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27 Nov 23

How Abuse of Trust Enhancements Apply in Counterfeiting Cases

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Last Updated on: 14th December 2023, 10:31 pm

How Abuse of Trust Enhancements Apply in Counterfeiting Cases

Counterfeiting is a serious crime that can have major consequences for public health and safety. When defendants abuse positions of trust to facilitate counterfeiting schemes, it makes the crime even more egregious. In such cases, federal sentencing guidelines recommend applying sentencing enhancements for abuse of trust. This article will examine how abuse of trust enhancements work in counterfeiting cases.

What is Counterfeiting?

Counterfeiting refers to the manufacturing, importation, and/or distribution of goods that bear a trademark or logo without the permission of the trademark owner. This includes making fake versions of brand-name items like purses, watches, shoes, pharmaceuticals, and auto parts. Counterfeiting is a type of trademark infringement, but it also often involves other crimes like fraud, smuggling, and money laundering.

The trafficking of counterfeit goods has grown exponentially due to e-commerce and internet marketplaces. According to a 2020 Department of Homeland Security report, counterfeit products account for nearly 3% of global trade, or about $500 billion per year. This illegal trade funds organized crime and costs the U.S. economy hundreds of billions of dollars and thousands of jobs every year.

Beyond just being illegal, counterfeits pose major risks to public health and safety when inferior or dangerous materials are used in knockoff products. For example, fake pharmaceuticals may be made with the wrong ingredients or unsafe dosages. Counterfeit auto parts like airbags or brake pads can fail and cause accidents. All counterfeit goods take revenue away from legitimate brands and businesses as well.

How are Counterfeiting Cases Prosecuted?

Federal prosecutors go after counterfeiting operations using a range of criminal statutes, including:

  • Trafficking in counterfeit goods or services (18 U.S.C. 2320)
  • Criminal copyright infringement (17 U.S.C. 506 and 18 U.S.C. 2319)
  • Trademark counterfeiting (18 U.S.C. 2320)
  • Mail fraud and wire fraud (18 U.S.C. 1341 and 1343)
  • Smuggling and importing counterfeit goods (18 U.S.C. 545)

Defendants face fines and up to 10 years in prison depending on the statutes charged. Penalties increase for counterfeits involving serious risks to health or safety, or for defendants with prior convictions. Organized criminal groups who traffic large volumes of counterfeit goods can face prosecution under racketeering laws as well.

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What is an Abuse of Trust Enhancement?

Sentencing guidelines allow for enhancements that increase penalties when certain aggravating factors are present in a case. One such enhancement is for “abuse of position of trust or use of special skill” under §3B1.3 of the U.S. Sentencing Guidelines.

This enhancement applies when a defendant uses their special position or skills to “significantly facilitate the commission or concealment of the offense.” For example, a pharmacist who makes counterfeit drugs abuses their position of trust. A software developer who helps traffickers conceal their activities online uses special technical skills. The abuse of trust makes their conduct more serious.

The enhancement increases the offense level by 2 which adds several months or years to the recommended sentence range, depending on the base offense level. It ensures defendants receive extra punishment for exploiting positions of trust to break the law.

Abuse of Trust Enhancements in Counterfeiting Cases

Abuse of trust enhancements are commonly applied in counterfeiting prosecutions when the facts warrant it. For example:

  • A customs officer who accepts bribes to allow counterfeit goods into the country abuses public trust.
  • A pharmacist who makes fake prescription drugs violates their duty of care to patients.
  • A product engineer who gives trade secrets to counterfeiters betrays their employer.
  • A lawyer who sets up shell companies to hide assets gained from counterfeiting abuses their license.

Essentially, the enhancement applies when any licensed professional or person in a fiduciary role uses that position to materially assist with counterfeiting. It reflects the common sense view that crimes like counterfeiting are even more troubling when the perpetrator is someone society trusts.

Recent Abuse of Trust Cases

There are many real world examples of abuse of trust enhancements in counterfeiting sentences:

  • In 2019, a pharmacist in Texas was sentenced to 180 months in prison for illegally dispensing millions of hydrocodone pills. His sentence included a 2-level enhancement for abusing his position of trust as a pharmacist to substantially facilitate the offense.
  • In 2018, an auto mechanic in California received a 46 month sentence for trafficking in counterfeit airbags. The court applied a 2-level enhancement because he used his specialized knowledge as a mechanic to purchase and install the airbags.
  • In 2015, a former Boeing engineer in Oregon was sentenced to over 5 years in prison for stealing trade secrets to manufacture and sell counterfeit airplane parts. His abuse of trust as an engineer increased his sentence.

These examples demonstrate how abuse of trust enhancements are applied in real counterfeiting cases to increase penalties for violations of special duties. The enhancements reflect the common sense notion that crimes like counterfeiting are even more troubling when committed by individuals who society trusts in special roles.

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Arguments Against Abuse of Trust Enhancements

While abuse of trust enhancements are commonly applied, defense attorneys sometimes object to their use during sentencing. Some arguments made against these enhancements include:

  • The enhancement amounts to “double counting” since abuse of trust is already part of the crime.
  • It was not foreseeable that the defendant’s special skills would facilitate the crime.
  • The position of trust was not actually abused to substantially facilitate or conceal the offense.
  • The enhancement over-punishes defendants with special skills or licenses.

However, courts have generally rejected these arguments when the facts show the defendant’s special position or skills did facilitate the counterfeiting offense. The enhancements attempt to punish the egregious nature of exploiting trust, even if that exploitation is part of the crime itself.

Conclusion

Counterfeiting is a serious crime that threatens consumer safety, legitimate businesses, and national security. When perpetrators abuse special positions of trust or skill to facilitate counterfeiting schemes, it represents an even more troubling form of misconduct. Abuse of trust enhancements under the federal sentencing guidelines are intended to address this aggravated issue by increasing penalties for counterfeiters who exploit positions of trust.

While objections are sometimes raised, courts routinely apply these enhancements when the facts show an abuse of a special position like pharmacist, engineer, or customs official. The enhancements reflect the common sense view that counterfeiting crimes are particularly egregious when committed by individuals given special trust, status, or skill by society. As counterfeiting continues to grow as a threat, abuse of trust enhancements will remain an important tool to punish and deter this dangerous exploitation of trust.