Baltimore, MD — A federal indictment unsealed today exposes a cross-border counterfeit racket allegedly run by Xiaoying Xu, 34, a Chinese citizen, and Yiwen Zhu, 34, a Chinese citizen and legal permanent resident of the United States, both of Covina, California. The duo faces 13 federal counts, including conspiracy to commit mail fraud and trafficking in counterfeit goods, for a scheme prosecutors say flooded American consumers with fake Pandora jewelry and Ray-Ban sunglasses.
The indictment, returned April 23, 2019, by a federal grand jury in Maryland, alleges Xu and Zhu imported knockoff luxury goods from Hong Kong and China, then repackaged and shipped them across the U.S. via the U.S. mail. Their residence and offices in El Monte and Alhambra, California, served as central hubs for receiving, repackaging, and dispatching the counterfeit merchandise to unsuspecting buyers who believed they were purchasing authentic products through online marketplaces.
According to court documents, the defendants used fraudulent seller accounts on e-commerce platforms to misrepresent the counterfeit goods as genuine. They further laundered the stolen proceeds by using fraudulently opened customer accounts at a global online payment processor. Payments from victims were funneled to bank accounts controlled by Xu and Zhu, who then withdrew cash at ATMs and transferred funds to accounts held in the names of other Chinese nationals—effectively hiding the trail of illicit gains.
“These defendants allegedly imported counterfeit goods from China and sold them as legitimate merchandise using the registered trademarks of legitimate companies,” said U.S. Attorney Robert K. Hur. “Those who traffick in counterfeit goods are committing a crime which results in American jobs lost, American business profits stolen, and American consumers tricked into receiving substandard products.”
If convicted, Xu and Zhu each face up to five years in prison for conspiracy to commit mail fraud and traffick in counterfeit goods; up to 20 years for each of six mail fraud counts; and up to 10 years for each of six counts of trafficking in counterfeit goods. The case was investigated by the FBI, HSI, U.S. Postal Inspection Service, and U.S. Customs and Border Protection, with field offices in Maryland, Los Angeles, Seattle, and Tampa contributing to the probe.
The defendants were arrested today and are expected to make their initial appearance in U.S. District Court in the Central District of California. No hearing has yet been scheduled in Maryland. An indictment is not a finding of guilt. Xiaoying Xu and Yiwen Zhu are presumed innocent until proven guilty in a court of law. The case is being prosecuted by Assistant U.S. Attorneys Martin J. Clarke and Peter J. Martinez.
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Key Facts
- State: Maryland
- Agency: DOJ USAO
- Category: Fraud & Financial Crimes
- Source: Official Source ↗
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