NEW BERN, NC – Kurt Michael KROL, 36, of Fayetteville, North Carolina, is headed to federal prison for six years after being sentenced today for running a large-scale counterfeit goods operation. United States District Judge Louise W. Flanagan handed down the 72-month sentence, followed by three years of supervised release. The feds didn’t stop there – KROL will forfeit a substantial haul to the government, including seized cash, properties, and a hefty money judgment.
According to court documents, KROL’s scheme dates back to September 2012, culminating in a guilty plea on December 15, 2015, to a charge of trafficking in counterfeit goods. The operation started innocently enough. KROL founded Universal Mania, Inc. (UM), an online marketplace for electronics in Fayetteville, initially dealing in legitimate products. But greed kicked in. In 2011 or 2012, KROL hooked up with a contact in Hong Kong and began sourcing counterfeit Otterbox products.
The jig was almost up in 2013. Otterbox hit UM with a trademark infringement lawsuit, ultimately winning a $200,000 judgment and securing an injunction against further unauthorized use of their trademarks. But KROL didn’t learn his lesson. Instead of shutting down, he doubled down, meeting with the Chinese supplier to scout out *more* products to counterfeit. The scope of the operation expanded to include a wide array of fake goods: L’Oreal (Clarisonic), HSI Professional, and Conair (Babyliss) beauty products; Garmin electronics; Choon’s Design (Rainbow Loom) toys; Philips (Sonicare) products; Zing Anything bottles; Harman International Industries (JBL), LG, and Bose speakers and/or headphones; and Spectrum Brands FURminator dog brushes.
Investigators tracked a staggering 2,047 shipments originating in Hong Kong addressed to KROL between August 2012 and February 2015. KROL cleverly mixed legitimate and counterfeit merchandise, laundering the profits together. When one online retailer caught wind of the fakes and terminated UM’s accounts, KROL resorted to enlisting employees, friends, and family to open new accounts and continue the sales.
“Defendants such as Krol while trafficking in counterfeit goods, undermine our fair trade and free market system to generate illicit proceeds,” stated HSI North Carolina Assistant Special Agent in Charge Christopher Healy. “This significant sentence will let people, such as Krol, know that this illegal activity impacts not only our national economy but the local economies where these illegal traffickers operate.”
The investigation, led by agents with the Department of Homeland Security (DHS), Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI), resulted in multiple seizures of counterfeit items between October 2013 and January 2015. A February 25, 2015 search of UM headquarters yielded even more fake products. KROL admitted to selling the counterfeits, even *after* the Otterbox civil judgment. The government seized $156,932 from four BB&T bank accounts, $51,988 from two USAA bank accounts, a Fayetteville residence, a Raeford residence, and obtained a money judgment for the full gross proceeds of the operation. Consider that a warning: counterfeit cash comes with a very real price.
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Key Facts
- State: North Carolina
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes
- Source: Official Source ↗
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