California man pleads guilty to selling Pentagon $3.5M in counterfeit electronics

March 28 (UPI) -- A California man has pleaded guilty for a scheme to sell more than $3.5 million worth of counterfeit or used electronics to the Defense Department, the Justice Department announced Thursday.

Steve Kim, 63, of Alameda County, controlled 'Company A,' which sold fan assemblies to the Defense Logistics Agency that were either counterfeit, used or surplus fan assemblies that he claimed were new, according to court documents.

"The defendant sold counterfeit and deficient fan assemblies for use in military systems to increase his profit," said Principal Deputy Assistant Attorney General Nicole Argentieri, head of the Justice Department's Criminal Division.

"Criminals who cheat the U.S. military by selling deficient or counterfeit goods put our national security at risk. This case demonstrates the Justice Department's commitment to protecting the military supply chain and Americans' security."

Documents show that after delivering used or counterfeit products, Kim tried to pass them off as real and presented invoices as though they were new. In an attempt to trick the DLA into accepting the products, Kim created counterfeit labels -- some of which used a third company's registered trademarks -- and then attached the labels to the fan assemblies he sold to the DLA.

When the DLA questioned Kim about the origin of the fan assemblies, Kim attempted to conceal the scheme by giving the DLA fake tracing documents that he created, and signed using a false identity, according to prosecutors.

Some of the counterfeit fans were installed or intended to be installed with electrical components on a nuclear submarine, a laser system on an aircraft and a surface-to-air missile system, the department said.

"Swindling our military is a sure way to find oneself in jail," said U.S. Attorney for the Northern District of California Ismail Ramsey. "This office is always on the lookout for fraudsters and will prosecute anyone caught cheating our military by providing products that endanger our service people or compromise our readiness."

Kim pleaded guilty to one count of wire fraud and one count of trafficking in counterfeit goods. He faces a maximum penalty of 20 years in prison on the wire fraud count and 10 years in prison on the trafficking in counterfeit goods count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. His sentencing is scheduled for July 17.