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Sun Apr 28 2024 16:29:55

Feds Say Millions of Parcels from China Sported Fake Postage

By: Ina Steiner

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A California woman pleaded guilty on Friday to defrauding the US Postal Service of $150 million by allegedly using fake postage to ship tens of millions of parcels to customers that came to the US from China-based logistics businesses. That's bound to make sellers fume given the high cost of postage for domestic shippers. Sellers who have access to below-market shipping costs can lower their prices, giving them an advantage over other sellers (whether or not they're aware of any fraudulent activity on the part of their vendors).

The US Department of Justice said the defendant, who has been in federal custody since her arrest in May 2023, pleaded guilty to one count of conspiracy to defraud the United States and one count of use of counterfeit postage. 

Citing the defendant's plea agreement, the DOJ alleged that she and her co-defendant provided shipping services, including the shipping of packages via U.S. Mail, for China-based logistics businesses from at least November 2019 to May 2023 and further alleged that the defendants printed duplicate and counterfeit Netstamps - "stamps that may be purchased online from third-party vendors and printed onto adhesive paper."

The office of US Attorney Martin Estrada in the Central District of California issued an announcement that explained how the scheme allegedly worked:

"Starting in 2020, Chen and Hu began affixing counterfeit postage to mail they presented to USPS for delivery. Chen and Hu received parcels from the China-based vendors and others, applied shipping labels showing postage purportedly paid and then arranged for the parcels to be transferred to USPS facilities to be shipped across the nation. The shipping labels were fraudulent and frequently included, among other red flags, "intelligent barcode data" recycled from previously mailed packages, according to court documents.  Intelligent barcode data is used in some postage shipping labels to evidence the payment of required postage for the shipped item."

Doing the math for one 5-month period, the defendants allegedly sent an average of 6.8 million packages/month bearing counterfeit postage: "From January 2020 to May 2023, Chen and Hu knowingly mailed and caused to be mailed more than 34 million parcels containing counterfeit postage shipping labels, which caused more than $150 million in losses to USPS."

According to the plea agreement published on the Court Docket on April 7, 2024, the defendant (and co-defendant) allegedly operated their businesses through multiple business entities, including: AHC International Group, Inc.; AHC Supply Chain Management, Inc.; Art Plus Technology, Inc.; Coco USA Group, Inc.; Coco USA Group International, Inc.; and ZHC Logistics, Inc.

The charging document affidavit by the Postal Inspector investigating the case included the following image of one of the parcels with alleged counterfeit postage:

The government noted in the announcement on the DOJ website: "An indictment is merely an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law."

United States District Judge Josephine L. Staton scheduled an August 2 sentencing hearing, at which time the defendant will face a statutory maximum sentence of five years in federal prison for each count.

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Perminate Link for Feds Say Millions of Parcels from China Sported Fake Postage   Feds Say Millions of Parcels from China Sported Fake Postage

by: Nonesuch This user has validated their user name.

Mon Apr 29 00:10:40 2024

Good for the Feds.  Enough of Make China Great Again.  Feds need to do more.  Marketplaces also need to weed out sellers of sheets and coils of fake US and UK postage stamps and even rolls of USPS barcode tracking labels.  Just today I reported numerous listings to Mercari.  No action taken that I can see.  

Surely the marketplaces vaunted AI tools could and should spot and delete these listings, which are often by new sellers with no or minimal previous sales.  These sellers aren't dumb - they disappear after a couple of sales, then reappear under new names.  

Ina, great for you to shine more light on this problem.  But take care, I suspect this is organized crime, not just a few casual operators.  

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by: mjr55 This user has validated their user name.

Mon Apr 29 01:08:55 2024

And my comment was deleted why? Sellers have enough issues with these fools overseas not to mention the $150 MILLION DOLLARS IN FAKE POSTAGE. F*ck them.  

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by: Zarzuella This user has validated their user name.

Mon Apr 29 03:01:51 2024

34 million parcels sent with fake postage and she appears to have a plea deal pleading guilty to one count with a maximum sentence of 5 years.

Who says crime does not pay.

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by: DingDong This user has validated their user name.

Mon Apr 29 06:56:37 2024

I have reported these sellers directly to the manufacturers.
I have reported stamps to the post office, LV purses to LV Mfg and so on with links to their stores and listings.
I have seen stores disappear.

Now if I can report purchases from other sites that use Amazon "Gift Receipts" for their outside businesses. Can't report them to Amazon unless you have an Amazon account and don't want one. I have all the copies from purchases with the packages, gift receipts and packing slips.

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by: kazaly This user has validated their user name.

Mon Apr 29 08:52:04 2024

Sounds like a pretty light sentence given the numbers involved.
No mention of the net profit to the accused, though just the 5 month avg for the period described 34mil items @6.8mil per month.
They were in business for 40 months though, so, giving a generous discount for slow months let's say they averaged 3mil per month over the scheme's lifetime.
If they were returning just $1 profit per item, that would have netted them $120,000,000!
So each of the 2 accused earned $60,000,000 each?
Ok, I'd probably have to think hard about a 5 year stretch for $12,000,000 p.a.
Some dodgy accounting could probably hide a fair part of that.
A large marketing bill to some $1 company in a solicitor's office in the Virgin Islands works for any number of US businesses and that money cannot be recovered.

