Counterfeit parts are a big problem in the trucking industry and unfortunately, our judicial system works in strange ways. Not just for the company victimized, but also the company that buys the parts. Poor quality can lead to breakdowns, damaged engines, and ultimately, lost money. Not to mention the innocent lives that are put at risk by parts that may break without warning. It’s a problem that no one seems to be able to keep up with for a variety of reasons, not the least of which is the ability of counterfeiters to produce realistic-looking duplicates.
One of the other reasons is the risk-reward factor. The penalties for counterfeiting are, in a word, atrocious.
Case-in-point: Last week, Joseph Ungar, of Brooklyn, pleaded guilty to a series of charges, including grand larceny, tax evasion and scheming to defraud while his company, Abec Industries, pleaded guilty to trademark counterfeiting and identity theft. Great you say. Not so fast.
Ungar, who authorities say used various names, including those of dead people, put people’s lives at risk. Abec Industries distributed ball bearings, gears and power transmission products. The fraud pertains to counterfeit ball bearings sold to the Metropolitan Transit Authority (MTA) in New York for use on buses and subways.
To perpetuate the fraud, Ungar used elaborate schemes, prosecutors said, and Abec Industries operated under various names, including Omega Engineering and Bearing Inc. and Rockwood Pulley Manufacturing. The city was also after him for evading personal taxes from 2003 through 2007 and not paying NYC corporate taxes on Abec’s income.
While the New York Times story didn’t specify his actual profit from the scam, Ungar likely made thousands in the years between 2003 and 2008 when the counterfeit parts were supplied to the city. His punishment for this illegal behavior – the very stiff penalty of five years probation, a lifetime ban on doing business with the MTA and a $330,000 fine to cover restitution. Abec Industries has to pay a $5,000 fine and go out of business, according to the prosecutor.
This is great. A scam artist makes a profit and at the very least costs the city money to replace defective parts, and puts thousands of lives in danger over the years should those counterfeit parts have broken and caused a deadly accident, and what does he get: In essence, a $330,000 penalty. Big deal.
“Simply put, the message is: You will be punished, pay us back, and never do business with us again,” the MTA’s inspector general, Barry L. Kluger, told the New York Times.
Say what? Does Mr. Kluger really believe this is an appropriate punishment? Ungar probably already has the plans in motion to set up another fraud. Counterfeiters always do.
As long as the penalties for counterfeiting remain soft, it will remain an issue. After all, if you could make thousands, even millions of dollars selling counterfeit parts with only the risk of a fine, would it be worth it? Many believe it is.