BOISE, Idaho — Five members of an Idaho family accused of running a multi-million-dollar counterfeit electronics operation have been convicted of criminal charges after a federal trial that lasted more than two months.
Monday in U.S. District Court, the jury convicted Paul (Pavel) Babichenko, Peter (Piotr) Babichenko, Timofey Babichenko, David Bibikov and Michael (Mikhail) Iyerusalimets of conspiracy to commit wire fraud and conspiracy to traffic in counterfeit goods.
Guilty verdicts were also returned for Paul Babichenko on one count of trafficking in counterfeit goods; for Timofey Babichenko on two counts of wire fraud, two counts of mail fraud and one count of trafficking in counterfeit goods; for David Bibikov on one count of wire fraud and one count of mail fraud; and for Michael Iyerusalimets on two counts of wire fraud, two counts of mail fraud and two counts of trafficking in counterfeit goods.
The jury found Bibikov not guilty on a third count of trafficking in counterfeit goods, and acquitted Kristina Babichenko and Anna Iyerusalimets of all charges against them.
"At trial, the evidence showed that over the course of 10 years, the convicted defendants participated in a conspiracy that violated intellectual property rights and endangered the safety of the public. They did this for their own financial gain," U.S. Attorney for Idaho Josh Hurwit said during a news conference Tuesday, the day after the verdicts were returned.
Federal prosecutors alleged that from January 2008 until August 2018, the defendants engaged in a scheme to sell counterfeit electronic devices, including devices purported to be Apple and Samsung phones and accessories, and defrauded customers in the Treasure Valley and on online marketplaces such as Amazon and eBay.
"Whenever Amazon, eBay, Apple or Samsung identified the counterfeit scheme and requested that they stop, the convicted defendants ignored those warnings, changed their business names, or lied to Amazon in order to hide their scheme," Hurwit said. "The convicted defendants sold over $41 million in counterfeit products during that time. At its core, this case was about protecting the public and the integrity of the marketplace for consumer products and also protecting the marketplace for intellectual property owners."
The defendants purchased the products in bulk from manufacturers based in China before the defendants repackaged them in Idaho, sold them as new and genuine brand-name products, and laundered millions of dollars in proceeds.
Hurwit said the evidence showed some of the products were capable of causing burns, fires or electrocution.
Judge Lynn Winmill presided over the trial. Sentencing hearings for the five defendants who were convicted are scheduled for Nov. 2 and Nov. 3 of this year. Those defendants are not in custody as they await sentencing.
A total of nine people were charged in August 2018 and eventually brought to trial under a grand jury indictment after federal agents and local law enforcement raided several locations in Ada County, including retail and warehouse locations, homes and a church building.
More than 100,000 pieces of evidence were collected over the course of the investigation. The U.S. Marshal's Service, U.S. Postal Inspection Service, the IRS, the FBI, Boise Police Department, Meridian Police Department and the Ada County Sheriff's Office all worked on the case.
The trial that ran from May 18, 2022, to Aug. 1, 2022, was the second trial in this case for seven of the defendants. In the first trial, which took place in the summer of 2021, the jury acquitted Natalya Babichenko and the court dismissed the case against Gennady Babichenko. The jury in the 2021 trial was deadlocked on multiple charges against the seven defendants who were retried this year.
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