California Business Owner Sentenced to 30 Months in Prison
For Conspiring to Sell Counterfeit Microelectronics
to the U.S. Military
– Counterfeit Integrated Circuits Sold to the U.S. Navy and Numerous Industry Sectors -

     WASHINGTON -- Mustafa Abdul Aljaff, 32, owner of MVP Micro, a business from Newport Coast, California, was sentenced today to 30 months in prison for conspiring to sell counterfeit integrated circuits to the United States military, defense contractors, and others.

     Aljaff pled guilty in January 2010 to federal charges of conspiracy to traffic in counterfeit goods and to defraud the United States, and trafficking in counterfeit goods. He was sentenced in the U.S. District Court for the District of Columbia by the Honorable Emmet G. Sullivan, who described the crime as “diabolical.” Upon completion of his prison term, Aljaff will be placed on three years of supervised release. He also must perform 250 hours of community service.

     The sentence was announced by U.S. Attorney Ronald C. Machen Jr.; John P. Torres, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Field Office in Washington, D.C., and John F. Wagner, Special Agent in Charge of the Washington, D.C. office of the Naval Criminal Investigative Service (NCIS).

     As part of the plea agreement, Aljaff agreed to forfeit to the United States industrial machinery which is designed to be used in the examination, testing, packaging, de-marking, and
marking of integrated circuits; computers and computer network servers; and his integrated circuit inventory, all of which was seized from his business location in connection with the execution of a search warrant on October 8, 2009. He also must pay $177,862 in restitution to the semiconductor companies whose trademarks were infringed as a result of his criminal conduct.

     Co-defendant, Neil Felahy, 34, the MVP operations manager and Aljaff’s brother-in-law, is awaiting sentencing on February 22, 2012, after pleading guilty to charges in the case.

     “Today’s prison sentence sends a message to the unscrupulous counterfeiters who put us all at risk by selling phony integrated circuits that end up in our military systems, medical devices, and consumer products,” said U.S. Attorney Machen. “We will continue to prosecute, convict, and seek prison sentences for the criminals who threaten our health, safety, and national security with their greed.”

     “Counterfeit electrical components destined for use by our military service members put those troops, and our national security, at great risk,” said Special Agent in Charge Torres. “That is why HSI will continue to prioritize the investigation of companies and individuals who attempt to engage in this type of criminal act.”

     “Counterfeit parts pose a grave threat to both the operational readiness and safety of our military forces,” said Special Agent in Charge Wagner. “These prosecution results embody the effectiveness of interagency law enforcement cooperation.”

     Aljaff pled guilty soon after his arrest and cooperated with authorities as the investigation continued. He owned MVP Micro and a host of other companies operating from the same location in Irvine, California. According to the government’s evidence, he was the mastermind and leader of the highly sophisticated fraud scheme to import, sell, manufacture and distribute, in interstate and international commerce, counterfeit integrated circuits. The conspiracy took place between September 2007 and August 2009.

     An integrated circuit is a high-tech device, incorporated into a computer board, which acts as a switch. Integrated circuits control the flow of electricity in the goods or systems into which they are incorporated. They are used in a variety of applications, including industrial, consumer electronics, transportation, infrastructure, medical devices and systems, spacecraft, and military.

     Counterfeit integrated circuits can result in product or system failure or malfunction, and can lead to costly system repairs, property damage, and serious bodily injury, including death. They also raise national security concerns because their history is unknown, including who has handled them and what has been done to them. In addition, the devices can be altered and certain devices can be preprogrammed. Counterfeits can contain malicious code or hidden “back doors” enabling systems disablement, communications interception, and computer network intrusion.

     Markings on integrated circuits indicate a part is “commercial-grade,”“industrial-grade,” or “military-grade.” Military grade markings signify that the part has been specially tested to withstand extreme temperature ranges and high rates of vibration.

     According to the government’s evidence, Aljaff and others sold the counterfeit devices, which included “military-grade” parts, through a cleverly designed web of corporations to unsuspecting customers in the United States and abroad. MVP and related companies sold and distributed counterfeit integrated circuits to approximately 420 buyers in the United States and abroad, including the U.S. Department of the Navy, defense contractors, other broker/distributors, and numerous industry sectors, including transportation, medical services, and aerospace.

     During his guilty plea, Aljaff agreed that on more than 20 separate occasions, he and others imported into the United States from China and Hong Kong, approximately 13,073 integrated circuits bearing counterfeit trade marks, including military-grade markings, valued at about $140,835. Those counterfeit integrated circuits bore the purported trademarks of a number of legitimate semiconductor manufacturers.

     One of the two counts to which Aljaff pled guilty involved a counterfeit, military-grade integrated circuit that he had purchased from a Florida-based company, Vision Tech Components, LLC. The owner of Vision Tech, Shannon Wren, was indicted in the U.S. District Court for the District of Columbia on conspiracy and other charges related to the firm’s own sales of counterfeit integrated circuits. Also indicted in that case was Stephanie McCloskey, Vision Tech’s administrative manager. Wren died pending trial. McCloskey pled guilty in November 2010 to charges of conspiracy to traffic in counterfeit goods and to commit mail fraud; she was sentenced in October 2011 to a prison term of 38 months.

     In announcing today’s sentence, U.S. Attorney Machen, Special Agent in Charge Torres, and Special Agent in Charge Wagner commended the work of ICE Special Agent Misty Price; NCIS Special Agents Steve DeMasi, Mike Gambill, Erin Michaels, and Stewart Thompson (Ret.), and former NCIS Forensic Auditor Stephen Green.

     In addition, they praised the efforts of the staff of the U.S. Attorney’s Office, including Paralegals Diane Hayes and Sarah Reis, Legal Assistant Jared Forney, and Forensic Accountant Maria Boodoo. Finally, they thanked Assistant U.S. Attorneys Sherri L. Schornstein, who prosecuted the case, and Diane Lucas, who assisted with asset forfeiture.

     They also acknowledged the Semiconductor Industry Association (SIA), STMicroelectronics, Inc., Texas Instruments, Inc., Analog Devices, Inc., and National Semiconductor, Inc. for their cooperation and assistance. Also acknowledged were the U.S. Customs and Border Protection officers who prevented counterfeit goods from entering the United States via stops of certain shipments at the U.S. ports of entry.

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