Transnational Crimes Weekly Recap 1-6-06

Click here for video

Intellectual Property Law Enforcement Coordinator—Asia

Yesterday, Attorney General Alberto Gonzales appointed San Jose, California federal prosecutor Christopher P. Sonderby to serve as the Intellectual Property Law Enforcement Coordinator [hereinafter IPLEC] for Asia.^[1] Mr. Sonderby is an Assistant US Attorney “who specialized in intellectual property prosecution at the U.S. Attorney’s Offices in San Jose and Sacramento.”^[2] He will be stationed in Bangkok, Thailand, and will serve not only as the IPLEC, but also as the DOJ’s Legal Attaché (a/k/a “Legat”) to Thailand.^[3] Fittingly, the US Embassy in Bangkok is located at 95 Wireless Road.

The DOJ’s Task Force on Intellectual Property recommended the creation of the IPLEC in Asia, and the position’s duties include:

• Coordinating investigations and prosecutions of intellectual property offenders located in the region;
• Developing relationships with foreign law enforcement agencies and prosecutors in the area;
• Providing legal and technical assistance to foreign law enforcement agencies on intellectual property enforcement;
• Assisting federal prosecutors in the United States working on intellectual property cases involving Asia; and
• Examining intellectual property crime trends in the region.^[4]

The DOJ’s Intellectual Property [hereinafter IP] Task Force’s Report, released in October 2004, recommended that the DOJ “should deploy federal prosecutors to the United States embassies in Hong Kong and Budapest, Hungary … to coordinate [IP] enforcement efforts in those regions.”^[5] Obviously, the IP Task Force’s recommendation wasn’t entirely adhered to, because Mr. Sonderby is being sent to Thailand instead. Furthermore, the Task Force recommended that Legats be assigned to assist the IPLEC,^[6] but it seems that Mr. Sonderby will be playing two roles in his new position.

It does not seem as though the IPLEC for Europe has been named yet.

---

[1] US DOJ, Press Release: Attorney General Alberto R. Gonzales Announces Appointment of Intellectual Property Law Enforcement Coordinator for Asia, Jan. 5, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] US DOJ, IP Task Force Report 32, Oct. 2004. (PDF)
[6] Id. at 33.

Trafficking in WMD Technology—EU Intelligence Report

According to the The Guardian, a 55-page confidential “early warning” intelligence assessment has detailed the names and locations of “suspect players in the global WMD game.”^[1] The report details how west European engineering firms, germ labs, thinktanks and universities are “preyed upon” by middlemen, front companies, scholars and bureaucrats working for Iran, Syria, North Korea, and Pakistan.^[2] The point of the report is to “name and shame,” to warn EU companies about doing business with the listed organizations,^[3] and its details are fairly impressive.

For example, it is reported that Russian brainpower is being tapped by Iran to help develop its nuclear weapons capability.^[4] Russia has just concluded a billion-dollar missile deal with Iran, and 16 Russian companies and academic institutes are named as “helping and profiting from the Iranian military effort.”^[5] Iran is also allegedly looking to benefit from North Korean military prowess and exports, which is “currently reckoned to be North Korea’s most important source of income.”^[6] North Korea, in turn, depends on being able to import western goods and equipment to maintain its exports;^[7] it would be unsurprising to discover that recent allegations about its currency counterfeiting are linked to this activity.

Pakistan is also seen as a major exporter of WMD technology. Even after A.Q. Khan was exposed more than two years ago, “extensive procurement efforts for the Pakistani nuclear efforts have been registered” and the “range of materials and components being bought ‘clearly exceeds’ that required for spare parts and replacements” leading to speculation that “the nuclear black market is trading on the surplus goods.”^[8]

Syria, for its part, has allegedly “been striving for self-sufficiency in its WMD efforts for years through substantial supplies of material and knowhow from Russia” and other European nations.^[9] There are also allegations that Syria “has recently strengthened cooperation” with Iran for weapons.^[10]

The United States is no doubt interested in the findings of the report. In the US, WMD issues are criminalized by Chapter 39 of Title 18 of the US Code.^[11] Under 18 U.S.C. § 832, it is a crime for a person to willfully participate in, or knowingly provide material support to, a nuclear weapons program or other WMD program of a “foreign terrorist power.”^[12] The United States Congress has explicitly stated that there is extraterritorial Federal jurisdiction over such an offense.^[13] A “foreign terrorist power” is defined as “a terrorist organization designated under section 219 of the Immigration and Nationality Act,^[14] or a state sponsor of terrorism designated under section 6(j) of the Export Administration Act of 1979^[15] or section 620A of the Foreign Assistance Act of 1961^[16].”^[17] Violating this section, or conspiring to violate this section, can be punished with imprisonment for up to 20 years; the statute makes no mention of a fine.

