Operation 'Cisco Raider' Nets $76 Million In Fake Gear

The U.S. Department of Justice and the Department of Homeland Security on Thursday said that law enforcement agencies have made more than 400 seizures of Cisco network hardware and product labels worth an estimated $76 million.

Officials from the Federal Bureau of Investigation, Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), and Royal Canadian Mounted Police (RCMP) participated in the multiagency announcement, offering an update on parallel multiyear efforts to curb the flow of counterfeit network hardware into the United States and Canada, much of it from China.

The efforts of the respective agencies reflect a steady escalation in the war on intellectual property crime. In 2007, federal authorities convicted and sentenced 287 defendants on intellectual property charges, a 35% increase from 2006 and a 92% increase from 2005. The number of intellectual property cases filed by the Department of Justice also increased in 2007, rising to 217, a 7% increase from 2006 and 33% increase from 2005.

The FBI called its portion of the multiagency counter-counterfeiting initiative Operation Cisco Raider. In the past two years, the agency has helped investigate 15 cases through nine FBI field offices. Operation Cisco Raider has produced 36 search warrants and about 3,500 counterfeit network components worth over $3.5 million. It has resulted in 10 convictions and $1.7 million in restitution.

ICE, CBP, and RCMP have also been directing investigations and seizures of counterfeit network equipment from a variety of vendors.

In a statement, Assistant Attorney General Alice S. Fisher of the Criminal Division warned, "Counterfeit network hardware entering the marketplace raises significant public safety concerns and must be stopped." Inspector Peter Goulet of the RCMP echoed Fisher's remarks, asserting that counterfeit networking hardware raises "serious health and safety concerns."

While the health risks of counterfeit pharmaceuticals have been well-documented, Cisco spokesperson John Noh couldn't cite any specific instances where public safety had been compromised as a result counterfeit networking hardware.

Ram Manchi, president of the Alliance for Gray Market and Counterfeit Abatement (AGMA), and coincidentally, director of global business controls at Cisco, also could not recall a specific incident where counterfeit network hardware had harmed public health or safety. However, he observed that counterfeit routers have been used in hospitals and that a failure in that setting could cause harm.

The U.S. Attorney's office for the Eastern District of Virginia didn't immediately respond to a request for comment.

Noh stressed that counterfeit goods represent a major concern for Cisco. "Cracking down on counterfeiting is a critical customer satisfaction issue for us," he said, adding that losses across various industries due to counterfeit goods cost billions annually.

Manchi said that U.S. companies lose about $250 billion annually because of counterfeit products, about $40 billion of which affects tech companies.