Gene L. Thompson, 55, photographed with his son before his sentencing on a federal conspiracy charge. The photo was included in a pleading to a federal judge for leniency.

NYSSA – A one-story home in Nyssa on a quiet city street was key to global criminal conspiracy that for years trafficked in phony brand-name handbags, according to federal court records.

The home served as the U.S. shipping depot for a scheme involving factories in China, the U.S. embassy in South Korea and this blue-collar town better known for onion packing than foreign intrigue.

Nyssa’s role is detailed in federal court documents in a criminal case that is sending a Nyssa High School graduate to prison.

Gene L. Thompson, 55, last month was sentenced to 18 months in federal prison after he pleaded guilty to conspiracy to traffic in counterfeit goods. His wife, Guojiao Zhang, 40, also known as Becky Thompson, also pleaded guilty, sentenced to eight months detention at the couple’s home in Virginia.

A Nyssa relative identified in federal records as participating wasn’t charged, so the Enterprise isn’t identifying the person. The U.S. Attorney’s Office in Portland declined to comment.

Case files noted that for years, Thompson and his wife trafficked in women’s accessories such as handbags made in China, selling the counterfeit products as genuine brand name goods.  

The couple “sold their products at a significantly reduced price to people who might not otherwise afford or purchase the real thing,” the Thompsons’ attorneys said in a court filing.

Zhang told federal investigators she bought items from “junk” markets in her native China for prices ranging from $1.50 to $5. They then sold the brand goods for $15 to $80, according to federal prosecutors’ sentencing memorandum filed in U.S. District Court.

The Thompsons said in court filings that overhead costs, including shipping goods to Oregon, made it a “losing venture.” Prosecutors said their behavior indicated otherwise.

Thompson was born in South Korea and later lived with his family in Nyssa, graduating from the high school in 1985. He served in the U.S. Navy and in 1995 went to work for the State Department. Court records show he had postings around the world. He met his future wife in the Marshall Islands and they married in 2003.

In March 2012, U.S. customs officials intercepted a shipment of 8,551 counterfeit handbags carrying names such as Louis Vuitton and Gucci, according to a State Department investigative report. The shipment, valued at $8.4 million dollars at retail value, was consigned to a company called Any Trading Inc. Thompson was company vice president, the report said.

That same month, the couple created a new Oregon company – Becky and Gene Trading Inc. – with Thompson as president. The company, whose activity they said was “women’s fashion accessories importation and wholesale,” listed the Nyssa home as its “primary place of business.”

Investigators said Thompson was the consignee for “over 100 other similar shipments coming from China to U.S. between Dec 2005 and Feb 2012,” the State Department report said.

At the time, Thompson was stationed at the U.S. embassy in Karachi, Pakistan.

The State Department opened an investigation in September 2012 as “Thompson was suspected of assisting his wife to import counterfeit goods into the U.S. via Diplomatic Pouch,” the state report said.

Suspicions were raised, the report said, because Thompson appeared to be living beyond his means, wearing a watch estimated to be worth $10,000 and owning a $90,000 vehicle. In a recent court filing by Bryan Boender, Thompson’s attorney, said that the report was wrong – the watch was worth $3,700 and Thompson paid $73,000 for a used Mercedes-Benz S550.

The FBI also investigated Zhang, but closed its case in 2013 because customs officials destroyed the seized shipment, the report said. The State Department reported separately that the allegations against Thompson were “unsubstantiated.”

In October 2017, Thompson transferred to the U.S. embassy in Seoul and the trafficking in phony handbags continued. He fell under suspicion almost immediately at his new post because he was spotted using government computers for personal matters, according to the State Department report.

A new investigation was launched, establishing that Thompson was using embassy computers to create online accounts for his sideline business. According to court records, Zhang handled day-to-day chores for the operation, placing orders in her native China, directing the shipment to Nyssa, and then providing instructions to the Nyssa relative for shipping goods to customers who had bought online.

Between 2015 and 2017, the couple sold at least 1,487 counterfeit Vera Bradley products, federal prosecutors wrote. In late 2017, Vera Bradley officials detected the counterfeit sales and initiated the first of 16 surreptitious buys. In April 2018, Vera Bradley sent a cease-and-desist demand, addressed to the Nyssa home.

The relative messaged Thompson about the letter, asking, “Just want to know if I’m going to jail,” according to a federal agent’s later affidavit.

Thompson responded that it was “just a warning.” The sales and shipments continued and in March 2019 Thompson wrote his Nyssa helper that they were “on a roll.”

Federal prosecutors recently noted that the warning wasn’t enough to deter the couple.

“In the face of clear notice that their conduct was illegal, they did not stop,” prosecutors said in their sentencing memo. “Rather, they became more brazen. They reregistered their accounts under aliases and doubled their sales.”

A lengthy international investigation continued while the Thompsons kept peddling the counterfeit goods. They continued using the Nyssa home as a shipping depot, but started listing various Ontario addresses on return labels, according to court records.

From April 2018 until December 2019, according to court records, the pair sold at least 3,649 more counterfeit products.

The conspiracy ended with their indictment in December 2019 and their subsequent arrest. Agents from the Diplomatic Security Service, the international investigative arm of the State Department, also executed a search at the Nyssa home, seizing 1,400 Vera Bradley items.

Federal prosecutors calculated that the Thompsons sold more than 5,000 counterfeit Vera Bradley products and “profited over $229,000,” according to a court filing.

On Dec. 8, the Thompsons each pleaded guilty to one federal charge and Thompson retired from the State Department. They were sentenced on March 18.

The couple’s attorneys urged leniency, noting that the Thompsons had just months earlier had their first child. The pleading included a photo of the infant, smiling and dressed in a lion outfit.

The filing said the Thompsons had agreed to forfeit $229,000, “which is a substantial portion of their life savings.”

The attorneys wrote that the sum represented “gross sales over several years” and didn’t account for expenses, such as “shipping from Oregon to customers.”

“Selling handbags was a losing venture” for the couple, their filing said.

Federal prosecutors countered that claim. The couple, they wrote, kept up their conspiracy even after they were warned by Vera Bradley that what they were doing was illegal.

“It makes no sense” for them to keep selling “if they operated at a loss,” prosecutors said.

The record, the prosecutors wrote, showed that “Offenders like Thompson and Zhang believe they can commit crimes with impunity.”

This story was originally published by the Malheur Enterprise of Vale, affiliated through management with Salem Reporter.

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