BOISE, Idaho — The trial for a Treasure Valley family accused of making millions in a massive counterfeit cellphone scheme began Monday.
Pavel Babichenko, Gennady Babichenko, Piotr Babichenko, Timofey Babichenko, Kristina Babichenko, Natalya Babichenko, Anna Iyerusalimets, Mikhail Iyerusalimets and David Bibikov are charged with dozens of felonies ranging from mail fraud and wire fraud to trafficking in counterfeit goods, conspiracy, and money laundering in the case.
Federal prosecutors say the group sold fake electronics including counterfeit Samsung and iPhone cellphones, smartwatches, and electronic accessories on Amazon and Ebay, advertising them as genuine products. The counterfeit phones were allegedly smuggled into the country from China and Hong Kong, then repackaged in two Meridian warehouses owned by the suspects.
The group has been awaiting trial since their arrests in a federal raid in August 2018, which came after a years-long covert investigation that relied on informants and undercover buys to build a case against the defendants.
The defendants are believed to have operated more than 150 separate business entities to sell the fake cellphones online. More than 25,000 customers bought a counterfeit product they believed was the real item, prosecutors say.
"In addition to using multiple businesses of their own, the Defendants also used their employees to open new accounts. These employees were originally hired to test, repackage, and mail items sold online. Eventually, many were used to open one or more selling accounts on behalf of the Defendants," prosecutors wrote in a filing. "To further evade detection, Piotr Babichenko and Pavel Babichenko solicited young (and financially inexperienced) members of their community to operate Amazon and eBay selling accounts. These young employees sold the Defendants’ products online, received large direct deposits from Amazon of the proceeds of those sales into their accounts, and then laundered that money to a Babichenko-controlled bank account. This scheme worked and led to substantial profits, which the Defendants laundered through various means."
The group is also accused of using Gennady Babichenko's dental office, European Denture Center, to launder some of the money brought in and obscure where it was coming from.
Agents seized 60 pallets of evidence connected to the counterfeit operation from the suspects' warehouses on Bridger Street in Meridian, recovering products "including 103,773 separate items, 8,399 empty Apple iPhone packages, and 18,768 empty Samsung packages," according to a filing.
Outbound mail from the warehouse in August 2018 revealed that 2,451 packages had been shipped out in just a two-day period, containing 2,629 electronic items that included counterfeit iPhones and Samsung phones, as well as counterfeit cellphone batteries.
All of the defendants except for Bibikov are related to one another by blood or marriage. A tenth defendant, Arthur Pupko, pleaded guilty to his role in the scheme in 2019.
Pupko, who worked for the Babichenko family, is expected to testify as a witness for the prosecution. He has told law enforcement that over the course of his time working with the defendants, he received $12,061,357 in direct deposits from Amazon. Pupko took a 6% cut of those earnings, then transferred the remaining $10,096,543 into a bank account belonging to Pavel and Natalya Babichenko, according to the prosecution.
At least 23 witnesses are expected to be called to testify for the prosecution, including other employees who were not charged criminally in the case.
The trial, which is slated to last ten weeks, began Monday with jury selection. It is expected to take at least one full day to seat a jury.
Watch more crime news:
See the latest Treasure Valley crime news in our YouTube playlist: