August 22, 2008

Two individuals and two companies pleaded guilty to counterfeit toothpaste trafficking

WASHINGTON -Two individuals and two corporations pleaded guilty to charges of trafficking in counterfeit and tainted Colgate toothpaste as a result of an investigation by Immigration and Customs Enforcement (ICE).

Saifoulaye Diallo, 51, from the Bronx, N.Y., and Habib Bah, 47, of Queens, N.Y.; and two New York corporations, Mabass Inc. and Vidtape Inc., pleaded guilty before U.S. District Court Judge Brian M. Cogan to trafficking in counterfeit goods in violation of criminal trademark laws. The defendants admitted during the plea hearings to having trafficked in a combined total of 518,028 tubes of counterfeit Colgate toothpaste with an estimated retail value of $730,419. At sentencing, the individual defendants each face up to ten years in prison, a fine of $2 million and three years of supervised release following their release from prison. The two corporate defendants face up to a $5 million fine, restitution and up to five years of organizational probation. Sentencing has been set for Jan. 9, 2009.

According to the criminal information filed in the case, laboratory tests conducted by the Food and Drug Administration (FDA) and Colgate-Palmolive on samples of the counterfeit toothpaste revealed that the toothpaste lacked fluoride, an ingredient found in genuine Colgate toothpaste, and that some of the toothpaste contained microorganisms, such as bacillus spores and diethylene glycol. Diethylene glycol, commonly used as a coolant for hydraulic and brake fluids, is illegally used in the production of counterfeit health care products to provide lubrication and help products maintain moisture. According to the FDA, the level of diethylene glycol contained in the counterfeit toothpaste can pose health and safety risks to all consumers but primarily to individuals with compromised immune systems, children and infants.

The information revealed that the packaging on the counterfeit toothpaste was substantially indistinguishable from the legitimate Colgate-Palmolive product except that it contained spelling and grammatical errors as well as erroneously stating that the toothpaste was made in South Africa, even though all of the product was imported from the People's Republic of China. Most of the counterfeit toothpaste at issue was sold by the defendants to secondary distributors and small to medium-sized discount stores throughout several states in the United States.

"Something as routine as brushing your teeth should not be dangerous. Consumers should not have to worry that criminals have tampered with the products they use or ingest," said Julie L. Myers, Homeland Security Assistant Secretary for Immigration and Customs Enforcement (ICE). "The risks that substandard, tainted and counterfeit products pose to the health and safety of consumers are real and a threat we take very seriously. ICE and its federal partners are working together to comprehensively investigate these crimes and to ensure American consumers can have confidence in the products they purchase."

"These defendants undermined the basic precept that consumers are safe to assume that when they purchase retail health and safety products, they are buying what the label says they are buying. A parent should never have to fear that buying an everyday item like toothpaste could put a family at risk," said Acting Assistant Attorney General Matthew Friedrich. "This case demonstrates the Department's continued commitment to prosecute aggressively criminals who seek to profit by importing and distributing counterfeit goods that put our citizens' health and safety in jeopardy."

As explained in court documents, Mabass Inc., incorporated in New York in March 2004, was an importer and wholesale distributor of general merchandise, including detergent and toothpaste. Between approximately May 2006 and March 2007, Mabass imported seven shipments of counterfeit Colgate toothpaste from the People's Republic of China and admitted during the plea hearing to continuing to import counterfeit toothpaste despite learning in November 2006 that the last three shipments contained 432,000 tubes that were counterfeit.

Defendants Diallo and Bah were principals of Afro Atlantic Corp., incorporated in New York State in March 2005, according to documents filed in court. During the plea hearing, defendants Diallo and Bah admitted that, in August 2006, they knowingly imported a shipment of approximately 82,944 tubes of counterfeit Colgate counterfeit toothpaste from the People's Republic of China.

Vidtape Inc., incorporated in New York in January 1988, was a reseller of merchandise that operated from Farmingdale, N.Y. According to court documents, between approximately November 2006 and June 2007, Vidtape purchased approximately 3,084 tubes of counterfeit Colgate toothpaste that had been imported by others from the People's Republic of China and resold it to a buyer in Toronto. Vidtape admitted that although it learned that the toothpaste was counterfeit while it was on route to Canada, Vidtape failed to recall the shipment or notify the buyer that the product was counterfeit.

The investigation leading to this case is part of the ongoing efforts of Operation Guardian, a comprehensive enforcement initiative launched in 2007, to combat the increasing importation of substandard, tainted and counterfeit products that pose a health and safety risk to U.S. consumers. This multi-agency effort includes ICE, U.S. Customs and Border Protection , the Food and Drug Administration(both OCI and Regularity are involved), Federal Bureau of Investigation , U.S. Postal Inspection Service, the Department of Justice's Computer Crimes & Intellectual Property Section and the Consumer Product Safety Commission working together as part of the National Intellectual Property Rights Center. The collaborative work of this group has led to the seizure of commodities that include pharmaceuticals, toothpaste, computer parts, circuit breakers, electronic goods, batteries, extension cords, honey, shrimp, condoms and toys. The combined seizures under this operation have exceeded $15 million dollars to date.

-- ICE --

U.S. Immigration and Customs Enforcement (ICE) was established in March 2003 as the largest investigative arm of the Department of Homeland Security. ICE is comprised of five integrated divisions that form a 21st century law enforcement agency with broad responsibilities for a number of key homeland security priorities.

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