---

[1] Ian Traynor, Intelligence Report Claims Nuclear Market Thriving, The Guardian, Jan. 4, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] 18 U.S.C. § 831 et seq.
[12] 18 U.S.C. § 832(a). (not available online)
[13] Id. § 832(b).
[14] 8 U.S.C. § 1189 (the organization must be a foreign organization, engaged in terrorist activity, that threatens the security of the US or its nationals).
[15] 50 U.S.C. Appx. § 2405(j) (requiring validated licenses for the export of goods to countries that have been determined by the Secretary of State to have repeatedly provided support for acts of international terrorism, and that the export of such goods or technology could make a significant contribution to the military potential of the country or enhance its ability to support acts of international terrorism).
[16] 22 U.S.C. § 2371 (prohibiting assistance to any country that has been determined by the Secretary of State to have repeatedly provided support for acts of international terrorism).
[17] 18 U.S.C. § 832(d)(3).

Trafficking in Counterfeit DVDs—Guthrie Guilty Plea

Randolph Hobson Guthrie III has pleaded guilty in a federal court in Mississippi to running an international counterfeit DVD ring.^[1] His guilty plea culminates a rather stunning example of how the US government can track people down across the globe when it wants to. When we first discussed Mr. Guthrie three months ago, we noted that he had just been returned to the United States from China after having been convicted there for selling pirated DVDs out of his Chinese apartment. He was sentenced to 30 months in prison, fined $60,000, and was scheduled to be deported after the completion of his sentence; however, he was deported before serving any time in prison.^[2] A couple of weeks later we noted that he had been arraigned in Mississippi on charges that he had engaged in criminal copyright and trademark infringements, as well as for importing infringing goods and for laundering money.

The investigation into Mr. Guthrie began with the purchase of several pirated DVDs at a Harrison County, Mississippi flea market.^[3] As we mentioned yesterday, federal agents have been stepping up their investigations into flea markets to find infringing goods.

The interesting aspect of Mr. Guthrie’s plea bargain is that he pleaded guilty to conspiring to traffic counterfeit goods, which is a substantial lessening of the 18 charges he was facing.^[4] Conspiracy carries a potential fine of US$250,000, a prison sentence of up to 5 years, or both. In the plea agreement, Mr. Guthrie also agreed to forfeit US$823,000 to the US government.

On December 30, 2005, Mr. Guthrie filed a motion to dismiss the indictment on double jeopardy grounds, arguing that US officials were behind the investigation and prosecution of Mr. Guthrie in China and that the prosecution of Mr. Guthrie in China resulted in a conviction for the same conduct alleged in the federal indictment: “selling pirated DVDs internationally through a website, threedollardcd.com.”^[5] Furthermore, he argued, the indictment “tries to avoid the dual prosecution argument by tacking on money laundering and forfeiture counts, but all of these counts derive from the very same conduct” for which Mr. Guthrie was convicted in China.^[6]

At the same time, Mr. Guthrie argued that testimony and documentary evidence to be presented at his trial should be suppressed “because [it] was obtained in conjunction with or derives from criminal proceedings in China in which [Mr.] Guthrie was deprived of constitutional safeguards afforded United States citizens.”^[7] Among the safeguards that Mr. Guthrie found lacking were: tape-recorded conversations with Mr. Guthrie in June, 2004;^[8] interrogation by Chinese authorities without being advised of his rights to remain silent or to have counsel;^[9] that China’s reticence to prosecute Mr. Guthrie without the US’s prodding constituted a vicarious prosecution;^[10] that prosecuting Mr. Guthrie constitutes double jeopardy;^[11] and that some of the evidence was obtained “unlawfully even under Chinese law.”^[12]

There is, however, no record of how District Judge Louis Guirola Jr. disposed of the motions, and a plea was entered just a few days later, yesterday, noting that Mr. Guthrie had entered a guilty plea to a violation of 18 U.S.C. § 371, as well as agreeing to forfeit the sums mentioned above. It is not clear what prompted the plea, but his trial was scheduled to begin yesterday, and all motions were due to be filed by December 20; Mr. Guthrie requested and received an extension of time to file his motions, however. Sentencing is scheduled for March 14, 2006.

---

[1] See International DVD Pirate Faces Jail, The Guardian, Jan. 4, 2006; Valerie Bauman, U.S. Man Pleads Guilty to Counterfeit DVD Trafficking After Joint U.S.-Chinese Probe, Associated Press (via Wilkes-Barre Times Leader), Jan. 4, 2006.
[2] Bauman.
[3] Id.
[4] Id.
[5] United States v. Guthrie, Motion to Dismiss 1, No. 1:05cv56-LG-JMR (S.D. Miss. 2005), available through PACER.
[6] Id. 1-2.
[7] United States v. Guthrie, Motion to Suppress 1, No. 1:05cv56-LG-JMR (S.D. Miss. 2005), available through PACER.
[8] Id.
[9] Id. at 2.
[10] Id.
[11] Id. at 3.
[12] Id.

Counterfeit Goods—American and British Operations

There are three counterfeiting stories that made the news in the past couple of days. In one story, there are fears that fake Tamiflu is hitting the US market as fears of the Avian Flu begin to rise. The other two stories, one from Britain, and the other from Miami, concern the seizure of counterfeit goods.

