companies doing business in the U.S.”

To be an effective international business and technology attorney, Chester has many years of experience in handling a broad range of domestic business matters, including entity formations, ecommerce, agreements, technology transactions, acquisitions, and other legal issues commonly faced by businesses. In addition to his work in international and IP law, Chester has been an adjunct professor of law at Baylor University Law School for more than ten years, teaching courses on International Trade Law and International Business Transactions.  He also served as an adjunct professor of Business Law at the University of Dallas for four years.



About CHESTER pllc

CHESTER pllc is a Dallas, Texas law firm providing mission-critical legal services to innovation-based companies doing business in the US, around the world, and on the web.  Its mission (and passion) is helping entrepreneurs and emerging companies solve problems and protect their interests. CHESTER pllc delivers value by providing business-savvy, cost-effective solutions to legal challenges.  The firm offers a wide array of business legal solutions, such as business entity formation (LLCs, corporations, etc.), trademarks and other intellectual property, technology transactions, contracts, ecommerce and dispute resolution.  Additional information about the firm and its attorneys may be found at

Foreign nationals charged in multi-million dollar counterfeiting scheme

By Import, International Business

A federal indictment unsealed this week, charges three foreign nationals in a sophisticated counterfeiting operation uncovered through a 17-month undercover operation, spanning two continents. The charges are the results of an extensive investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the U.S. Secret Service.

Alonso Moises Zambrano Herrera, 46, a Peruvian national operating out of the Dominican Republic was arraigned today on charges of counterfeiting and smuggling, and will be in custody pending trial. Zambrano Herrera has been charged along with Karin Gixet Sanchez Fajardo, aka Karucha, 28, a Peruvian national operating out of Lima, Peru; and Ernesto Perez Ferrera, 48, a Dominican national operating out of the Dominican Republic, in a 25-count felony indictment arising from a series of related sales of counterfeit U.S. currency in Peru and the Dominican Republic.

“This extended undercover operation, which targeted one of the most significant sources of high-quality counterfeit U.S. currency in the world, is a compelling example of the fight against international crime,” said U.S. Attorney Carmen M. Ortiz, District of Massachusetts. “In partnership with the Peruvian National Police and the Dominican police, we are seeking to shut down the elusive counterfeiting organizations in those countries.”

“This case illustrates the merging of traditional crimes such as counterfeiting with advanced technologies that criminals so often use to commit financial crimes today,” said Bruce M. Foucart, special agent in charge of HSI Boston. “No matter how creative counterfeiters think they are, they will get caught, and they will get prosecuted. In conjunction with the U.S. Secret Service, HSI will continue to aggressively pursue those who internationally manufacture, smuggle and try to pass counterfeit currency in the U.S. to the fullest extent of the law.”

“Thanks to our strong partnership with Homeland Security Investigations, we were able to uncover and disrupt a counterfeiting scheme that spanned two continents,” said Steven D. Ricciardi, special agent in charge of the U.S. Secret Service. “I want to thank our partners at HSI and the U.S. attorney’s Office for their tireless efforts and collaboration in this investigation.”

At a detention hearing on Monday before U.S. Magistrate Judge Jennifer Boal, the government presented evidence that Zambrano Herrera was expelled from the Dominican Republic and arrested upon his arrival in Boston June 1, 2012. Dominican authorities expelled Zambrano Herrera from that country after he coordinated the delivery of $100,000 in counterfeit U.S. currency to an undercover federal agent posing as an American cocaine dealer in search of cheap cash.

In a coordinated law enforcement effort in Peru, the Peruvian National Police, at the request of U.S. authorities, arrested Fajardo in Lima, Peru late on June 8. The U.S. attorney’s office, in coordination with the U.S. Department of Justice Office of International Affairs, has formally sought Fajardo’s extradition from Peru to face charges brought by the federal grand jury in Boston. Fajardo is being held in custody in Peru. A federal arrest warrant is outstanding for Perez; he remains at large.

The 45-page indictment, which was unsealed on Monday, alleges that the three defendants were engaged in related conspiracies and transactions involving more than $2 million in high-quality counterfeit currency being produced in Peru and the Dominican Republic. Samples of the counterfeit currency revealed that it had many of the sophisticated security features of genuine U.S. currency.

