Counterfeit computer chips sold in scheme

Published On: Mar 01 2014 11:17:16 AM EST
Updated On: Mar 01 2014 09:30:00 AM EST

If you're thinking about buying any parts for your computer, be careful. We're learning how one conman made a killing selling counterfeit chips that left behind a long list of cheated consumers.

"He would purchase the chips for about $2 apiece in China and sell them in the U.S. for several hundred dollars," explained U.S. Postal Inspector Alex Sylvester.

The mastermind was Ronald Graban.  He realized he could make a very healthy profit.

"He had inside information on exact serial numbers that Cisco and Nortel use. So, when he requested labels from China they would put those exact numbers on there to try and hide they were counterfeit chips," said Sylvester.

Graban would then sell them to a third party retailer.

"It was reported to be a refurbished Cisco and Nortel product but in fact it wasn't.  It was a counterfeit product from China," explained Sylvester.

Business was good. In fact, authorities say Graban made more than $3 million with this slight of hand, until the chips began malfunctioning.

"The customer would go back to Cisco and Nortel and request a refund. And Cisco and Nortel would check their records and discover they never sold them to that customer," explained Sylvester.

At the same time, border patrol agents began to see more chips and separate labels coming into the country and called postal inspectors.

"If you're going to purchase anything like a GB or any other computer component we suggest going to the manufacturer directly. If not, there are several suppliers that are all legitimate and do offer warranties on products," advised Sylvester.

Graban was caught and pleaded guilty to mail fraud and money laundering. He faces 20 years in prison on the mail fraud charges and 10 years on the money laundering. He is still awaiting sentencing.

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