Unrelibale counterfeit semiconductors for use on nuclear submarines

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Department of Justice
Office of Public Affairs

Massachusetts Man Charged with Selling Counterfeit Semiconductors Intended for Use on Nuclear Submarines

Peter Picone, 40, of Methuen, Mass., has been charged with importing counterfeit semiconductors from China for sale in the United States.

The charges were announced today by Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; Acting U.S. Attorney for the District of Connecticut Deirdre M. Daly; Special Agent in Charge Bruce Foucart of U.S. Immigration and Customs Enforcement (ICE) – Homeland Security Investigations (HSI) in Boston; Acting Special Agent in Charge of Defense Criminal Investigative Service (DCIS) Northeast Field Office Craig W. Rupert; and Special Agent in Charge of the Naval Criminal Investigative Service (NCIS) Northeast Field Office Cheryl A. DiPrizio.

The eight-count indictment charges Picone with conspiring to traffic in counterfeit goods, conspiring to traffic in counterfeit military goods, trafficking in counterfeit goods, conspiring to commit wire fraud, wire fraud and conspiring to commit money laundering. The indictment was returned by a federal grand jury in New Haven on June 25, 2013, and was unsealed today.

The indictment charges that from February 2007 through April 2012, Picone, through two companies he owned and operated, Tytronix Inc. and Epic International Electronics, purchased counterfeit semiconductors from sources in Hong Kong and China. According to the indictment, Picone made false representations about the semiconductors and sold them to customers throughout the United States, including companies believed by Picone to be defense contractors in Connecticut and Florida. Certain semiconductors sold by Picone were intended for use on nuclear submarines.

“By allegedly purchasing and reselling counterfeit semiconductors for military applications, Peter Picone put personal gain above the safety and well-being of dedicated U.S. servicemen and women,” said Acting Assistant Attorney General Raman. “As charged in the indictment, Picone went to great lengths to conceal the true origin of counterfeit semiconductors in order to sell the devices as seemingly legitimate and reliable components for use in nuclear submarines and other complex machinery. The charges unsealed today demonstrate our steadfast commitment to working with our law enforcement partners to prosecute counterfeiters and others who risk the security of the men and women of the U.S. military.”

“Counterfeit semiconductors pose a serious health and safety risk to consumers and end-users, and an even greater threat to the safety of the men and women of our armed services when they are sold for use in the military,” said Acting U.S. Attorney Daly. “We will prosecute these types of cases to the fullest extent of the law.”

“Today’s charges demonstrate the continued commitment of the Defense Criminal Investigative Service and our peer agencies to protect the Department of Defense’s supply chain from being infiltrated and compromised with inferior components,” said DCIS Northeast Field Office Acting Special Agent in Charge Rupert. “Safeguarding our warfighters and ensuring their equipment functions at the absolute highest levels is vital to our nation’s defense and readiness. Detecting and dismantling the operations of suppliers who choose to make a profit by supplying counterfeit or inferior products is a DCIS priority. I applaud the agents and prosecutors who worked tirelessly to bring about this result.”

“Trafficking in counterfeit sensitive technologies is an extremely dangerous practice on several fronts. Not only are there significant risks associated with the transportation of this faulty equipment, but our own American servicemembers are also put in harm’s way when they encounter substandard equipment,” said ICE-HSI Special Agent in Charge Foucart. “One of HSI’s top enforcement priorities is protecting the integrity of U.S. military products and other sensitive technology.”

“Counterfeit semiconductors represent a serious threat to the safety of our military service members and raise national security concerns,” said NCIS Special Agent in Charge DiPrizio. “The introduction of defective equipment into the military supply chain can result in product failure, property damage and even serious bodily injury, including death. Some of these counterfeit devices can also be preprogrammed with malicious code and enable computer network intrusion. NCIS has worked closely with our law enforcement partners at DCIS and ICE-HSI in identifying unscrupulous suppliers and bringing them to justice.”

Picone was arraigned before U.S. Magistrate Judge Donna F. Martinez of the District of Connecticut in Hartford, Conn., and was released on bond. Trial is scheduled for Sept. 9, 2013, before U.S. District Judge Alvin W. Thompson in Hartford.

