DOJ Announces G Nova Corporation and Its CEO Indicted for Conspiracy to Fix Prices of Koozies; Netbrands Media Corporation and Two of Its Top Executives Agree to Plead Guilty to Conspiracy to Fix Prices of Wristbands, Lanyards, Temporary Tattoos, and Buttons
On January 31, 2019, the Department of Justice announced that a federal grand jury in Houston returned an indictment against Taiwan-based G Nova Corporation (“G Nova”) and its Chief Executive Officer, Yeh Fei Chu, aka Jim Chu (“Chu”), for participating in a conspiracy to fix prices of Koozies (foam or fabric sleeves that thermally insulate beverage containers such as cans or bottles) sold in the United States.
The Department of Justice also announced that it has filed criminal charges against Netbrands Media Corporation (“Netbrands”) and two of Netbrands’ top executives, Mashnoon Ahmed (“Ahmed”) and Mueen Akhter (“Akhter”), for their roles in a separate conspiracy to fix prices of wristbands, lanyards, temporary tattoos, and buttons sold in the United States. Netbrands has agreed to plead guilty and pay a criminal fine of over $6 million. Ahmed and Akhter entered guilty pleas on January 8, 2019.
Including the results announced, the investigation into the customized promotional products industry has resulted in charges against five companies and six individuals. The charges announced against G Nova and Chu are the first that relate to a conspiracy to fix prices of Koozies.
Including Netbrands, Akhter, and Ahmed, nine defendants have been charged for their roles in a separate price-fixing conspiracy related to sales of other customized promotional products, including wristbands. All nine of those defendants have agreed to plead guilty.
G Nova & Chu
The indictment against G Nova and Chu, filed in United States District Court for the Southern District of Texas in Houston, charged the two defendants with participating in a conspiracy to fix prices of Koozies (also known as can coolers or coolies) beginning in about May 2012 and continuing until at least February 2014. The one-count felony indictment chargedthat G Nova and Chu carried out the conspiracy by agreeing to fix the prices of Koozies during meetings and other communications.
Netbrands, Ahmed & Akhter
According to the felony charge filed against Netbrands on January 24, 2019, the felony charges filed against Ahmed and Akhter on December 3, 2018, and the plea documents filed in the cases against Ahmed and Akhter on January 8, 2019, in the United States District Court of the Southern District of Texas in Houston, the defendants and their co-conspirators agreed to fix the prices of customized promotional products, including wristbands, lanyards, temporary tattoos, and buttons, sold online from as early as May 2014 until at least June 2016. The defendants and their co-conspirators used social media platforms and encrypted messaging applications, such as Facebook, Skype, and Whatsapp, to reach and implement their illegal agreements.
In addition to pleading guilty, Netbrands has agreed to pay a $6,531,687 million criminal fine and cooperate with the Antitrust Division’s ongoing investigation. As part of their guilty pleas, Ahmed and Akhter also agreed to cooperate with the ongoing investigation.
A criminal violation of Section 1 of the Sherman Act carries a maximum sentence of 10 years in federal prison and a fine of $1 million for individuals, and a maximum fine of $100 million for corporations. The maximum fines may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.