The Curious Case of the $1B Cisco Gear Fraud

We don't usually cover breaking news, but an interesting case from the U.S. Department of Justice (DOJ) seems to have eluded many major news outlets: The DOJ has charged a Florida resident with a massive fraud scheme in selling and distributing fake Cisco equipment originating from China.

A federal grand jury in the District of New Jersey returned an indictment last Thursday (July 7), charging a resident of Florida with running a large operation distributing fraudulent and counterfeit Cisco networking equipment with an estimated retail value of over $1 billion.

Fake Cisco Gear Distributed Online

The fraud is alleged to have occurred over many years, starting around 2014, and it involved dozens of companies and businesses, including those using common digital services from Amazon and eBay.

The indictment charges Onur Aksoy, 38, who also used several aliases including Ron Aksoy and Dave Durden. The grand jury says Aksoy imported tens of thousands of fraudulent and counterfeit Cisco networking devices from China and Hong Kong and resold them to customers in the United States and overseas, falsely representing the products as new and genuine. The indictment says that the operations generated more than $100 million in revenue and millions of dollars in profit for Aksoy personally.

Aksoy's business entities, referred to as “Pro Network Entities,” were dealing pieces of equipment that were “typically older, lower-model products, some of which had been sold or discarded," which Chinese counterfeiters then modified to appear to be genuine versions of new, enhanced, and more expensive Cisco devices, says the indictment.

Between 2014 and 2022, U.S. Customs and Border Protection (CBP) seized approximately 180 shipments of counterfeit Cisco devices being shipped to the Pro Network Entities from China and Hong Kong.

In July 2021, agents executed a search warrant at Aksoy’s warehouse and seized 1,156 counterfeit Cisco devices with a retail value of over $7 million. Aksoy is charged with one count of conspiracy to traffic in counterfeit goods and to commit mail and wire fraud; three counts of mail fraud; four counts of wire fraud; and three counts of trafficking in counterfeit goods. Aksoy was charged by a criminal complaint filed in New Jersey on June 29 and was arrested in Miami the same day.

According to the indictment, the equipment came with counterfeited Cisco labels, stickers, boxes, documentation, packaging, and other materials. It was loaded with unreliable and sometimes buggy software that caused damage to some customers’ networks.

The indictment doesn’t say anything about the DOJ reaching out to China to cooperate, but it does say that when Aksoy was confronted with evidence, he supplied forged Cisco documents. He communicated with Chinese co-conspirators using his aliases, including “Dave Durden.”

How Did That Happen?

Several things are interesting about this:

• The fraud was able to expand and grow over many years (since at least 2014), without being stopped.
• The elaborate and extensive nature of the gear that was faked – including rebadged equipment, fake or stolen software, and intellectual property -- is surprising.
• The sources of the equipment in China and Hong Kong went to elaborate lengths in faking the Cisco gear.
• This fraud isn't generating a lot of news coverage.

One thing that's not a surprise: The bulk of the crimes appear to have been based in New Jersey and Florida and they were allegedly perpetrated by a Florida man. Also: China's involvement.

The alleged crimes probably won't harm Cisco's brand much, as it is clear from the details of the indictment that the products were dodgy counterfeits. However, it's not likely to help China's reputation in its struggle with Western states that are cracking down on Chinese copies and intellectual property theft.

Blowback against intellectual property theft in China has been rising in recent years. The FBI and the UK's MI5 security agency just weeks ago warned that that Beijing has been backing powerful hackers to coordinate methodical intellectual property theft from Western companies. Some research has estimated the damage in the trillions of dollars.

(Editor’s Note: An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.)