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Schneider wins guilty pleas from Texan counterfeiter pursued since 2009

mailto:ecdotcom@gmail.com”>By Joe Salimando

A December guilty plea (with sentencing to come in April 2012) was a major victory for Schneider Electric against a counterfeiter that it has pursued since at least 2009, according to tedmag.com reporting.

Along the way, the case apparently involves a defendant named in a 2009 legal action – the man who pled guilty recently. There’s more depth and breadth, as outlined in full (as we now understand it) below.

From the Jan/Feb 2012 issue of Electroscan, the newsletter of the Fort Worth/Tarrant County (TX) chapter of the Independent Electrical Contractors:

“An Austin business owner pleaded guilty in December in federal court to trafficking more than $4.7 million in counterfeit electronics.

“Eldon Tamas ‘Nick’ Toldy, 62, owner of Pioneer Breaker and Control Supply and Nick’s Sales, also pleaded guilty to mail fraud in connection with a scheme to sell counterfeit circuit breakers, according to a release from the U.S. Immigration and Customs Enforcement. He is set to be sentenced in April.

“From late 2008 to April 2010, Toldy traveled to China with U.S. made circuit breakers and met with Chinese manufacturers to produce breakers with counterfeit trademark names…Toldy brought the breakers to the U.S. relabeled them and sold them through his companies.

That item alerted tedmag.com to do a little catch-up research. For those who like it short, there is a six-paragraph item posted to the site of U.S. Immigration and Customers Enforcement. It includes this.

“This individual, motivated only by greed, has allowed these potentially dangerous counterfeit circuit breakers to be bought and used in homes and businesses around the country.

“These items, which have not been properly manufactured or tested, could lead to costly repairs, property damage, and even serious injury or death,” said Susan McCormick, special agent in charge of the ICE HSI office overseeing Jacksonville.”

Notes:

1. HIS—Homeland Security Investigations

2. According to the item, ICE HSI’s raid on the Pioneer warehouse in Austin took place on April 21, 2010—meaning it took more than 16 months from seizure of evidence to a conviction. Of course, it no doubt took longer to take in the initial information on Pioneer and make the internal argument for a raid.

Back to 2009…

In further research, tedmag.com discovered a Dec. 17, 2009, court decision (U.S. District Court for the Western District of Texas, Austin Division).

Download a 25-page PDF of the decision. It’s the judge’s order in the case of Square D Company v. Pioneer Breaker & Control Supply, Co. et al. Sound familiar?

That action saw Schneider’s Square D Co. sue Defendants

  • Pioneer Breaker and Control Supply, Corp. (“Pioneer Breaker”),
  • Tamas Toldy (“Toldy”),
  • Gordon E. Vaught d/b/a ABN Direct (“Vaught”),
  • Surtidora Electrica del Norte SA DE C.V. (“Surtidora”), and
  • Humberto Gonzalez d/b/a HESCO (“Gonzalez”)

“…for the sale of counterfeit goods in violation of the Lanham Act, 15 U.S.C. § 1114, which prohibits trademark infringement, and § 1125(a), which prohibits false designation of origin.”

In his opinion, Judge Sam Sparks included this paragraph which, he wrote, was not arguable:

“…it is undisputed Toldy, on behalf of Pioneer Breaker, acquired 54,400 Square D breakers from Vaught and sold them to Breakers Unlimited. Of these, Breakers Unlimited retained approximately 30,981 of them. These retained breakers were tested by Plaintiff’s expert, Mr. Rezac, and he has concluded they contain numerous counterfeit characteristics, and are not authentic breakers.  

“He also supervised and observed the testing of a sampling of these breakers under UL489’s testing standards, and found they did not comply with even basic testing standards…Plaintiff has presented undisputed evidence at least 30,981 of the breakers sold by Pioneer Breaker to Breakers Unlimited are not authentic breakers and bear counterfeit versions of Plaintiff’s trademarks.”

That’s from page 19 of the PDF. On page 22:

“As for the trademark infringement claims, Pioneer Breaker and Toldy claim summary judgment must be granted for those infringement claims that are based on the first four shipments of QO® 2020 breakers to Breakers Unlimited in 2005. As has been stated numerous times in this order, it is undisputed Toldy (on behalf of Pioneer Breaker) acquired 20,800 QO® 2020 breakers from Vaught in 2005 in four shipments, and resold all those breakers to Breakers Unlimited in Indiana.

“Breakers Unlimited in turn resold all 20,800 breakers from those first four shipments to its customers. Apparently, none of them were returned or complained about.

“Some months after the first four shipments, Pioneer Breaker and Toldy acquired 33,600 more QO 2020 breakers from Vaught, and again sold them to Breakers Unlimited (for a total of 54,400 breakers). The breakers that were tested by Plaintiff’s expert and found to be counterfeit come from this fifth shipment, part of which was retained by Breakers Unlimited.”

There is more, of course, in that 2009 decision.

ADDITIONAL NOTE: For background info on Schneider’s case against Breakers Unlimited, decided (in Schneider’s favor) by a jury in mid-2009, see this report on CounterfeitsCanKill.com.

Read paragraph three, which specifically names Pioneer Breaker and Control Supply of Austin as the suppliers to Breakers Unlimited of the counterfeit items.

To put a counterfeiter down—the timeline

If one puts the facts amassed here together, it would appear that:

  • In 2005, Pioneer Breaker may have done something illegal.
  • Sometime thereafter, Schneider Electric/Square D Co. caught a whiff of that.
  • In 2007, Schneider Electric filed suit against Breakers Unlimited.
  • In mid-2009, a jury found Breakers Unlimited “guilty of purchasing and selling counterfeit circuit breakers.”
  • In late 2009, Judge Sam Sparks issued the decision linked and quoted above.
  • In April 2010, federal authorities raided a Pioneer Breaker warehouse.
  • In early December 2011, Toldy of Pioneer pled guilty.
  • In April 2012, he’ll be sentenced.
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