It is alleged that during the course of the investigation, one or more of the defendants shipped counterfeit U.S. currency into the United States concealed in the bindings of books; sent a courier into the United States carrying nearly $60,000 in counterfeit currency concealed in a photo album; and hand-delivered more than $100,000 in counterfeit currency to a cooperating witness in Peru and the Dominican Republic. At a hearing on Monday, the government presented evidence that Zambrano Herrera arranged for the delivery of an additional $100,000 to an undercover agent in Santo Domingo May 31, 2012, just prior to his arrest by Dominican authorities.

The indictment also alleges that Fajardo’s co-conspirators in Peru agreed to sell the cooperating witness and undercover agent $2 million in counterfeit currency.

Zambrano Herrera stands charged with two counts of conspiring to deal in counterfeit currency and smuggling, and five related counterfeiting and smuggling counts. Fajardo has been charged with two counts of conspiring to deal in counterfeit currency and smuggling, three counts of counterfeiting, and eight counts of money laundering. Perez is charged with one count of conspiring to deal in counterfeit currency and smuggling, and six counts of counterfeiting and smuggling.

If convicted, Zambrano Herrera faces up to five years in prison on each conspiracy count and up to 20 years imprisonment on each counterfeiting count, to be followed by three years of supervised release and a total of $1.75 million in fines; Fajardo faces up to five years in prison on each conspiracy count and up to 20 years on each counterfeiting and money laundering count, to be followed by three years of supervised release and up to $3.25 million in fines; and Perez faces up to five years in prison on the conspiracy count and up to 20 years imprisonment on each counterfeiting count, to be followed by three years of supervised release and a total of $1.75 million in fines.

SOURCE: U.S. Immigration and Customs Enforcement (ICE)

Owners of CA Computer Company Sentenced to Prison and Forfeit $2 Million for Illegal Exports to Iran

By Export, International Business

Massoud Habibion, 49, a U.S. citizen, Mohsen Motamedian, 44, a U.S. citizen, and their Costa Mesa, Calif., company, Online Micro LLC, were recently sentenced in the District of Columbia in connection with a scheme to illegally export millions of dollars worth of computer-related goods from the United States to Iran through the United Arab Emirates UAE).

The sentences were announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; John Morton, Director of U.S. Immigration and Customs Enforcement (ICE); David W. Mills, Assistant Secretary for Export Enforcement, Department of Commerce; and Adam Szubin, Director of the Office of Foreign Assets Control (OFAC), Department of the Treasury.

U.S. District Judge Ellen S. Huvelle today sentenced Habibion to 13 months in prison for conspiracy to violate the International Emergency Economic Powers Act and to defraud the United States. Judge Huvelle sentenced Motamedian to three years supervised release for obstruction of justice. Habibion and Motamedian pleaded guilty to these charges on Feb. 16, 2012.

Under the terms of their guilty pleas and related civil settlements with the Department of Commerce’s Bureau of Industry and Security (BIS) and OFAC, Habibion and his company have agreed to forfeiture of $1.9 million seized from Online Micro’s bank accounts by ICE’s Homeland Security Investigations (HSI) during the course of the investigation. In addition, Habibion and Online Micro are denied export privileges for 10 years, although the denial order will be suspended provided that neither Habibion nor Online Micro commit any export violations during the 10-year probationary period and comply with the terms of the criminal plea agreements and sentences. Motamedian separately agreed to a $50,000 monetary penalty to settle a civil charge that he solicited a false statement to federal law enforcement agents.

Habibion and Motamedian were arrested on a criminal complaint in California on April 7, 2011. The defendants and their company were later indicted on April 21, 2011.

Habibion and Online Micro willfully conspired with a company operating in Dubai, UAE, and Tehran, Iran, to procure U.S.-origin computers from the United States and export those computers from the United States to Iran through Dubai without first obtaining licenses or authorizations from OFAC.

In or around May 2007, Online Micro purchased 1,000 computer units from Dell Inc. for approximately $500,000. Later that year, Dell began receiving service calls concerning Dell computer units from individuals in Iran, and after conducting an internal investigation, suspended Online Micro from placing further orders with Dell.

