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The Military Hardware

Man Pleads Guilty To Selling Fake Chips To US Navy 327

Posted by timothy
from the vinegar-was-ersatz-too dept.
itwbennett writes "Neil Felahy of Newport Coast, California, has pleaded guilty to conspiracy and counterfeit-goods trafficking for his role in a chip-counterfeiting scam. Felahy, along with his wife and her brother, operated several microchip brokerage companies under a variety of names, including MVP Micro, Red Hat Distributors, Force-One Electronics and Pentagon Components. 'They would buy counterfeit chips from China or else take legitimate chips, sand off the brand markings and melt the plastic casings with acid to make them appear to be of higher quality or a different brand,' the US Department of Justice said in a press release. The chips were then sold to Naval Sea Systems Command, the Washington, DC group responsible for maintaining the US Navy's ships and systems, as well as to an unnamed vacuum-cleaner manufacturer in the Midwest."
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Man Pleads Guilty To Selling Fake Chips To US Navy

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  • Re:uuuh (Score:5, Informative)

    by eldavojohn (898314) * <eldavojohn@@@gmail...com> on Wednesday November 25, 2009 @04:15PM (#30230002) Journal

    whats wrong with sony, samsung, or intel. I'm sure they could produce chips for government related applications, not some shady business no ones heard of before.

    Are you familiar with efforts to foster American small businesses in the United States by the government [barackobama.com] (note this is nothing specific to Obama)? If you want to get into government contracts, I suggest you start a small business owned by a woman who is a minority. You'd be amazed at how easily you can land contracts and subcontracts as the government and big contractors strive to make quotas.

  • Value Added Reseller (Score:5, Informative)

    by pavon (30274) on Wednesday November 25, 2009 @04:28PM (#30230142)

    Government procurement is a bureaucratic mess, and a royal pain in the ass for both buyers and sellers. Because of this (and because of rules preferring "small" and "minority-owned" businesses), it is very common for government entities to buy though a middle man that knows how their procurement systems work, rather than getting product directly from a manufacturer, especially for low-cost COTS products.

  • Re:HOW??? (Score:5, Informative)

    by Chris Mattern (191822) on Wednesday November 25, 2009 @04:31PM (#30230190)

    Here's how. [navy.mil] All government procurement has special programs for buying from small business, and in fact are required to spend a certain percentage at small businesses. Congress mandates it, 'cause it makes good press with the voters.

  • Re:Treason (Score:4, Informative)

    by Runaway1956 (1322357) * on Wednesday November 25, 2009 @04:55PM (#30230454) Homepage Journal

    Old destroyer man here. Nature and the elements are one enemy that sailors battle every day. Not to mention Al Queda and assorted terrorists such as the ones who attacked the USS Cole. Pointing out that Iran is already geared up for war in the Strait of Hormuz, The Persian Guf, and the Sea of Oman is probably redundant.

    No, treason is probably not an appropriate charge against these idiots, but I felt it necessary to point out that the US Navy is never at "peace". There are always operations taking place in which men's lives are in peril. Some of the most dangerous things pulled of by destroyers and small craft never make the news at all. Shipboard equipment is tested to it's limits daily, and lives depend on that equipment operating properly.

    Care to step aboard an aircraft carrier? During flight operations, no matter how peaceful, there is more danger in one 24 hour day than most people can imagine.

  • by Anonymous Coward on Wednesday November 25, 2009 @05:05PM (#30230574)

    The Military buys in far too small quantities for companies like AMD, etc. to care. While the military was once the bastion of forward looking electronics, it now focuses most of its energy on maintaining ailing fleets of old vehicles using technology that's 15+ years old (I know, I work for a company providing such support).
    The main reason for purchasing through companies such as that listed above is that there are obsolete devices that are required to maintain $100000+ systems, that can ocassionally be found in the "after-market" - i.e. someone had a stash in their warehouse that they didn't use. If it wasn't for unfortunate practices such as this, the miliary budget would need to be significantly larger to redesign and build new electronics systems for its vehicles every 5 years (or every 2 years when dealing with memory technology).

