Citizen of China Pleads Guilty to Trafficking in Counterfeit Computer Chips

Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that Daofu Zhang, 40, of Shenzen, China, pleaded guilty today in New Haven federal court to conspiring to sell counterfeits of sophisticated integrated circuits to a purchaser in the United States.

According to court documents and statements made in court, Zhang and his two co-conspirators each operated businesses in China that bought and sold electronic components, including integrated circuits (“ICs”).  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.  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, 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, Connecticut, 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.  He is scheduled to be sentenced by U.S. District Judge Robert N. Chatigny in Hartford on July 8, 2016, at which time he faces a maximum term of imprisonment of 10 years and a fine of up to $2 million fine.

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.

This matter is being investigated by the Defense Criminal Investigative Service, the Department of Homeland Security, the Department of Commerce, the Federal Bureau of Investigation, and the Air Force Office of Special Investigations.  The case is being prosecuted by Assistant U.S. Attorney Henry Kopel and U.S. Department of Justice Counterintelligence and Export Control Section Trial Attorney Casey Arrowood.

USAO - Connecticut

Updated April 15, 2016