HARTFORD, CT -- A Massachusetts man pleaded guilty this week in US District Court to importing thousands of counterfeit ICs from China and Hong Kong and then reselling them to U.S. customers, including contractors supplying them to the US Navy for use in nuclear submarines.

Peter Picone, 41, of Methuen, MA, pleaded guilty to an indictment charging him with conspiracy to traffic in counterfeit military goods. As part of a plea agreement with the government, Picone agreed to a forfeiture money judgment of $70,050 and the forfeiture of 12,960 counterfeit ICs seized during the execution of a search warrant at his business and residence. Sentencing was set for Aug. 22, 2014.

According to court filings, from 2007 through 2012, Picone conspired with his suppliers in China and Hong Kong to sell millions of dollars’ worth of ICs bearing the counterfeit marks of approximately 35 major electronics manufacturers, including Motorola, Xilinx and National Semiconductor. Picone sold counterfeit ICs to contractors knowing that they would be supplied to the United States Navy for use in nuclear submarines.  

Many of Picone’s customers specified in their orders that they would not accept anything but new ICs that were not from China, but Picone told them that the ICs were new and manufactured in Europe. Testing by the Navy and one of its contractors revealed that in fact the ICs purchased from Picone had been resurfaced to change the date code and to affix counterfeit marks, all in order to hide their true pedigree. Federal agents searched Picone’s business and residence on April 24, 2012, and recovered 12,960 counterfeit ICs.  

This is the second conviction ever on a charge of trafficking in counterfeit military goods, a relatively new provision in the US Criminal Code that was enacted as part of the National Defense Authorization Act of 2011.

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