Counterfeiting

Offences

• Counterfeiting of food

Keywords

• Counterfeiting of food
• Copyright (infringement)

U.S. v. Shayota et al

UNODC No.:
USAx102

Fact Summary

The case concerns a large schema conspiracy, involving the American food sector, in particular the energy drink sector.
The schema was run by Joseph Shayota and his wife Adriana Shayota together with 9 additional co-consiprators, involved in the manufacture and sale of millions of bottles of the 5-Hour Energy Drink.
The conspiracy schema, which began in late 2009 and ran through October 2012, was intentionally divided in two phases: the defendants first engaged in a repackaging phase and then shifted their strategy in entirely counterfeiting the product for personal financial gain.

The repackaging phase

Initially, in late 2009, Living Essentials (owner of the trademark 5-Hours energy drink) authorized Baja to distribute 5-hour energy in Mexico. The liquid product was manufactured by Living Essentials, who sell the product (at a discount of nearly 40%) together with Spanish-language labelling and a complete product package to Baja, under the agreed condition that 5 hours was only meant to be distributed in Mexico.

Baja, instead of distributing authentic 5-hour energy with Spanish labelling in Mexico, tried to sell the product to distributors in the United states. Spanish language labelling and packaging made the search of interested distributors hard. As a consequence, they replaced the Spanish-language labelling with counterfeit labels and displaying labels imitating Living Essentials ’packaging in the United States.

The defendants repackaged over 350, 000  bottles of 5-hour energy drink and sold them in the United States at a price which was 15% lower than  what Living Essentials charged for the authentic product. 

The counterfeiting phase

In early 2012 the defendants started moving into counterfeiting the entire product.

Between December 2011 through October 2011, the defendants started different actions relevant to moving into the counterfeiting phase: engaged sources for the plastic bottles and caps with the trademarked “running man” (the logo of the drink) , different equipment needed to produce the drink, etc. By 2012 the Shayotas and their co-conspirators began to manufacture and sell an entirely counterfeited 5-Hour Energy product.


On 29 June 2016 the U.S. Government filed a Superseding Information, charging each of the defendants with the following counts:
- Conspiracy to traffic in counterfeit goods - in violation of 18 U.S.C. § 2320(a) [Count One];
- Conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce - in violation of 18 U.S.C. § 371 [Count Two].


Besides the Shayotas, other defendants charged with various roles in the scheme include: Justin Shayota, 33, of Spring Valley, Calif.; Walid Jamil, 57, of Troy, Mich.; Raid Jamil, 48, of West Bloomfield, Mich.; Kevin Attiq, 52, of El Cajon, Calif.; Fadi Attiq, 59, of El Cajon, Calif.; Leslie Roman, 63, Rancho Cucamonga, Calif.; Mario Ramirez, 56, of San Diego; Camilo Ramirez, 32, of San Diego; and Juan Romero, 70, of Mexico City, Mexico.

Commentary and Significant Features

This case is of particular interest, since it is displaying how a large conspiracy schemas can contribute to put the health of unaware people and customers in danger. The act of violating intellectual property rights, by counterfeiting products, can have severe consequences on people's life. Citing Special Agent in Charge Bennett: "by trafficking in counterfeit dietary supplements, Joseph Shayota and Walid Jamil led an organized criminal conspiracy that violated intellectual property rights and endangered the health and safety of the public for their own financial gain".

Driven by financial gain, those acts endanger the public health.

Sentence Date:
2017-06-20

Cross Cutting

Liability

... for

• completed offence

Application of the Convention

Details

• occurred across one (or more) international borders (transnationally)

Involved Countries

United States of America

Mexico

• Gender Dimension

Defendants / Respondents in the first instance

Defendant:
Joseph Shayota
Gender:
Male
Age:
64
Defendant:
Adriana Shayota
Gender:
Female
Age:
45

Adriana Shayota is the wife of Joseph Shayota.

Charges / Claims / Decisions

Defendant:
Joseph Shayota
Verdict:
Guilty
Statute:
U.S. Code Title 18 § 2320(a), 18 § 371

Count one: Conspiracy to traffic in counterfeit goods;
Count two: Conspiracy to commit criminal copyright infringement;
Count three: Conspiracy to introduce misbranded food into interstate commerce.

Guilty

Found guilty by a jury on 28 November 2016 of:

  • Conspiracy to traffic in counterfeit goods - in violation of 18 U.S.C. § 2320(a) ;
  • Conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce - in violation of 18 U.S.C. § 371.
Charge / Claim:

Count one: Conspiracy to traffic in counterfeit goods;
Count two: Conspiracy to commit criminal copyright infringement;
Count three: Conspiracy to introduce misbranded food into interstate commerce.

Finding:

Found guilty by a jury on 28 November 2016 of:

  • Conspiracy to traffic in counterfeit goods - in violation of 18 U.S.C. § 2320(a) ;
  • Conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce - in violation of 18 U.S.C. § 371.
Term of Imprisonment:
7 years 2 Months
 

With 3 years of supervised release.

Fine / Payment to State:
144868  USD  (100,000-500,000 USD)  
Defendant:
Adriana Shayota
Verdict:
Guilty
Statute:
U.S. Code Title 18 § 2320(a), 18 § 371

Count one: Conspiracy to traffic in counterfeit goods;
Count two: Conspiracy to commit criminal copyright infringement;
Count three: Conspiracy to introduce misbranded food into interstate commerce.

Guilty

Found guilty by a jury on 28 November 2016 of:

  • Conspiracy to traffic in counterfeit goods - in violation of 18 U.S.C. § 2320(a) [Count One];
  • Conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce - in violation of 18 U.S.C. § 371 [Count Two].
Charge / Claim:

Count one: Conspiracy to traffic in counterfeit goods;
Count two: Conspiracy to commit criminal copyright infringement;
Count three: Conspiracy to introduce misbranded food into interstate commerce.

Finding:

Found guilty by a jury on 28 November 2016 of:

  • Conspiracy to traffic in counterfeit goods - in violation of 18 U.S.C. § 2320(a) [Count One];
  • Conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce - in violation of 18 U.S.C. § 371 [Count Two].
Term of Imprisonment:
2 years 2 Months
 

With 3 years of supervised release.

Fine / Payment to State:
144868  USD  (100,000-500,000 USD)  

Sources / Citations

The case is U.S. v. Shayota et al., case number 5:15-cr-00264, in the U.S. District Court for the Northern District of California.

DOJ (detailed) press release:
https://www.justice.gov/usao-ndca/pr/counterfeiters-sentenced-convictions-nationwide-conspiracy-distribute-fake-5-hour

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