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by: spooky This user has validated their user name.

Mon Apr 29 12:01:23 2024

Plus the fact the markets are being flooded with counterfeit postage stamps and are nearly impossible to detect. I would bet the USPS is out billions in income past few years. All are coming from China

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by: Modlcitizn This user has validated their user name.

Mon Apr 29 15:17:22 2024

Counterfeit US postage stamps are an epidemic!  Everywhere you look you see the ads for rolls of first class stamps (Forever Stamps now cost 68 cents) for as low as $20 a roll on eBay, Facebook and other venues.

Every time I see them on Facebook I hit the button to report the ad and the only appropriate choice is “Misleading or Scam” so I choose this. There should be a box for “Counterfeit” and then there is no place for a comment.

Reporting these is like playing Whack A Mole. They just keep popping up.. different company names etc.

I never got any response from Facebook until yesterday telling me they reviewed my complaint and the ad doesn’t violate their community standards!

There is a good educational video on the subject. Go to YouTube and search for “Wayne Youngblood” and it comes right up.

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by: quirkyantiques This user has validated their user name.

Tue Apr 30 10:16:56 2024

So let me get this straight. They defrauded $150,000,000 and are looking at 5 years in prison? Hands up everyone that would go to prison for 5 years for $30,000, 000 a year. I'll go first *puts hand up*

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by: Geetar This user has validated their user name.

Tue Apr 30 18:42:37 2024

and who said crime doesnt pay? It seems to pay $150 Mil, after a 5 year stretch.
I bet that money is in an account somewhere just waiting till they get out! Maybe not 150 mil, but even if it's 5, they're set for life.

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by: comments This user has validated their user name.

Wed May 1 01:09:19 2024

So over 5mo at and average of 6.8 million packages is about 34 million packages. So that is 34 million counts and they only get 2 charges?

Why did they have to commit the same crime 34 million times to get caught? They are calling that a win? If I was the prosecutor I wouldn't be taking a victory lap! If a maximum 10 years is on the table for a white collar crime and a plea agreement has been reached........ it is the criminals that should be taking the victory lap.

How many more people are doing this and not meeting the 34 million count threshold?

I think DeJoy is done "delivering for America" and has now begun the delivering for China campaign. Maybe the tax payers can buy China a new fleet of electric mail trucks too. At least in China they don't have pension funds for the US tax payers to bail out using "covid relief appropriations". How does packages sitting in trailers for up to 3 months translate to a need for a new fleet of trucks anyway?

Business owners pay the highest taxes and use the post office much more than regular citizens. Surely there will be no further need for the PRC to rubber stamp every rate hike and continue inventing new classes of mail to bypass the pesky limits of said increases?

I'm almost glad they got away with it.

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This user has validated their user name. by: toolguy

Wed May 1 13:56:32 2024

Fake US Postage is available all over facebook, I've reported hundreds of sellers of fake US Postage, the US Postal Inspection Service could care less.  

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by: mjr55 This user has validated their user name.

Wed May 1 21:18:29 2024

Shocking.....Chinese seller in California? I don't believe it. Sounds like 99.9% of the other POS sellers like that from China.

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by: MilesT This user has validated their user name.

Fri May 3 04:05:30 2024

Counterfeiting of postage is an emerging issue in the UK too, since the recent changeover that the majority** of pre-printed stamps are only valid if the stamp has an intelligent barcode.  (Royal Mail has an ongoing swap-out programme to exchange stocks of unused non-barcoded stamps, which now cannot be used, for barcoded stamps to equivalent value).

And the counterfeiting is impacting 2 ways:  
* some senders are getting to send items at very low cost by using counterfeits (printed abroad and shipped in, often sold on eBay and similar),
and,
* people using legitimate stamps (bought through reputable sources including Post Office/Royal Mail themselves) are getting fined (£5) for insufficient postage because the intelligent barcode is seen as already used i.e. the counterfeiters have cracked the algorithm used for generating the single use barcode numbers

What's worse is the **recipient** is getting the fine £5 plus making good the postage which has to be paid before the item is released (although that will change soon, items with "reused" stamps will be returned to sender, if there is a return address and the sender will be fined).  Valid but insufficient postage (i.e. barcodes valid) will still be charged to recipient plus a admin fee.

The issue doesn't seem to be impacting senders who are using print on demand postage (different unique number range for the barcode?) or commercial senders who have an account with Royal Mail and also generate their own shipping labels using software (directly connected to Royal Mail APIs or via a carrier management solution like GFS, Auctane/Metapack or similar).  The latter option is relevant to the US case reported here but we haven't seen similar large scale cases in the UK from operators of inbound leg of business performing parcel brokerage/groupage (some sellers use such services themselves, including Temu and sellers on SheIn, and eBay/Amazon "International" programmes also rely on groupage services to redispatch customs cleared parcels in the UK via Royal Mail/Parcelforce or Evri or Amazon Parcel)

**not all UK stamps are barcoded--commemorative issues (i.e. stamps with pretty pictures instead of a plain King's head) are still valid for use and new commemoratives--several issues per year, as publicity and to keep up interest in collectors of first day covers--are not always barcoded as it makes the stamps look ugly.



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