Fake Tamiflu
Over the past month, “[h]undreds of fake Tamiflu pills sold to US consumers by Asian online entrepreneurs have been seized in South San Francisco.”^[1] The pills were in containers marked “generic Tamiflu” which was an immediate tip-off since no generic version of the primary treatment available for combating the avian flu virus’s symptoms has been produced.^[2] Some internet sites are selling the fake Tamiflu for two to three times the ordinary cost for a 10-pill treatment.^[3] The federal government is concerned that organized crime may be behind the counterfeit drugs, because some organizations “already make other counterfeit drugs … often [using] sophisticated packages and labels, making it hard to distinguish their fakes from the real thing.”^[4]

At this time, the FDA claims that they are “powerless to prosecute Internet purveyors based overseas,” often relying on “foreign counterparts to crack down on such abuses.”^[5] Now that Congress has held hearings on counterfeit Tamiflu and other drugs in November, we expect that US federal jurisdiction will be officially expanded to cover these activities.^[6]

British Seizures
In East Lothian, British trading standards officers and police seized more than 1000 counterfeit DVDs and roughly 100 items of clothing from local pubs and markets during the run-up to Christmas.^[7] The DVDs, some of which were hard-core pornography, were made in China, and the clothing bore counterfeit trademarks from Lacoste, Nike, Timberland, and Ralph Lauren.^[8] In addition to clothing and DVDs, there are reports that even Vodka is being counterfeited.^[9] Counterfeit Stolichnaya vodka traced to Bulgaria has appeared at a local market which, like flea markets in the US, is increasingly becoming the target of counterfeiting investigations.^[10]

Miami
According to Immigration and Customs Enforcement [hereinafter ICE], five individuals were indicted on three separate charges of conspiring to traffic in counterfeit goods.^[11] The individuals are alleged to have imported counterfeit goods into the United States from China.^[12] The goods, which included electrical cords, batteries, handbags, wallets, sunglasses, shoes, hats, sunglasses, watches, key holders, umbrellas, and different articles of clothing and accessories which bore counterfeit trademarks such as Underwrites Laboratories (better known as simply UL), Duracell, Louis Vuitton, Rolex, Prada, Gucci, Coach, Disney, Nike, Major League Baseball, Oakley, and others.^[13] The individuals allegedly sold the items directly from their warehouses in the US, as well as from booths at a flea market in Florida.^[14] Flea Markets seem to be becoming a major site of ICE investigations; a couple of months ago, we mentioned that a flea market in Brownsville, Texas had been raided by ICE agents. The items seized from the Miami individuals’ homes, warehouses, and flea market booths “filled several tractor trailers.”^[15]

The individuals in Miami were charged under 18 U.S.C. §§ 371 (conspiracy), 2320(a) (trafficking in counterfeit goods), and 545 (concealing and selling imported counterfeit goods).

Under 18 U.S.C. § 545, it is a crime for a person to fraudulently or knowingly import into the United States any merchandise contrary to law, or to conceal or sell any merchandise brought into the United States contrary to law. The punishment for doing so is a fine, imprisonment for up to 5 years, or both.

Under 18 U.S.C. § 2320(a), it is a crime for a person to intentionally traffic in goods and that bear a counterfeit mark. The punishment for doing so is a fine up to US$2 million, imprisonment for up to 10 years, or both.

We have covered conspiracy a great deal in the past.

If the Miami defendants' trial ever goes to a jury, the jury can only convict if certain things are proven by the government. Based on the pattern jury instructions for an alleged violation of the first paragraph of section 545 promulgated by the 11th Circuit,^[16] the instructions to the jury would read something like this:

Title 18, United States Code, Section 545, makes it a Federal crime or offense to fraudulently or knowingly import or bring into the United States any merchandise contrary to law, or receive, conceal, buy, sell, or facilitate the transfer any of those acts after importation.

The Defendant can be found guilty of that offense only if all of the following facts are proved beyond a reasonable doubt:

First: That the Defendant brought or imported into the United States, any merchandise contrary to law, or received, concealed, bought, sold, or facilitated any of the previous after importation;
Second: That the Defendant knew that the merchandise was brought or imported into the United States contrary to law; and
Third: That the Defendant acted knowingly with an intent to defraud.

The word "knowingly" means that the act was done voluntarily and intentionally and not because of mistake or accident.

The words "contrary to law" means contrary to any existing law.

To act "with intent to defraud the United States" means to act with the specific intent to deceive or cheat the Government; however, it is not necessary to prove that the Government was in fact deceived or defrauded.^[17]

---

[1] Steve Johnson, Bogus Bird-Flu Drugs Flooding the Internet, San Jose Mercury News, Jan. 3, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Trading Standards Net Haul of Festive Fakes, The Scotsman, Jan. 3, 2006.
[8] Police Seize Christmas Avalanche of Fake Goods East Lothian Courier, Dec. 29, 2005.
[9] Id.
[10] Id.
[11] ICE, Five Individuals Indicted for Trafficking in Counterfeit Goods, Dec. 29, 2005.
[12] Id.
[13] Id.
[14] Id.
[15] Id.
[16] 11th Circuit, Pattern Jury Instructions (Criminal Cases), 2003. (PDF)
[17] Id. at 172.