A Houston importer was indicted on charges of conspiracy and trafficking in counterfeit goods. He had been bringing counterfeit branded headphones in from China and Hong Kong, shipping them to a series of addresses around the city, and consolidating them at a warehouse for distribution. The indictment put the value of the counterfeit product at more than $560,000.
The operation had been running for about eight months.
Most importers who contact us about counterfeits are thinking about a seizure notice and a penalty from CBP. That is the usual path, and we have written extensively about it. This article is about the other one, because the line between a penalty case and an indictment is narrower than people assume, and almost nothing written for importers explains where it sits.
Two Regimes, Two Very Different Standards
Counterfeit importation can produce consequences on two separate tracks, and they are not alternatives to one another.
- The customs track. CBP detains, then seizes, then forfeits the merchandise, and may assess a civil fine measured against the value the goods would have had if genuine. A first seizure carries a ceiling of that MSRP figure; a second and each subsequent seizure, twice it. That process is covered on our page about counterfeit import seizures and penalties.
- The criminal track. A federal prosecution under 18 U.S.C. § 2320 for trafficking in counterfeit goods, brought by a U.S. Attorney rather than decided by CBP, carrying imprisonment as well as fines.
An importer can face one, the other, or both. Resolving the customs matter does not resolve the criminal one, and a decision not to prosecute does not end the forfeiture.
What § 2320 Requires
The statute reaches whoever intentionally traffics or attempts to traffic in goods or services and knowingly uses a counterfeit mark in connection with them. Attempts and conspiracies are punished the same as completed offences, which is why the Houston indictment carried a conspiracy count alongside the substantive one.
Both mental elements matter, and they are the whole battleground. An importer who genuinely did not know the goods were counterfeit has not intentionally trafficked in them. That is a real defence in a criminal case, and it is worth contrasting with the civil side, where lack of knowledge is only a mitigating factor in setting a fine rather than a shield against liability.
| Offence | Individual | Entity |
|---|---|---|
| First offence | Up to $2,000,000 and/or 10 years | Up to $5,000,000 |
| Second or subsequent | Up to $5,000,000 and/or 20 years | Up to $15,000,000 |
| Causing serious bodily injury | Up to $5,000,000 and/or 20 years | Up to $15,000,000 |
| Counterfeit military goods or drugs | Up to $5,000,000 and/or 20 years | Up to $15,000,000 |
| Military or drug goods, repeat | Up to $15,000,000 and/or 30 years | Up to $30,000,000 |
Separately from all of this, the trademark owner can bring a civil action of its own. Brands monitor seizure records and do pursue importers directly, so a third set of consequences can arrive after the other two.
What Turns a Penalty Case Into a Prosecution
There is no published threshold, and prosecutorial discretion varies by district. But the features that recur in charged cases are consistent, and every one of them is present in the Houston facts.
- Distribution rather than personal use. A warehouse and a distribution operation is not someone who bought a bad batch.
- Repetition. A single seized shipment looks like a mistake. A pattern of shipments over months looks like a business.
- Structural evidence of knowledge. Shipping to numerous different addresses in one area is difficult to explain as ordinary logistics. It is the kind of arrangement prosecutors point to as proof the importer knew what was arriving.
- Scale. A value in the hundreds of thousands puts a case well inside the range where a U.S. Attorney will take it.
- Corporate form used as a vehicle. Running the operation through a company does not insulate the individual and can supply the conspiracy count.
Eight months is not a short time
Importers frequently believe that small quantities, or a short run, or “just testing the market” keeps them below the line where anyone serious pays attention. This case ran from June to February and produced a federal indictment. Duration is not a defence and brevity is not protection. What matters is what the conduct looks like, not how long it lasted.
When Both Tracks Are Running
An importer with a seizure notice and a criminal investigation has a sequencing problem, and it is the same one that arises in currency cases.
A petition for mitigation is a written submission explaining where the goods came from, what the importer understood, what the commercial arrangement was, and why relief is warranted. Every sentence of it is also a statement available to a prosecutor. An account assembled to reduce a civil fine can hand the government exactly the evidence of knowledge it needs for the intent element.
CBP’s mitigation guidelines also contemplate this directly: where a violator is being prosecuted criminally, civil liability is generally settled only after the prosecution concludes or with the express approval of the U.S. Attorney. The civil deadline does not stop running, but control over the timing of any resolution shifts.
Establish what you are facing before you write anything
A detention notice is not a seizure notice, a seizure notice is not a penalty notice, and none of them is an indictment. Identify which documents you actually hold and what statutory authority each cites. An importer responding to a civil penalty while a criminal referral is open needs both matters coordinated, and where a prosecution is live that means criminal defence counsel alongside customs counsel, not instead of.
If You Are on the Civil Side
Most importers reading this are not facing prosecution. They have a shipment detained or seized, or a penalty notice quoting an alarming figure, and they want to know what happens next.
The figure on a penalty notice is a statutory ceiling rather than a bill. CBP publishes mitigation guidelines, weighs aggravating and mitigating factors, and arrives at a mitigated amount, and a petition for mitigation or remission is how that figure gets moved. The earliest and cheapest stage to resolve anything is during detention, before a seizure is ever perfected, which is covered on our page about customs detention of merchandise.
Where the allegation is that goods were introduced contrary to law rather than that they bear a counterfeit mark, the analysis runs differently again, and our page on importations and exportations contrary to law covers that. The wider set of issues that generate these notices is on our customs violations page. Outcomes depend heavily on the specific facts, the compliance history and the documentation available.
Goods Seized or Penalty Notice Received?
Great Lakes Customs Law represents importers in seizure and penalty proceedings at ports nationwide. Contact us for a confidential case evaluation.
Frequently Asked Questions
Can importing counterfeit goods be a crime, not just a penalty?
Yes. Trafficking in counterfeit goods is a federal offence under 18 U.S.C. § 2320, carrying up to 10 years and a $2 million fine for an individual on a first offence, with higher tiers for repeat offences and for counterfeit military goods or drugs. Attempts and conspiracies are punished the same as completed offences.
Does not knowing the goods were counterfeit help?
It differs by track. The criminal statute requires intentional trafficking and knowing use of a counterfeit mark, so genuine lack of knowledge goes to the elements. On the civil side, lack of knowledge is a recognised mitigating factor in setting the fine amount but does not shield the importer from liability.
I only imported a small quantity for a few months. Am I safe?
Not necessarily. The case described here involved roughly eight months of activity and produced a federal indictment. Duration is not a defence. What draws a prosecution is the shape of the conduct: distribution, repetition, scale, and evidence that the importer knew what was arriving.
Does resolving the CBP penalty end the matter?
No. The customs and criminal tracks are independent, and a trademark owner can bring a civil action of its own on top of both. Statements made in a petition are also available to a prosecutor, so the two should be coordinated rather than handled in sequence by default.
Legal Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Reading it, or contacting Great Lakes Customs Law through this website, does not create an attorney-client relationship. Great Lakes Customs Law represents importers in customs seizure and penalty proceedings and does not represent defendants in federal criminal prosecutions; the description of the criminal process here is general background, and anyone facing charges should retain criminal defence counsel. The matter described is drawn from a public indictment announcement; an indictment is an allegation and the defendant is presumed innocent unless and until proven guilty. Laws, regulations and agency procedures change, and the outcome of any customs seizure or penalty matter depends heavily on its specific facts and circumstances. No result is guaranteed or implied. You should consult a licensed attorney about your particular situation before taking or refraining from any action.