May 10, 2008 / 2:02 AM / 12 years ago

FBI probes counterfeit China computer parts

WASHINGTON (Reuters) - The FBI on Friday said an investigation into the sale of counterfeit Chinese computer components to the U.S. government has recovered about 3,500 bogus devices with a retail value of $3.5 million.

The criminal probe, code-named Operation Cisco Raider, came amid concerns that counterfeit network components could enable hackers to access secure U.S. government databases, according to sources with knowledge of the investigation.

But one U.S. official, who spoke on condition of anonymity, said the components discovered by the FBI are not believed to have made government computer systems more vulnerable.

The existence of the operation came to light after an FBI slide presentation on the probe’s findings showed up on the Web site The FBI made the presentation on January 11 to another government agency.

“This unclassified briefing was never intended for broad distribution or posting to the Internet,” James Finch, assistant director of the FBI’s Cyber Division, said in a statement released by the bureau on Friday.

Operation Cisco Raider involved 15 investigations at nine FBI field offices and the execution of 39 search warrants, the bureau said.

Components included pirated versions of Cisco Systems Inc routers as well as switches, interface converters and wide area network interface cards.

Some counterfeit products also went to defense contractors and other private-sector buyers.

There was no word of arrests. One official said the probe has now been concluded.

FBI slides posted to the Web site showed cases in Massachusetts, Ohio, Missouri, Minnesota, Oklahoma, Texas, Colorado and California.

The presentation depicted counterfeit components moving from companies inside China to the U.S. government through distributors in the United States, Canada, Germany, the Netherlands and Britain.

Other components were purchased through the Internet auctioneer eBay or with government credit cards from non-government vendors.

Some counterfeit routers sold for as little as $234 each, compared with a retail price of $1,375 for the genuine article, according to the FBI presentation.

In one case, a subcontractor shipped counterfeit components to the U.S. Navy from a supplier in China.

ABC News reported that authorities around the world, including in the United States, Canada and China, have made more than 400 seizures with an estimated value of $76 million. In one instance, the Royal Canadian Mounted Police seized 1,600 counterfeit Cisco computer parts.

Editing by Eric Walsh

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