Man pleads guilty to selling counterfeit ICs

SAN FRANCISCO—One of three people charged with selling counterfeit semiconductors to the U.S. Navy has pleaded guilty to trafficking in counterfeit goods, according to the U.S. Justice Department.

Neil Felahy, 32, also pleaded guilty Nov. 20 to one count of conspiracy to traffic in counterfeit goods and to defraud the United States for his involvement in an alleged counterfeit semiconductor business that sold parts to the Navy and others, according to a statement from the U.S. Attorney's Office.

Felahy, his wife and another man—Mustafa Abdul Aljaff— were indicted last month.

As part of the plea agreement, Felahy agreed to cooperate with the government, according to the statement. Under the U.S. sentencing guidelines, Felahy faces a sentence of between 30 and 51 months in jail, depending on factual issues to be decided later by the sentencing judge, according to the statement. The charges he pleaded guilty to carry a combined maximum penalty of up to up to 15 years in prison and $252,000 in fines, according to the statement.

Felahy's sentencing will likely occur in 2010, according to the statement.

According to the 11-count indictment handed down last month, Felahy and the other defendants acquired counterfeit ICs from sources in China, imported them into the U.S. and sold them via the Internet. They also bought trademark-branded devices and altered them to make it appear that they were of a certain brand, newer, higher quality, or were of military grade, according to the indictment.

The defendants entered into three separate contracts with the U.S. Navy between March and July, according to the indictment, and subsequently shipped counterfeit devices bearing false trademarks, the indictment alleges. It also alleges that the defendants imported more than $140,000 worth of counterfeit ICs from China and Hong Kong in 22 separate incidents.

The defendants operated a number of companies and websites, according to the indictment, including MVP Micro, Inc., BeBe Starr, Consulting, Inc. and Red Hat Distributors Inc.