A man accused of participating in a fraud scheme to resell $1.7 million worth of counterfeit U.S. postage stamps made in China has pleaded guilty, the U.S. Attorney’s Office for the Middle District of Alabama announced on Thursday.
Kevin Douglas Padgett, 48, pleaded guilty to money laundering on June 30. His partner, John Patrick Best, 55, made his initial appearance in federal court on Wednesday.
According to the indictment and other court records, Best and Padgett conspired in January 2024 to purchase counterfeit U.S. postage stamps from suppliers in China and resell the stamps in the United States. As part of the alleged scheme, the defendants formed a shipping supply company in Georgia and opened bank accounts in the company’s name.
The indictment alleges that Best and Padgett knowingly purchased counterfeit postage stamps from sources in China and elsewhere. The conspirators purchased a product listed by the vendor as “Patriotic Series American Independence Day Doodle Stickers” and resold them as genuine U.S. flag Forever stamps. After receiving the counterfeit stamps, Best allegedly used his position with a media company to advertise and sell them through an online vendor marketplace under the newly created business name.
Padgett then allegedly packaged and mailed the counterfeit stamps from multiple locations, including post offices in Smiths Station and Phenix City, Alabama.
[WHY IT MATTERS: Using counterfeit stamps deprives the U.S. Postal Service, which is losing money, of much needed revenue and highlights how China is the source for many types of bogus goods.]
According to the indictment, the scheme generated at least $1.7 million in proceeds. The government alleges that the proceeds were derived from the sale of nearly 6.5 million counterfeit stamps, with an additional 544,596 stamps seized before distribution.
The defendants were accused of moving the proceeds through various bank accounts in an effort to disguise the source and ownership of the money.
The charges against both men carry a potential maximum sentence of up to 20 years in prison, along with substantial monetary penalties and restitution.
Earlier this month, a Los Angeles-area woman was sentenced to 30 months in prison and fined for using counterfeit postage to ship tens of millions of parcels from China, causing more than $150 million in losses to the U.S. Postal Service.
Click here for more FreightWaves/American Shipper stories by Eric Kulisch.
Write to Eric Kulisch at [email protected].
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