Beginning around Nov. 9, 2009, and continuing through December 2010, Habibion and Online Micro conspired with a company operating in Dubai and Tehran, to procure U.S.-origin computer-related goods and export those goods to Iran via the UAE. During the scope of the conspiracy, Online Micro and Habibion sold to that company and exported from the United States numerous shipments of computer-related goods, worth a total of more than $4,904,962, with knowledge that the majority of those goods were destined for Iran.

Online Micro also caused Shipper’s Export Declarations to be filed with U.S. Customs and Border Protection falsely identifying the ultimate destination of the goods as the UAE. During the course of the investigation, Habibion and Motamedian told a government cooperator to lie to U.S. law enforcement officials about the transactions. Specifically, the defendants told the cooperator to lie about Iran being the true ultimate destination for the goods and counseled him to tell U.S. law enforcement agents that the computer-related goods remained in Dubai.

SEC Charges Former Morgan Stanley Executive with FCPA Violations

By FCPA, International Business

The U.S. Securities and Exchange Commission recently charged a former executive at Morgan Stanley with violating the Foreign Corrupt Practices Act (FCPA) as well as securities laws for investment advisers by secretly acquiring millions of dollars worth of real estate investments for himself and an influential Chinese official who in turn steered business to Morgan Stanley’s funds.

The SEC alleges that Garth R. Peterson, who was a managing director in Morgan Stanley’s real estate investment and fund advisory business, had a personal friendship and secret business relationship with the former Chairman of Yongye Enterprise (Group) Co. – a Chinese state-owned entity with influence over the success of Morgan Stanley’s real estate business in Shanghai. Peterson secretly arranged to have at least $1.8 million paid to himself and the Chinese official that he disguised as finder’s fees that Morgan Stanley’s funds owed to third parties. Peterson also secretly arranged for him, the Chinese official, and an attorney to acquire a valuable Shanghai real estate interest from a Morgan Stanley fund. Peterson was acquiring an interest from the fund but negotiated both sides of the transaction. In exchange for offers and payments from Peterson, the Chinese official helped Peterson and Morgan Stanley obtain business while personally benefitting from some of these same investments. Peterson’s deception, self-dealing, and misappropriation breached the fiduciary duties he owed to Morgan Stanley’s funds as their representative.

Peterson agreed to a settlement of the SEC’s charges in which he will be permanently barred from the securities industry, pay more than $250,000 in disgorgement, and relinquish his interest in the valuable Shanghai real estate (currently valued at approximately $3.4 million) that he secretly acquired through his misconduct. The U.S. Department of Justice has filed a related criminal case against Peterson.

“Peterson crossed the line not once, but twice. He secretly bribed a government official to illegally win business for his employer and enriched himself in violation of his fiduciary duty to Morgan Stanley’s clients,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This case illustrates the SEC’s commitment to holding individuals accountable for FCPA violations, particularly employees who intentionally circumvent their company’s internal controls.”

Kara Novaco Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit, added, “As a rogue employee who took advantage of his firm and its investment advisory clients, Peterson orchestrated a scheme to illegally win business while lining his own pockets and those of an influential Chinese official.”

According to the SEC’s complaint filed in U.S. District Court for the Eastern District of New York, Peterson’s violations occurred from at least 2004 to 2007. His principal responsibility at Morgan Stanley was to evaluate, negotiate, acquire, manage and sell real estate investments on behalf of Morgan Stanley’s advisers and funds. He was terminated in 2008 due to his FCPA misconduct.

The SEC alleges that Peterson led Morgan Stanley’s effort to build a Chinese real estate investment portfolio for its real estate funds by cultivating a relationship with the Chinese official and taking advantage of his ability to steer opportunities to Morgan Stanley and his influence in helping with needed governmental approvals. Morgan Stanley thus partnered with Yongye on a number of significant Chinese real estate investments. At the same time, Peterson and the Chinese official expanded their personal business dealings both in a real estate interest secretly acquired from Morgan Stanley as well as by investing together in Chinese franchises of well-known U.S. fast food restaurants. Peterson failed to disclose these investments in annual disclosures that Morgan Stanley required him to make as part of his employment.

According to the SEC’s complaint, Peterson openly credited the Chinese official with helping obtain approvals required from other Chinese government entities for a deal to close. He wrote to several Morgan Stanley employees in response to an e-mail discussing the terms of one of Yongye’s purported investments, “Everyone pls keep in mind the big picture here. YY gave us this deal. … So we owe them a favor relating to this deal. … This should be very easy and friendly.” In another e-mail a week later, Peterson described “YYI” as “our friends who are coming in because WE OWE THEM A FAVOR.”

