U.S. Customs agents investigating the international trade in counterfeit steel bolts have made a shocking discovery: American importers are knowingly ordering these dangerous, substandard industrial fasteners from Asian manufacturers.
When we first reported on the flood of cheap counterfeit bolts coming into the country, it was assumed that shady factory owners in Japan, Korea and Taiwan were hoodwinking their U.S. customers with substandard bolts made to look exactly like high-grade bolts. But Customs sources told our associate Stewart Harris that American importers are deliberately ordering the counterfeits. They cost less because they are made of inferior material, or they may not be properly tempered to withstand high temperatures and stress.
For example, investigators have assembled documentary evidence in the form of orders for "Grade 8 boron bolts." Genuine Grade 8 bolts, the workhorse of the steel-fastener industry, do not contain boron. Bolts made with boron turn to putty at high temperatures.
"It's not the Japanese putting one over on the importer," a Customs agent told us. "The importer is requesting a fraud."
The flood of bogus bolts has reached such staggering dimensions that about one in every three Grade 8 bolts tested at the Defense Industrial Supply Command depot in Philadelphia is a counterfeit.
The Customs Service plans to prosecute domestic importers of counterfeit steel bolts under the Lanham Act, which makes it a crime to misrepresent goods brought into the United States. The law has been used against wine merchants who put French labels on bottles that come from other countries, and Customs Service attorneys argue that the "head markings" on the bogus bolts are similarly fraudulent, because they indicate that the bolts are stronger than they really are.
Many Japanese bolt makers have agreed not to counterfeit steel bolts for the U.S. trade, even when their customers ask for them. But manufacturers in Korea and Taiwan have refused so far to stop their lucrative counterfeiting.
Pentagon investigators are also looking into the bolt situation, after discovering last winter that counterfeits were popping up in the Army's armored vehicles.
We first reported on the hazards of counterfeits in armored vehicles this March. Since then, the "CBS Evening News" has picked up the story.
Between Customs and the Pentagon, about 20 prosecutions are being prepared against importers and distributors who sold counterfeit bolts to their military or industrial customers.
The crackdown on counterfeit bolts was coordinated at a meeting of about 30 federal law-enforcement agents in Long Beach, Calif., earlier this month. They compared notes and mapped out strategy for prosecuting the counterfeit bolt pushers.
The steel bolts themselves aren't the only things being counterfeited, according to sources close to the Pentagon investigation. Documents are also forged to lend legitimacy to shipments.
Indictments against some companies are expected as early as next month.