If convicted of conspiracy to traffic in counterfeit goods, Picone faces a maximum penalty of five years in prison. If convicted of conspiracy to traffic in counterfeit military goods, Picone faces a maximum term of 20 years in prison. If convicted of trafficking in counterfeit goods, Picone faces a maximum term of 10 years in prison. If convicted of conspiracy to commit wire fraud, or wire fraud, Picone faces a maximum penalty of 20 years in prison. If convicted of conspiracy to commit money laundering, Picone faces a maximum term of 20 years in prison.

The indictment also seeks forfeiture of proceeds from illicit trafficking in counterfeit goods and wire fraud as well as the seizure of the goods and any property involved in the money laundering conspiracy.

The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

The case was jointly investigated by HSI, DCIS and NCIS. The case is being prosecuted by Assistant U.S. Attorney Edward Chang of the District of Connecticut and Trial Attorneys Kendra Ervin and Carol Sipperly of the Criminal Division’s Computer Crime and Intellectual Property Section. Trial Attorney Kristen M. Warden of the Criminal Division’s Asset Forfeiture and Money Laundering Section is assisting with the forfeiture aspects of the case.

The enforcement action announced today is one of many efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force). Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation, and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state, and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders. To learn more about the IP Task Force, go to http://www.justice.gov/dag/iptaskforce/.

Criminal Division

Coastie explosives detection canine retires after 49 “dog years” of service

BZ, Ferro!

“Coast Guard canines are a rank higher than their handlers,” said Coleman. “The idea behind that is that the handler works for the canine, not the other way around.”

Any dog owner will confirm the truth of that!

49 dog years of service

Chief Petty Officer Ferro, a Belgian Malinois and military working dog, retires after nine years of service. U.S Coast Guard photo by Petty Officer 3rd Class Manda M. Emery.

Chief Petty Officer Ferro, an explosives detection canine , has served in the Coast Guard for nine years alongside his handler Petty Officer 1st Class Shane Coleman. In a ceremony held June 10 at Coast Guard Maritime Safety and Security Team Galveston, Texas, Ferro was formally retired into a life of rest and relaxation.

Ferro and Coleman’s partnership spans nearly a decade. Ferro, a Belgian Malinois, was hand-picked as a puppy to become a Coast Guard canine , and underwent several exams. Ferro was given a prey, hunt, drive test to see if he would have the ability to work in explosives detection. He was also given a rigorous health exam, as well as other tests to ensure he would be able to work in high-stress environments, said Coleman.

Meanwhile, Coleman was selected to become a Coast Guard canine handler. At that time, Coleman was stationed at Maritime Safety and Security Team Kings Bay, Ga. When a solicitation came out for interested petty officers to apply for the Coast Guard’s canine program, Coleman knew this was the opportunity he had been waiting for.

Petty Officer 1st Class Shane Coleman receives a shadow box gift on behalf of Chief Petty Officer Ferro, a Belgian Malinois. U.S. Coast Guard photo by Petty Officer 1st Class Andrew Kendrick.

“I had a high desire to work with dogs because I’ve had dogs all my life,” said Coleman. I thought it would be a rewarding job to get in to. I would be the forefront of national security with a United States Coast Guard explosive detector canine.”Ferro passed all the tests and at 14 months, in October 2004, was partnered with Coleman at the Customs and Border Protection Canine Enforcement Training Center in Front Royal, Va. While at the training center, Coleman would learn to master dog handling. His canine counterpart would be trained to detect explosives.

Today, when Ferro and Coleman are together, the handler-canine bond is apparent. According to Coleman, this wasn’t always the case.

“Ferro was a challenging dog to work with,” said Coleman. “I knew in my heart that I was going to be the only one who would be able to handle him.”

It was during the second week of training when Coleman was assigned two dogs: Max, a yellow Labrador retriever, and Ferro. He was not given a choice breed.

“You are initially assigned two dogs, and you don’t get a choice as to the breed,” said Coleman. “They give you two dogs to see how and if you bond with one of the dogs.”

Coleman vividly remembers his first meeting with Ferro and Max.

“Max was a spaced-out Lab,” said Coleman. “He was sitting in his kennel without a care in the world.”

Ferro, on the other hand, was far from carefree.

“Ferro was at the back of his cage with his ears pinned back, the hair on his back sticking up, and he was growling and snarling at everyone,” said Coleman. “At first I thought, ‘I hope I don’t get that dog.’” He was mean-looking, but I do remember that he was a handsome dog.”

