Sometimes it's easy to forget just how simple it is to set up a business that can traffic in counterfeit components. An article in a Boston-area newspaper provides a great lesson in how a small operation has the potential to do big damage.
Yesterday, in Methuen, Mass., local and federal agents raided a private residence and carried out boxes of material to a police van, according to the Eagle-Tribune. The residence was also the headquarters of Epic International Electronics Inc., an independent distributor of electronics components. According the the Eagle-Tribune, the principals of Epic are Peter Picone, who serves as president and director; and Lisa Picone, who serves as treasurer and secretary. There is no mention of any charges or arrests that have been made in conjunction with the search. Officials said the raid was part of an ongoing investigation.
It's significant to note that both the US Department of Defense Criminal Investigative Service (DCIS) and the Naval Criminal Investigative Service (NCIS) took part in the raid. The sale of counterfeit components to the US military has received a lot of attention lately and has spurred a recent mandate called Combating Military Counterfeits Act of 2011.
The fact that the US government is so involved in the effort indicates the magnitude of the problem. Yet, component suppliers, authorized distributors, and even buyers point out that many of the firms that traffic in suspect components are small operations that spring up and disappear within days. According to the Eagle-Tribune, the Picones formed Epic International Electronics in August 2009 and previously had served as directors of a company called Tytronix Inc., which was founded in 2005.
US distributors that are doing business in Asia say that small trading companies are among the most populous form of resellers in the region. The main difference between the trader model and authorized distribution is the issue of franchises, which authorize distributors to represent component brands. Most component makers will not guarantee the performance or authenticity of their products unless they are sold by an authorized distributor.
But the fact is, it takes very little capital to set up a distribution operation. For example, catalogue orders are frequently so small that purchases can be made by credit card. In such a case, the fraudulent buyer orders and receives components; swaps bad parts (either counterfeits or devices pulled from scrapped circuit boards) out for good; and sends the bogus parts back to the distributor as a return. By the time the distributor inspects the returned order for authenticity, the buyer could be gone. That buyer, in turn, can resell the good parts at a huge profit.
Traders aren't a problem that's unique to Asia. The Epic situation is a very real reminder that counterfeiters can literally exist right in our own backyard.
YES as a matter of fact my purchasing team has tried your service in the past and found it to be of little to no difference (and lacking) to other "for free" franchised compolation web site svcs.......ergo the reason for my comments. And yes we use franchised distributors on a global basis......daily! We have Net 30 terms w/ Avnet, Arrow, Future, Digi-Key, Newark, Telmil/Avnet Israel, Mouser, TTI.........I could go on but I do not want to bore other viewers of these posts. I stand behind my critique of your svc and offer no apologies.........again please do not use this site to advertise your wares.....for free.......perhaps you could purchase an add and have it posted on this highly respected site.
As you are a broker it is hardly surprising that you are angry with suggestions that encourage electronic components supply-chain professionals to buy only from Authorized sources.
It is unfortunate that you did not bother to download the free trial of the application from www.dististock.com before denigrating it.
I would love to read your comments once you have downloaded and had tried it for locating Authorized inventory for your customers.
While we encourage readers to point to tools, companies and services that can help our community, we try to exercise judgment. A reference and a URL will suffice, and I've edited down comments accordingly.
@hm: The US government can't ban businesses from opening, but they can discourage certain practices in defense procurement. The 2011 mandate outlines some of those practices. As for foreign government involvement, I don't think that the counterfeiting is some kind of conspiracy, I think it is plain old human greed.
Counterfeit semiconductors are entering the worldwide supply chain in unprecedented numbers, and those numbers are increasing at an exponential rate. Also entering the world supply chain are substandard components that were originally viable but have been damaged through improper handling, storage, and shipping methods employed by unauthorized distributors. All of these components are causing production and maintenance failures that range all the way from inconvenient to deadly. Added to the already overwhelming mix of components that just don't perform properly – or at all – are components armed with malicious "extras" that can destroy systems, cause malfunctions, or covertly gather proprietary information.
The Cost Effective Strategy against counterfeit components is to buy only from the original manufacturer or their authorized distributors.
This is very good action. Military procurement people do have good idea about this and they should ban all these type of resellers. Do US government suspect involvement of foreign power in this?
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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