A Florida woman has admitted helping to sell millions of dollars-worth of counterfeit chips, in a scheme that brought in almost $16 million over three years.
Stephanie McCloskey worked for component distributor VisionTech Components, which claimed that the chips it supplied were mostly from OEMs in Europe. In fact, they were counterfeits and were mostly sourced from mainland China and Hong Kong.
VisionTech's website listed chips from 107 companies, including STMicroelectronics, Intel, Analog Devices, NatSemi and TI, according to testimony filed with the US District Court in Washington DC. Counterfeit markings applied to the chips included trademarks and brands, date and lot codes, country of origin, and false industrial or military grade marks.
Falsely-marked components, especially ones with the wrong grade marking, can be extremely difficult to detect, as they may work OK to begin with and only fail when stressed. Military officials also worry about fake chips containing
McCloskey told the court that she and others working for VisionTech owner Shannon L Wren were instructed to use large erasers to polish the leads of devices that had arrived from China dirty. On at least one occasion, Wren told her to send chips with different date codes to China to be remarked all with the same date code.
She said that Wren would on occasion run his fingernail through the number sequence on a box, making it appear to have been damaged in transit, but also making it impossible to check that the lot, trace and country codes matched the box's contents.
At Wren's direction, McCloskey also sent letters to US Customs and Border Protection after fake chips had been detected and seized, falsely claiming that VisionTech did not knowingly import fakes.
When customers complained, VisionTech would offer to replace goods. However, over the three years from January 2007 to December 2009, the company issues over $1 million in customer refunds.
A sentencing date for McCloskey, who confessed prior to her case coming to court, has not yet been set; however she faces the possibility of five years in prison and a a maximum fine of $250,000.