State Department Employee and Spouse Plead Guilty to Trafficking in Counterfeit Goods from U.S. Embassy
On December 10, 2020, a U.S. Department of State employee and his spouse pleaded guilty to trafficking counterfeit Vera Bradley goods into the United States through e-commerce third-party sites on computers owned and operated by the U.S. Embassy in Seoul, South Korea.
According to the indictment dated December 11, 2019, Gene Leroy Thompson Jr. and his spouse, Guojiao “Becky” Zhang, operated the scheme from September 2017 until December 2019. During this period, Thompson Jr. was employed by the U.S. Department of State as an Information Programs Officer (IPO) at a Sensitive Compartmented Information Facility within the U.S. Embassy. According to court papers, the couple “created accounts on e-commerce platforms such as eBay, Poshmark, and Mercari,” to post counterfeit Vera Bradley handbags “using his Department of State computer, which used Internet Protocol (“IP”) addresses in the United States.”
After the accounts were created by Thompson Jr., Zhang took control and the responsibility of the scheme to fulfill the transactions. She shipped the counterfeit products and a prepaid shipping label to a co-conspirator in the state of Oregon. The individual in Oregon stored the goods and finished the transactions by sending the packages to customers throughout the United States. The proceeds were then deposited into two United States-based bank accounts owned by Thompson Jr. and his spouse.
The co-conspirator in Oregon received cease-and-desist letters from the Vera Bradley company in April 2018. After forwarding to the couple in Seoul, Thompson Jr. sent an e-mail to his spouse stating “Take all of the listings for VB down. VB has caught you.” However, the investigation conducted by the DSS Office of Special Investigations with help from the US Postal Inspection Service later found that the defendants continued the schemes by changing their registered account names on the e-commerce websites.
Vera Bradley is an American company producing handbags, luggage, fashion items, and home accessories. Barbara Bradley Baegaard and Patricia R. Miller established their brand in 1982 and became a publicly-traded company in 2010. They have over 2,000 retail stores, multiple online indirect points of sale, and will have an estimated annual revenue of $495.21 Million in 2020.
As an IPO, Thompson Jr was responsible for managing all systems, programs, and telecommunication operations within the Information Programs Center (IPC) at the embassy. The incumbent of such a position “oversees the IPC’s data network operations, administration, and maintenance.” The duties include ensuring proper security configurations of the internet and intranet and ensuring correct inventory of all IPC assets of an embassy.
The law defines a counterfeit mark as “a spurious mark – that is identical with, or substantially indistinguishable from, a mark registered on the principal register in the United States Patent and Trademark Office .” The law also stipulates that the user of this counterfeit mark will be indicted if it is used “to cause confusion, to cause mistake, or to deceive.” The couple is charged with using three marks registered to Vera Bradley with the USPTO.
The USPTO and the national trademark registration system were created in 1946 under the Lanham Act, which provides “for the registration and protection of trademarks used in commerce.” The civil penalties and process for protecting registered trademarks stem from this legislation signed into law by President Harry Truman. The use of a counterfeit mark wasn’t made a federal offense until the passing of the Trademark Counterfeiting Act of 1984.
In January 2020, the Department of Homeland Security prepared a report entitled “Combating Trafficking in Counterfeit and Pirated Goods” as a requirement under President Trump’s “Memorandum on Combating Trafficking in Counterfeit and Pirated Goods” issued on April 3, 2019. The report highlighted the impact e-commerce has had on the rise in counterfeit and pirated goods in US markets in recent years. The report found that in Fiscal Year 2018, just like in years past, apparel and accessories top the list of seized, counterfeit goods at the border.
Thompson Jr. and Zhang pleaded guilty to one count of conspiracy to traffic in counterfeit goods and services, even though the original indictment charged them with three counts under Title 18, United States Code, Section 2320(a). The charge holds a penalty of a maximum fine of $5,000,000, maximum imprisonment of 10 years, or both, for anyone who “intentionally traffics in goods or services and knowingly uses a counterfeit mark.” The couple will be sentenced on March 18, 2021.
