US-Based Chinese Logistics Firms Caught Using Counterfeit USPS Labels
On May 15, the U.S. filed a civil complaint in a Brooklyn federal court alleging that YDH Express, Inc. and YDH Int'l Inc., which are based in Queens, N.Y. and Los Angeles, Calif., along with their owner, Yizhao 'Harvey' Hou, conspired and committed mail fraud by shipping thousands of parcels hailing from China using their own fake USPS postage labels.
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Joseph Nocella, Jr., a United States Attorney for the Eastern District of New York, and Edward Gallashaw, Acting Inspector in Charge for the U.S. Postal Inspection Service (USPIS), announced Wednesday that a temporary restraining order will bar both firms from utilizing the postal service. According to a statement from the U.S. Attorney's Office, the companies would regularly receive packages from their customers in China and send them to customers through USPS.
The U.S. complaint seeks injunctive relief under the Anti-Fraud Injunction Act, and it also seeks to provide relief to USPS, which suffered financial losses due to the long-running illegal operation. One day after the suit was filed, U.S. District Court Judge Natasha C. Merle served the defendants with a temporary restraining order.
'The Postal Service provides essential services to Americans, and we will not tolerate attempts by unscrupulous overseas businesses using fake postage to unlawfully deprive USPS of revenue it is entitled to,' Nocella said this week. 'My Office is working diligently with our partners at the United States Postal Inspection Service to stop this ongoing fraud against the Postal Service.'
Nocella said the USPIS and Customs and Border Protection (CBP) rooted out the fraudulent activity.
Gallashaw said that 'Hou allegedly cared only about making a profit at the expense of the USPS.' The government agencies worked together to identify him and unearth the bogus postage operation.
'Postal Inspectors will use all of our resources to put an end to the use of counterfeit postage and hold accountable all who seek to defraud the USPS. We will fulfill our mission to strengthen the American public's trust in the U.S. Mail,' he added.
The complaint detailed a scam wherein the defendants conspired to ship—and did send—thousands of parcels that bore fake USPS labels, which they received from their customers located in China. They are charged with mail fraud and conspiracy to commit mail fraud, along with violations of the False Claims Act (FCA), which will allow the government to pursue 'treble damages and penalties' or three times the monetary damage caused by the firms through the scheme.
The temporary restraining order said that there is 'probable cause to believe that defendants are still engaged in the ongoing commission of mail fraud, and are still engaged in the ongoing conspiracy to commit mail fraud,' and that without an order barring the defendants from usting the postal service, USPS would suffer 'irreparable harm.'
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