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Two Pinellas residents indicted on charges of selling counterfeit circuits to military

The owner and a manager of a Pinellas County electronics company have been indicted on federal charges that they sold nearly 60,000 counterfeit microchips to the military, which prosecutors say may have put national security and hundreds of lives at risk.

Shannon L. Wren, 42, of 11200 Fifth St. E in Treasure Island, and Stephanie A. McCloskey, 38, of 2092 Whitney Place N in Clearwater, were arrested on a 10-count indictment charging them with conspiracy, trafficking in counterfeit goods and mail fraud, prosecutors said Tuesday.

Prosecutors said the integrated circuits — high-tech devices that control the flow of electricity — that Wren and McCloskey sold to the military were made in China and Hong Kong. The U.S. Navy and defense contractors ordered the devices for use on military warships and planes and in missiles and weapons systems believing they were of "military grade," when in fact they were fakes, prosecutors said.

The indictment, which was handed up last week by a Washington, D.C., grand jury, comes as government agencies warn that such low-grade circuitry could be defective or, worse, harbor "electronic Trojan horses" that enable hackers to do harm.

The military pays premium prices for chips that can withstand desert heat, deep sea cold or vibrations from a missile launch. But the demand for that caliber of circuitry has surged with the wars in Iraq and Afghanistan, exposing the military to a bustling knockoff market.

"Product counterfeiting, particularly of the sophisticated kind of equipment used by our armed forces, puts lives and property at risk," U.S. Attorney Ronald C. Machen Jr. said in a news release.

A recent study by the Commerce Department found that counterfeit incidents discovered by the military and its suppliers more than doubled between 2005 and 2008 to more than 9,356 cases, the Washington Post reported.

Prosecutors said Wren and McCloskey sold the devices through Wren's company, VisionTech Components at 5120 110th Ave. N in Clearwater. McCloskey is a manager there. Authorities conducted a raid there Tuesday, confiscating computer equipment and several vehicles including a Showhauler motor home, Ferrari Spider, Bentley Arnage and Mercedes-Benz motorcycles.

The circuits they sold the military were valued at about $426,000, prosecutors said, and included use in Navy warships and a classified Raytheon missile program. But the indictment does not say that any faulty counterfeit chips actually made their way into weapons systems.

From 2007 to 2009, the company sold $16 million worth of counterfeit circuitry overall, according to prosecutors, including defective parts that were found in chips bound for use on a "life critical" control system for high-speed trains.

Some of the chips sold by the pair were allegedly resold by Mustafa Aljaff and Neil Felahy, of Newport Beach, Calif., who recently admitted to importing more than 13,000 counterfeit chips from China. Aljaff and Felahy are cooperating with authorities.

Wren, a former drag car racer who owns Reborn Couture, a South Tampa retail store frequented by professional athletes, was being held at the Pinellas County Jail Tuesday night at the request of U.S. marshals. McCloskey was released on $25,000 bail and restricted from travel.

They could not be reached for comment, and it was not immediately clear if they had retained lawyers. They face up to 35 years in prison if convicted.

Information from the Washington Post and Reuters was used in this report. Luis Perez can be reached at (727) 892-2271 or Lperez@sptimes.com.

Two Pinellas residents indicted on charges of selling counterfeit circuits to military 09/14/10 [Last modified: Wednesday, September 15, 2010 2:50pm]
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