A man in San Gabriel Valley, California, has pleaded guilty to being involved in a multi-million-dollar scheme to ship counterfeit laptop batteries and other electronics from China to the United States, where they were sold through online marketplaces.
The 29-year-old Chinese national, Zoulin Cai, who went by the name Allen Cai, pleaded guilty to one count of conspiracy to commit wire fraud and mail fraud and one count of aggravated identity theft, the U.S. Attorney’s Office for the Central District of California said in a statement.
According to his plea agreement, Cai conspired to import counterfeit lithium-ion batteries and other electronic accessories for laptops and cellphones to the United States from China.
He sold and shipped the counterfeit batteries to unsuspecting buyers via online marketplaces eBay and Amazon, and advertised them as new and original products from companies such as Apple, Dell, HP, and Toshiba.
The batteries also bore counterfeit trademarks of those companies, and also carried counterfeit safety certification marks of the company UL.
According to UL, most laptop battery counterfeiting is of lithium-ion batteries because the market is bigger and more lucrative. Due to poor design or a fault in the counterfeited battery, these counterfeit items can pose significant safety risks and overheat, catch fire, and explode.
Cai was previously arrested in December 2019 for his then-alleged involvement in the scheme.
He admitted on June 29 that his co-conspirators and he had profited by at least $3.5 million and as much as $23,831,668 from the sale of the counterfeit products from March 2014 to June 2019. In that same time frame, Cai and his co-conspirators sent more than $18 million through wire transfers from U.S.-based bank accounts directly to Chinese bank accounts.
According to a federal grand jury indictment unsealed in December 2019, Cai worked for Shenzhen Theseus Technology Co. Ltd., a China-based company, before he moved to Los Angeles County in 2012. Shenzhen Theseus manufactured counterfeit lithium-ion batteries and was owned and operated by Cai’s relatives.
Federal agents made undercover purchases of the counterfeit batteries from Cai on several occasions prior to his arrest.
Cai and other co-conspirators had created many corporations based in the United States to import and sell the counterfeit batteries and electronics, which were then shipped from warehouses in La Puente under his control, the plea agreement stated.
One of Cai’s warehouses was found in December 2019 to have contained about 44,000 batteries and 175,000 counterfeit labels of multiple companies, including Apple, Dell, HP, Toshiba, Lenovo, Asus, Acer, and Samsung.
The Chinese national faces a maximum sentence of 22 years of federal imprisonment. A sentencing hearing has been scheduled for Oct. 4.