Five defendants convicted in connection with multi-million dollar cellphone counterfeiting scheme USAO ID

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BOISE — A federal jury in Idaho yesterday convicted five defendants for their role in conducting a $41 million scheme in which they sold counterfeit cell phones and cell phone accessories on Amazon.com and eBay.com, which they misrepresented as new and genuine Apple – and Samsung products represented.

Pavel Babichenko, Piotr Babichenko, Timofey Babichenko, David Bibikov and Mikhail Iyerusalimets were found guilty of conspiracy to wire fraud, conspiracy to trade in counterfeit branded goods, wire fraud, mail fraud and trafficking in counterfeit goods on a total of 24 counts in connection with online sales of these counterfeit mobile phones and accessories. Two defendants, Kristina Babichenko and Anna Iyerusalimets, were found not guilty. The convicted defendants face up to 20 years in prison and a $250,000 fine for wire fraud and mail fraud. They face up to 10 years in prison and a $5,000,000 fine for trafficking in counterfeit goods. Sentencing is scheduled for November 2-3, 2022 before US District Judge B. Lynn Winmill, who presided over the trial.

During the nine-week trial, the jury heard evidence that the defendants had sourced counterfeit cell phones and cell phone accessories in bulk from manufacturers in China, repackaged them in the Treasure Valley area of ​​Idaho, and then resold them individually as genuine to consumers on Amazon and eBay and new. The defendants resold these items despite receiving numerous reports from US Customs and Border Protection that they were importing counterfeit items. The defendants also repeatedly ignored cease and desist letters from companies such as Apple, Inc. and Samsung Electronics America. When companies like Amazon identified the defendants as sellers of counterfeit products and suspended their selling privileges, the defendants presented fake invoices and action plans to regain access to the Amazon platform and convince the company to release proceeds from the program. This pattern continued for about a decade, with defendants changing company names and tactics when confronted with their infringing conduct.

“By trafficking counterfeit cell phones, chargers and batteries, the defendants led an organized criminal conspiracy that violated intellectual property rights, defrauded the American consumer and compromised the safety of the public for their own financial gain,” said US Attorney Josh Hurwit. “The US Attorney’s Office is committed to working with its federal law enforcement partners to identify, arrest and prosecute those who defraud businesses and consumers to line their own pockets. I would like to thank the special agents and analysts at the FBI and HSI for their tireless work on this investigation and prosecution.”

“These individuals have tricked the public into buying counterfeit electronic goods, putting people at risk with counterfeit products, while reducing trust in reputable brands,” said Robert Hammer, Special Agent in Charge (SAC), who oversees HSI operations in the Pacific Northwest. “The dedicated work of HSI agents through federal partnerships with the FBI, US Postal Inspection Service, IRS-CI, US Marshals Service, combined with our Idaho law enforcement partners, Treasure Valley Metro Violent Crimes Task Force, Ada County Sheriff’s Office, Boise Police Department and the Meridian Police Department led to the disruption of this fraudulent transnational scheme.”

“The verdicts demonstrate the FBI’s unwavering commitment to combating transnational organized crime, which poses the greatest threat to the national and economic security of the United States,” said FBI Special Agent Dennis Rice in Salt Lake City. “Our strong partnerships in Idaho and around the world are instrumental in dismantling these groups trying to make vast sums of money by defrauding the American people and businesses.”

US Attorney Josh Hurwit made the announcement, praising the cooperative efforts of the joint investigation led by the FBI and Homeland Security Investigations along with IRS-CI, the US Postal Inspection Service and the US Marshals Service. These federal agencies were joined in the investigation by the Treasure Valley Metro Violent Crimes Task Force, the Ada County Sheriff’s Office, the Boise Police Department, and the Meridian Police Department.

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