Date: April 26, 2024 Contact: newsroom@ci.irs.gov LOS ANGELES — A San Gabriel Valley woman pleaded guilty today to defrauding the United States Postal Service (USPS) out of more than $150 million by using counterfeit postage to ship tens of millions of parcels. Lijuan “Angela” Chen of Walnut, pleaded guilty to one count of conspiracy to defraud the United States 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 at least 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. This company provided shipping services, including the shipping of packages via U.S. Mail, for China-based logistics 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. In November 2019, knowing that law enforcement was investigating his use of counterfeit postage, Hu fled the United States and moved to China. After fleeing to China, Hu developed ways to make counterfeit postage and avoid detection, such as a computer program for fabricating counterfeit postage shipping labels. Chen remained in the United States and managed the warehouses that she and Hu used to ship mail bearing counterfeit postage. Starting in 2020, Chen and Hu began affixing counterfeit postage to mail they presented to USPS for delivery. Chen and Hu received parcels from the China-based vendors and others, applied shipping labels showing postage purportedly paid and then arranged for the parcels to be transferred to USPS facilities to be shipped across the nation. The shipping labels were fraudulent and frequently included, among other red flags, “intelligent barcode data” recycled from previously mailed packages, according to court documents. Intelligent barcode data is used in some postage shipping labels to evidence the payment of required postage for the shipped item. For example, on October 25, 2022, Chen and Hu caused to be transported to USPS a delivery of approximately 4,779 packages to be shipped via U.S. Mail. This delivery included multiple packages bearing counterfeit USPS Priority Mail postage meter stamps. From January 2020 to May 2023, Chen and Hu knowingly mailed and caused to be mailed more than 34 million parcels containing counterfeit postage shipping labels, which caused more than $150 million in losses to USPS. As part of her plea agreement, Chen has agreed to forfeit funds that law enforcement seized from her bank accounts, insurance policies, and real estate in Walnut, Chino, Chino Hills, South El Monte, Diamond Bar, and West Covina. “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.” “Ms. Chen has admitted today that she conspired with Mr. Hu to defraud the United States Government willfully and knowingly,” said Special Agent in Charge Tyler Hatcher, IRS Criminal Investigation (CI), Los Angeles Field Office. “IRS:CI will work tirelessly with our partners to protect taxpayer interests in the postal service and other government agencies.” 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 United States, three counts of passing and possessing counterfeit obligations of the United States, and one count of forging and counterfeiting postage stamps. An indictment is merely an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. The United States Postal Inspection Service and IRS Criminal Investigation investigated this matter. Assistant United States Attorneys James C. Hughes and Richard E. Robinson of the Major Frauds Section are prosecuting this case. CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.