  • by NecroPuppy (222648) on Wednesday November 25, 2009 @05:06PM (#30230586) Homepage

    They can't, unless certain, very specific criteria are met.

    And even if they are, it's usually cheaper to have purchased the data rights to an end of line product, and turn around and find another vendor who will make them to those specs.

    The US Military doesn't own large scale fabrication plants to "just make" whatever they need. And even if they did, Congress wouldn't let them use them, because it would be taking money away from US corporations.

    Let me give an example: There's a base that has SEABEE units. Naval Construction Battalions (CB -> SeaBee). It is not unknown that such a navy base might need, at some point, a new pier. This is the sort of thing that, when the SeaBees are sent overseas, that they build. But they can't do this at the base, even if they label it a "training exercise", because statutorally, the money has to go to contracted construction companies.

  • by DragonWriter (970822) on Wednesday November 25, 2009 @05:19PM (#30230690)

    Is this like "counterfeit" copies of MS Windows? Where these chips that acted and functioned the same (shadow shift production runs)? Seems like we need a better word as counterfeit implies that it looks the same but does not act the same.

    No, it doesn't. A counterfeit is something that has been made or altered to appear to be something other than what it is, it may well act the same (indeed, "acting" the same under various tests is a key part of counterfeiting some things.)

    A counterfeit chip may well be one designed to perform the same function (e.g., in terms of logic), at least under normal conditions, but with different origins, QC, and/or range of designed operating conditions from the brand it is passed off as. Indeed, it would pretty much have to be not be noticed as soon as it was used.

    Maybe we should just be saying "copies produced without authorization?"

    "Copies produced without authorization" is quite a mouthful. If only there was an adjective that means that already [reference.com], so the same idea could be expressed more concisely.

    Or, in short, in response to "what does counterfeit mean?" -- RTFDictionary.

  • by soundhack (179543) on Wednesday November 25, 2009 @05:28PM (#30230772)

    I would suspect that for certain chips, manufacturers do the same thing Intel/AMD do in terms of speed ratings. They make the chip, then test it at different conditions, and whichever chip passes the more stringent requirements gets labeled milspec. So the same silicon design could be designated different things.

  • by Antique Geekmeister (740220) on Wednesday November 25, 2009 @07:40PM (#30231856)

    Microsoft didn't invent that: it was invented by Goldtouch Technologies, from whom Microsoft simply ripped off the design which Goldtouch had shown them under a non-disclosure agreement to get Microsoft to license the mouse design. I actually used to have one of the old Goldtouch mice: the design was very similar. Check out http://news.zdnet.co.uk/hardware/0,1000000091,2070243,00.htm [zdnet.co.uk] to see my point.

  • by viking80 (697716) on Wednesday November 25, 2009 @08:36PM (#30232294) Journal

    Argumentum ad hominem abusive does not belong in civilized discussion. I thought this was taught in elementary school. Since you bring up, I am curious as to where you got your education? It appears you neither understand my comment, and you also do not understand the marketplace.

    It is common, and well documented that early production of ICs often have few chips in the highest performance bin. These chips are then sold at a high premium. Later the process matures, and often all chips go into the highest performance bin. To still get the premium price this bin used to command, many of these are now derated. There are also many other reasons manufacturers sell the same silicon with different rating printed on the part.

    BTW, I have negotiated and sold products for military and aerospace use for decades. This includes ASICs and other in-house developed silicon.

    Can you give any examples of any of your claims?

  • by danlip (737336) on Wednesday November 25, 2009 @09:27PM (#30232690)

    It puts people at risk, and the motherfucker should be tried for sedition.

    I think you mean treason. Sedition is encouraging insurrection. Treason is acts of disloyalty to one's nation. But in the US treason is narrowly defined by the constitution (to prevent abuses), so unfortunately they probably can't be prosecuted for treason.

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