USPS loses US$150m in counterfeit postage scam

A woman from Walnut, California, has pled guilty to defrauding the United States Postal Service (USPS) out of more than US$150m in a counterfeit postage scam in Los Angeles.

According to the US Attorney’s Office, Central District of California, Lijuan ‘Angela’ Chen, pleaded guilty to one count of conspiracy to defraud the USA and one count of use of counterfeit postage. Chen has been in federal custody since her arrest in May 2023.

“This defendant participated in a fraud scheme that caused massive losses to our nation’s postal service,” said United States attorney Martin Estrada. “My office will continue to focus on holding fraudsters accountable and bringing justice to victims everywhere.”

According to her plea agreement, from November 2019 to May 2023 Chen and her co-defendant Chuanhua ‘Hugh’ Hu owned and operated a package shipping business located in the City of Industry in downtown LA. This company provided shipping services, including the shipping of packages via US Mail, for China-based logistics and e-commerce businesses.

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.

From January 2020 to May 2023, Chen and Hu knowingly mailed more than 34 million parcels containing counterfeit postage shipping labels, which caused more than US$150m in losses to USPS.

“The Postal Service and the Postal Inspection Service will continue to implement expanded measures to preserve the level of security Postal Service customers expect and deserve,” said inspector in charge Carroll Harris, Los Angeles division of the Postal Inspection Service. “Engaging in counterfeit postage fraud causes monetary losses to customers and the Postal Service alike. Fraudsters beware, the Postal Inspection Service will continue to exhaust all its efforts to disrupt your scheme, find you, and bring you to justice.”

United States District Judge Josephine L Staton scheduled an August 2 sentencing hearing, at which time Chen will face a statutory maximum sentence of five years in federal prison for each count.

Hu, who is believed to be a fugitive residing in China, is charged with one count of conspiracy to defraud the USA, three counts of passing and possessing counterfeit obligations of the USA, and one count of forging and counterfeiting postage stamps.