The SEC alleges that a Morgan Stanley compliance officer specifically informed Peterson in 2004 that employees of Yongye, a Chinese state-owned entity, were government officials for purposes of the FCPA. Peterson also received at least 35 FCPA compliance reminders from Morgan Stanley, but nonetheless committed the FCPA violations.

The SEC’s complaint charges Peterson with violations of the anti-bribery, books and records and internal control provisions of the FCPA, and with aiding and abetting violations of the anti-fraud provisions of the Investment Advisers Act of 1940. Peterson consented to a court order requiring him to disgorge $254,589 and relinquish to a court-appointed receiver the interest he secretly acquired from Morgan Stanley’s fund in the Jin Lin Tiandi Serviced Apartments. Peterson’s interest has a current estimated value of approximately $3.4 million. The proposed settlement is subject to court approval. Peterson also has consented to permanent industry bars based on the anticipated entry of the injunctions against him and his criminal conviction.

Over $1.5 Million Seized from Online Sale of Counterfeit Sports Apparel manufactured in China

By Customs IP Enforcement, Intellectual Property, International Business, International IP

The Department of Justice seized more than $1.5 million in proceeds from the distribution of counterfeit sports apparel and jerseys, following an investigation into the sale of counterfeit goods on commercial websites conducted by the National Intellectual Property Rights Coordination Center (IPR Center), which is led by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

The developments are the latest result of Operation In Our Sites, a law enforcement initiative targeting online commercial intellectual property crime announced by HSI in June 2010. Operation In Our Sites targeted online retailers of a diverse array of counterfeit goods, including sports equipment, shoes, handbags, athletic apparel, sunglasses and DVD boxed sets. To date, 761 domain names of websites used in the sale and distribution of counterfeit goods and illegal copyrighted works have been seized as a result of Operation In Our Sites.

“ICE will continue to target those who traffic in counterfeit goods by attacking the financial profits of counterfeiting sites and shutting them down,” said ICE Director Morton. “Operation In Our Sites and the tireless work of the National Intellectual Property Rights Coordination Center protect consumers from fraud on the Internet and combat intellectual property theft which exacts a toll on our economy and industries.”

Last month, more than $896,000 in proceeds from the sale of counterfeit sports apparel on commercial websites was seized as part of Operation In Our Sites. According to court documents, investigation by federal law enforcement officers revealed that subjects whose domain names had been seized in a November 2010 In Our Sites operation continued to sell counterfeit goods using new domain names. In particular, the individuals, based in China, sold counterfeit professional and collegiate sports apparel, primarily counterfeit sports jerseys. Law enforcement officers made numerous undercover purchases from the websites associated with the new domain names. After the goods were confirmed to be counterfeit or infringing, seizure warrants for three domain names used to sell the infringing goods were obtained from a U.S. magistrate judge in U.S. District Court for the District of Columbia.

The individuals conducted sales and processed payments for the counterfeit goods using money service business accounts and then wired their proceeds to bank accounts held at a Chinese bank, the court documents state.

Pursuant to warrants issued by a U.S. district judge, law enforcement officers seized $1,455,438.72 in proceeds that had been transferred from the money service business accounts to various bank accounts in China. The funds were seized from correspondent, or interbank, accounts held by the Chinese bank in the United States. Pursuant to additional seizure warrants issued by a U.S. magistrate judge, law enforcement officers also seized $94,730.12 in funds remaining in six money service business accounts used by the subjects.

“The seizures … are another step forward in our efforts to disrupt and disable those engaged in intellectual property crime,” said Assistant Attorney General Lanny A. Breuer. “By seizing the domain names and profits of online counterfeit goods operations, we are protecting consumers and sending a message to criminals that we will use every tool at our disposal to stop them.”

“Within a matter of weeks, this law enforcement operation has seized more than $2.4 million in proceeds from individuals overseas who are preying on the American economy and consumers with their sales of counterfeit goods,” said U.S. Attorney Ronald C. Machen Jr., District of Columbia. “We will continue to work with our law enforcement partners to target these unscrupulous operators where it hurts them the most – at the bank.”