Postal Updates

California resident from China pleads guilty in largest postal counterfeiting operation in U.S. history

May 7, 2024, 8 AM
A prison sentence of up to 10 years may await Chen Lijuan when she is sentenced in August. Chen has been in United States police custody since August 2023, and on April 26 pleaded guilty to the most extensive postal counterfeiting crime in U.S. history.

By Allen Abel

A Chinese citizen residing in the city of Walnut in the San Gabriel Valley of Southern California pleaded guilty on April 26 to the most extensive and lucrative postal counterfeiting crime in United States history.

Law enforcement documents illuminated a massive trans-Pacific fraud and forgery scheme that duped the United States Postal Service into accepting, sorting, transporting and delivering more than 34 million parcels franked with duplicate, fake, worthless and previously used postage labels.

Chen Lijuan, 51, known as Angela Chen in the United States, faces up to 10 years in a federal penitentiary for her part in the operation when she is sentenced in August. Her husband and alleged mastermind in the criminal enterprise, Chuanhua “Hugh” Hu, 51, fled to China in 2019, two days after being interrogated by officers of the U. S. Postal Inspection Service.

Chen has been in U.S. police custody since August 2023, when she was charged with one count each of conspiracy to defraud the United States and of possession and use of counterfeit postage.

Before changing her plea, she had been scheduled to face a jury trial in Los Angeles beginning in June. Chen has agreed to surrender her bank account as well as real estate holdings in the California cities of Chino, Chino Hills, Diamond Bar, South El Monte, Walnut and West Covina.

The scam continued to flourish for three years after postal authorities began to scrutinize the couple.

“To avoid the cost of postage, Hu began creating false and counterfeit postage to ship packages by printing duplicate and counterfeit Netstamps — stamps that may be purchased online from third-party vendors and printed onto adhesive paper,” a spokesperson for the U.S. Attorney’s Office for the Central District of California outlined in a press release on April 26.

“In November 2019, knowing that law enforcement was investigating his use of counterfeit postage, Hu fled the United States and moved to China,” the spokesperson said. “After fleeing to China, Hu developed ways to make counterfeit postage and avoid detection, such as a computer program for fabricating counterfeit postage shipping labels. Chen remained in the United States and managed the warehouses that she and Hu used to ship mail bearing counterfeit postage.”

Linn’s Stamp News reached out to the Postal Service on April 30 for Postmaster General Louis DeJoy’s reaction to the history-making scam and to Chen’s guilty plea. Linn’s also sought an explanation of how the Postal Service’s scanning and sorting apparatus was unable to detect tens of millions of reused indicia (postage labels) and homemade replicas, and insight into what new technologies have been implemented since Chen’s apprehension to ensure that every package that goes through the Postal Service’s mail system has been duly paid for.

No response had been received as the May 20 issue of Linn’s was being prepared for publication.

The Los Angeles Field Office of the U.S. Department of Justice declined to comment on Chen’s plea. Inspector Mike Martel, national public information officer for the Postal Inspection Service, told Linn’s that “the Chen case is the largest counterfeit postage fraud case to date.”

“Chen’s business received parcels from the vendors and others, applied shipping labels showing postage purportedly paid, and then arranged for the parcels to be transferred to USPS facilities to be shipped across the nation,” the original affidavit filed by the U.S. Attorney’s Office for the Central District of California stated. “The investigation in this case has revealed that the shipping labels were fraudulent and that they included, among other red flags, ‘intelligent barcode data’ from previously-mailed items.”

“Investigators also determined that the meter numbers on many of the shipping labels, all of which indicated that they had been purchased and printed in 2023, related to postage meters known to have been discontinued in 2020,” the affidavit said.

Chen and Hu’s operation dwarfed, by an order of magnitude, other known assaults on the integrity of the U.S. postal system. For example, a USPS document issued in 2023 stated that “In FY2022, the Postal Service and Postal Inspection Service seized more than 340,000 packages with counterfeit postage and more than 7.7 million counterfeit stamps with an estimated $7.8 million loss avoidance for the Postal Service.”

Robert Thompson of Texas, an expert on modern postal counterfeiting, noted that Chen and Hu were not accused of trying to sell their fake stamps and labels online at a deep discount to legal postage.

“These people were using the stamps for themselves to send packages through the mail, as opposed to selling the counterfeit stamps on the internet,” Thompson told Linn’s via email. “Unfortunately, there are still a lot of the counterfeit stamps out there.”

Overshadowed by Chen’s guilty plea was a similar outcome in the case of Omer Bedir Korkmaz, a Turkish national living in the suburbs of New York City, who pleaded guilty in March to scraping almost $600,000 worth of Priority Mail flat-rate indicia from parcels and affixing them on much heavier packages of sundry consumer goods for shipment to customers of Korkmaz’s Metoscar store on the Amazon website.

“Postal workers noticed the discrepancy in Spring 2021, and for 55 days Korkmaz was watched,” the Westfair Business Journal website reported on July 18, 2023. “Metoscar paid the flat-rate for nearly all of the packages, according to the complaint, even though they were not in flat-rate envelopes and the FLAT RATE ENV phrase had been removed from the postage slips.”

“The Postal Service examined 10,365 pieces of mail shipped by Metoscar from December 2019 through June 2022, … and about 10,000 pieces did not qualify for flat-rate shipping,” the Westfair Business Journal website said.

“Metoscar paid about $7.55 per altered package, … but should have paid an average of $63.53 per piece based on the weights and distances shipped,” according to the journal’s website.

Korkmaz pleaded guilty on March 21 and agreed to pay $585,000 in restitution to the Postal Service. He will be sentenced in U.S. District Court in White Plains, N.Y., in August.

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