LA man pleads guilty to massive fake laptop battery scam

A San Gabriel Valley man has pleaded guilty today to involvement in a multimillion-dollar scheme to manufacture and ship counterfeit laptop batteries and other electronics from China to the US.

Zoulin Cai (29) of La Puente – also known as Allen Cai – admitted one count of conspiracy to commit wire fraud and mail fraud and one count of aggravated identity theft as part of a plea agreement.

According to the Department of Justice, Cai conspired to import batteries, battery labels, cell phones, and other electronics and then then sold the bogus items to unsuspecting buyers via eBay and Amazon.

The gang obtained at least $3.5m and potentially as much as $23.8m from the sale of laptop batteries through the online marketplaces between March 2014 and June 2019, and transferred more than $18m to Chinese bank accounts.

Court documents listed seven accomplices, six of whom are living in China and have not been indicted.

Cai falsely advertised them as brand-name new, genuine, original, or OEM (original equipment manufacturer) products from manufacturers such as Apple, Dell, HP, Toshiba, Lenovo, Asus, Acer and Samsung. He also counterfeited certification marks of UL, a company that tests and certifies the safety of electronic products.

UL has said that counterfeit rechargeable lithium-ion batteries most commonly used in electronic devices pose a risk of overheating, with numerous incidents of fakes expelling their contents during transport, catching fire and even exploding.

"The main safety hazard posed by lithium-ion batteries, thermal runaway, happens when the battery heats up to over 100°C, a critical threshold after which further heating can no longer be controlled," according to UL. "Once thermal runaway sets in, it can lead to temperatures of up to 1000°C."

In one notorious case, Amazon settled a $30m lawsuit brought by a Tennessee family whose $1m home was destroyed by a fire caused by the battery in a hoverboard toy bought on the online marketplace. The value of the settlement wasn't disclosed.

The batteries that Cai and his co-conspirators shipped frequently lacked required and essential internal safeguards, according to the DoJ. They established numerous US-based corporations to facilitate the importation and sale of the knock-offs.

The fraudsters packaged fake items and shipped them to the US, sometimes covering the trademarks with black tape or a similar material, so that a quick inspection by customs officials would not reveal the trademark infringement.

A 2019 raid on warehouses operated by Cai unearthed approximately 44,000 batteries, as well as approximately 175,000 labels.

Cai will be sentenced at a haring scheduled for October 4.

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