Counterfeit toy importers indicted in New York
The U.S. Justice Department on Wednesday said five individuals and five corporations have been charged in an indictment unsealed in Brooklyn, N.Y., for allegedly importing hazardous and counterfeit toys from China for sale in the United States.
The 24-count indictment charges Chenglan Hu, 51; Hua Fei Zhang, 52; and Xiu Lan Zhang, 60, all Chinese nationals and residents of Queens, N.Y., and Guan Jun Zhang, 29; and Jun Wu Zhang, 28, both naturalized citizens and Queens residents, along with their closely held companies Family Product USA Inc., H.M. Import USA Corp., ZCY Trading Corp., Zone Import Corp. and ZY Wholesale Inc., with importing and trafficking hazardous toys in violation of the Consumer Product Safety Act (CPSA) and toys bearing copyright-infringing images and counterfeit trademarks, smuggling, money laundering and structuring.
“They allegedly retooled their operations many times in order to avoid detection, and despite repeated citations by the authorities, they continued to peddle counterfeit toys featuring Dora the Explorer, SpongeBob SquarePants and other popular children’s characters,” said Assistant Attorney General Lanny Breuer of the Justice Department’s Criminal Division, in a statement.
The five individual defendants were arrested Wednesday morning. The defendants’ warehouse, two residences and an email account were searched by federal agents. In addition, three luxury vehicles, including a Porsche and Lexus, three personal bank accounts and three corporate accounts were seized. Agents also filed lis pendens on two of the defendants’ properties in Queens, N.Y.
The indictment charges that from July 2005 through January 2013 the individual defendants used their companies, the corporate defendants, to import toys from China that they sold, both wholesale and retail, from a storefront and warehouse in Ridgewood, N.Y., and other locations in Brooklyn and Queens.
According to the indictment, the defendants’ companies had children’s toys seized by Customs and Border Protection from shipping containers entering the United States from China on 33 occasions.
Seventeen of the 33 seizures were of "violative" toys – toys prohibited from import into and distribution in the United States, under laws and regulations enforced by the CPSC, because of excessive lead and phthalate levels; small parts that presented choking, aspiration or ingestion hazards; and easily accessible battery compartments.
The other seizures were of toys bearing copyright-infringing images and counterfeit trademarks, including knockoff versions of toys featuring a wide variety of popular children’s characters, the Justice Department said.
“Due to the number and volume of the seizures, the individual defendants allegedly shifted their use of the companies and alternated formal roles, in order to continue importing and distributing violative and infringing toys. Each time the number of seizures accumulated for one company, the individual defendants allegedly formed a new toy company to continue importing the violative and infringing toys,” the department said.
In the indictment, the government is seeking forfeiture of the seized vehicles and bank accounts and the restrained properties, in addition to a money judgment to be determined at trial.