Aside from Ferro’s rugged good looks, Coleman thought Ferro’s name was indicative to the canine’s personality. The name Ferro was derived from the periodic table of elements. The symbol Fe on the periodic table of elements means iron, so the name Ferro, fits to the canine’s build and personality, said Coleman.

As the weeks passed at the training center, Ferro developed his detection skills. He retained his aggressive behavior and lashed out at Coleman. At Week 16, Coleman went to get Ferro out of his kennel for a day of training. Coleman said Ferro did not want to get out of his kennel. In a split second, Ferro attacked Coleman, biting Coleman from finger tips to shoulders on both arms. The wounds required Coleman to seek emergency medical attention, which resulted in several dozen stitches, said Coleman. The scars are still visible today.

Later, a subsequent attack resulted in another round of stitches. This second attack was grounds for the director of the training center to pull Ferro from the training program.

“I asked the director of the training center to reconsider and allow me to work with the dog some more,” said Coleman. “I felt that Ferro was misunderstood. He needed a little more time to develop to his full potential.”

Coleman’s hunch about Ferro paid off. At week 17, Coleman selected Ferro as his partner, and the pair graduated from the training center.

“I knew he was the one,” said Coleman. “I was the only one he changed his behavior toward. I was the only one he would let get him out of his kennel.”

Upon graduation, Ferro was given the rank of chief petty officer.

Chief Petty Officer Ferro’s handler, Petty Officer 1st Class Shane Coleman, has been partnered with Ferro for the duration of the K-9′s career. U.S. Coast Guard photo by Petty Officer 1st Class Andrew Kendrick.

“Coast Guard canines are a rank higher than their handlers,” said Coleman. “The idea behind that is that the handler works for the canine, not the other way around.”Ferro and Coleman were sent back to MSST Kings Bay to work as a team and spent six years deploying to various locations throughout the U.S. augmenting Coast Guard missions of port safety and security, said Coleman.

In June 2010 Ferro and Coleman were transferred to MSST Galveston. The same type of unit with the same type of mission, but in a different location. This time the duo found themselves on the Gulf Coast. While at MSST Galveston, Ferro and Coleman traveled to the U.S. border with Mexico several times and worked with other Department of Homeland Security agencies to train for mission readiness.

“Our work with other agencies, including law enforcement canine handlers and Transportation Security Administration canine handlers, has been rewarding and challenging,” said Coleman. “Our relationship with the agencies was strong. They were open to getting know how the Coast Guard works.”

After three successful years at MSST Galveston, Coleman knew it would be time to retire Ferro. It was a hard decision for Coleman to make, but he knew it was time for Ferro to enjoy the remainder of his dog years living a spoiled life.

“On Aug. 4, 2013, Ferro will be 10. For a working dog that is old,” said Coleman. “He still has a lot of spunk and energy, but it is time for him to enjoy retirement.”

When Ferro and Coleman are at work, the bond between the pair is unrivaled. Ferro only has eyes for his handler. His honey brown-colored eyes constantly scan for Coleman, and his ears are always on alert for Coleman’s next command. And Coleman is just as attached to Ferro, as Ferro is attached to Coleman.

“We have been partners for almost a decade,” said Coleman. “I know his every move. He knows my every move. I have been with this dog 24 hours per day, seven days per week for nine years, both at work and at home. I even take him on leave when I can. We go deer hunting together, we go duck hunting together and we go fishing together. He is going to be the ring bearer in my wedding .”

Ferro’s retirement ceremony served a dual purpose: Ferro’s service life was celebrated and the command at MSST Galveston said farewell and following seas to Coleman. Coleman has been reassigned to Coast Guard Cutter Vigorous, a 210-foot medium endurance cutter homeported in Cape May, N.J.

“It is going to be tough knowing I will be out on patrol doing law enforcement missions and he won’t be there with me,” said Coleman. “That’s on the work side of things. On the personal side of things, I am used to having him with me all the time.”

During Ferro and Coleman’s partnership, the pair has traveled more than 400,000 road miles together. They have been sent on missions to 21 states, including Puerto Rico, and taken three cross-country flights together, all for the sake of protecting the country’s ports, waterways and borders, said Coleman.

“He’s had a good life, and we’ve had an outstanding partnership,” said Coleman. “I know that while I’m out to sea, that he will be taken care of by my future wife. We joke around saying he will become mommy’s baby, and I’m certain that will be the case.”