A US-based executive will be forced to return $15 million in illicit gains and could face a lengthy prison sentence after pleading guilty to a counterfeit Cisco hardware distribution scheme.
Onur Aksoy, CEO at the Pro Network Entities business group, pleaded guilty to running an “extensive operation” that saw counterfeit Cisco networking equipment sold to customers over the course of nearly a decade.
US court documents show that Aksoy, a joint US and Turkish national, led a scheme to import the fake equipment from suppliers in China and Hong Kong.
Officials described the counterfeit equipment as “low quality, modified computer networking devices” that appeared legitimate and featured authentic-looking Cisco labels, stickers, boxes, documentation, and packaging.
Hardware security and confidential computing in server platforms
Computing security is central to IT infrastructure transformation
“The devices the Pro Network Entities imported from China and Hong Kong were typically older, lower-model products – some of which had been sold or discarded – which Chinese counterfeiters then modified to appear to be genuine versions of new, enhanced, and more expensive Cisco devices,” the US Department of Justice said in a statement.
“The Chinese counterfeiters often added pirated Cisco software and unauthorized, low-quality, or unreliable components – including components to circumvent technological measures added by Cisco to the software to check for software license compliance and to authenticate the hardware.”
The fake devices sold to customers had an estimated retail value of hundreds of millions of dollars, officials said.
Similarly, the Pro Network Entities group, comprised of more than 19 firms located in New Jersey and Florida, generated “over $100 million in revenue” through the scheme.
Prosecutors described how the counterfeit products sold by the group often suffered from “numerous performance, functionality, and safety problems” and wrought havoc on users’ networks and operations.
In some instances, the malfunctioning hardware cost customers tens of thousands of dollars due to business disruption and remediation attempts.
“Customer’s of Aksoy’s fraudulent and counterfeit devices included hospitals, schools, government agencies, and the military,” officials said.
Cisco scam: Forged documents and seized imports
Around 180 shipments of counterfeit Cisco devices purchased by the Pro Network Entities group were seized by border agents between 2014 and 2022, according to the DoJ.
Cisco also sent repeated cease and desist notices to Aksoy between 2014 and 2019 after being made aware of the scheme.
Aksoy was found to have responded to “at least two” of these letters by providing the firm with forged documents, prosecutors revealed.
In July 2021, locations used by Aksoy were raided, with 1,156 counterfeit Cisco devices seized. Law enforcement officials said the devices had a retail value of over $7 million upon seizure.
Lengthy prison sentence a possibility
The DoJ revealed that Aksoy pleaded guilty on several counts, including “conspiring with others to traffic in counterfeit goods” and conspiracy to commit mail fraud.
He is expected to be sentenced on 6 November this year. Despite the acceptance of a plea deal by the court, Aksoy could still face between four to six-and-a-half years in prison for his involvement in the operation.
Aksoy must also forfeit $15 million in illicit gains and will be required to make full restitution to victims of the scheme.
