LOS ANGELES – A San Gabriel Valley man was arrested today on federal criminal charges that he participated in a $23.8 million scheme to manufacture and ship counterfeit laptop computer batteries and other electronics from China to the United States, where the bogus batteries were sold to unsuspecting buyers in online marketplaces.
Zoulin Cai, a.k.a. “Allen Cai,” 28, of La Puente, was arrested at his residence this morning on a federal grand jury indictment unsealed today. He is scheduled to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.
The three-count indictment alleges that Cai, a Chinese national who moved to Los Angeles County in 2012, worked for Shenzhen Theseus Technology Co. Ltd., a China-based company. Theseus Technology, which was owned and operated by Cai's relatives, manufactured counterfeit lithium-ion batteries, some of which were designed for laptop computers.
Cai and his co-conspirators sold and shipped the counterfeit batteries to unsuspecting individual buyers via eBay and Amazon, falsely advertising them as brand-name new, genuine, original, or OEM (original equipment manufacturer) products, the indictment alleges. The batteries allegedly bore counterfeit trademarks of companies such as Apple, Dell, HP, and Toshiba, as well as counterfeit certification marks of UL, a company that tests and certifies the safety of electronic products.
Counterfeit lithium-ion laptop batteries pose significant safety risks – including the risk of extreme heat, fire, and explosions – and the batteries that Cai and his co-conspirators allegedly shipped frequently lacked required essential internal safeguards.
“Counterfeit goods are not manufactured with the same care as legitimate products backed by well-known companies and their highly developed intellectual property,” said First Assistant United States Attorney Tracy L. Wilkison. “The batteries involved in this case were sold to numerous unsuspecting online buyers, including one victim whose laptop started smoking and nearly caught fire after the battery was installed. Consumers need to exercise great caution when purchasing discounted items, particularly electronic goods, because these items pose very real safety risks.”
“Counterfeit products not only attack the name and value of a known business, but, in many cases, can cause harmful, and sometimes fatal, consequences for the unsuspecting buyer,” said Mark Zito, Acting Special Agent in Charge for Homeland Security Investigations (HSI) Los Angeles. “These fakes have no place in a fair, legitimate marketplace. While we hear about consumer fraud on a daily basis during the holiday season, the public should be assured that HSI, along with our federal and state law enforcement partners – including Customs and Border Protection and the Los Angeles Police Department – is committed to targeting the unscrupulous vendors of substandard merchandise year round. They are the ones who may pay the steep price.”
The counterfeit batteries allegedly were imported, sold, and shipped from warehouses in La Puente and the City of Industry, which Cai ran and where federal agents made undercover purchases of counterfeit laptop batteries from Cai on several occasions.
The indictment further alleges that from 2014 through June 2019, Cai and his co-conspirators fraudulently obtained at least $23.8 million from the sale of counterfeit laptop batteries through eBay and Amazon. They laundered those funds, including more than $18 million wired directly to Chinese bank accounts in the name of Theseus Technology as well as other Chinese businesses involved in the conspiracy. Cai allegedly used his ill-gotten gains for a variety of personal expenses, including monthly payments for a Maserati sports car he leased.
Cai is charged with conspiracy to traffic in counterfeit goods and labels, conspiracy to commit wire fraud and mail fraud, and conspiracy to engage in money laundering.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of all charges, Cai would face a statutory maximum sentence of 50 years in federal prison.