U.S. News

Florida woman pleads guilty over fake China chips

WASHINGTON (Reuters) - A Florida woman pleaded guilty on Friday for her role in a scheme to sell fake computer chips imported from China and Hong Kong to the U.S. Navy, defense contractors and others, the U.S. Justice Department said.

Stephanie McCloskey, 38, worked for the small Florida company VisionTech Components, which imported nearly 60,000 of the fake integrated circuits and generated almost $16 million in revenue between 2007 and 2009, the department said.

McCloskey was in charge of administration for the company and was aware that the chips were not made by the name-brand manufacturers advertised. She also knew they were from China and often arrived in poor condition, the Justice Department said.

She and the owner of the company, Shannon Wren, were arrested in September and indicted on 10 counts for the alleged scheme. Authorities also seized several luxury vehicles from Wren when he was arrested.

Fake computer chips often are inferior, which could lead to the device failing, or have malicious code embedded that would allow someone to hack into it or intercept communications.

Buyers included the U.S. Navy, BAE Systems and Alstom. While the indictment did not say that the fake chips made it into weapons systems, they were allegedly sold for use in missiles and handheld radiation detectors as well as for controlling high-speed trains.

VisionTech issued over $1 million in refunds to customers who had complained that the chips they purchased did not work properly, the Justice Department said.

McCloskey pleaded guilty to conspiracy and aiding and abetting the scheme in a federal court in Washington. She faces up to five years in prison and a $125,000 under federal sentencing guidelines.