According to the U.S. Department of Justice (DOJ), Daofu Zhang of Shenzen, China, and two co-conspirators each operated businesses in China that bought and sold electronic components. In the summer of 2015, Zhang’s co-conspirator, Xianfeng Zuo asked the other co-conspirator, Jiang Yan, to locate and purchase several advanced ICs made by Xilinx Corp., which had military applications, including radiation tolerance for uses in space.
Court documents reported Yan then asked a U.S. individual to locate the Xilinx ICs and sell them to Yan. The U.S. individual explained that the ICs cannot be shipped outside the U.S. without an export license, but Yan still wished to make the purchase. When the U.S. individual expressed concern that the desired ICs would have to be stolen from military inventory, Yan proposed to supply the U.S. source with “fake” ICs that “look the same,” to replace the ones to be stolen from the military.
In November 2015, according to the court, Zhang shipped from China to the U.S. individual two packages containing a total of eight counterfeit ICs, each bearing a counterfeit Xilinx brand label. After further discussions between Yan and the U.S. individual, Yan, Zhang, and Zuo flew together from China to the U.S. in early December 2015 to complete the Xilinx ICs purchase.
On December 10, 2015, the three conspirators drove to a location near Route 95 in Milford, Conn., where they planned to meet the U.S. individual, make payment, and take custody of the Xilinx ICs. Federal agents arrested all three at the meeting location.
Zhang pleaded guilty to one count of conspiracy to traffic in counterfeit goods, according to the DOJ. He is scheduled to be sentenced by a U.S. district judge in July. He faces a maximum prison term of 10 years and a fine of up to $2 million.
On March 7, 2016, Yan, 33, pleaded guilty to one count of conspiracy to traffic in counterfeit goods, and one count of attempt to export integrated circuits without the required export license. On March 16, 2016, Zuo, 38, pleaded guilty to one count of conspiracy to traffic in counterfeit goods. They await sentencing.