A man accused of participating in a fraud scheme to resell $1.7 million worth of counterfeit U.S. postage stamps manufactured 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 co-defendant, John Patrick Best, 55, made his initial appearance in federal court on Wednesday.

According to the indictment and court records, Best and Padgett conspired beginning in January 2024 to purchase counterfeit U.S. postage stamps from suppliers in China and resell them within the United States. As part of the alleged scheme, the defendants established a shipping supply company in Georgia and opened bank accounts under the company's name.

The indictment alleges that Best and Padgett knowingly purchased counterfeit postage stamps from sources in China and elsewhere. The conspirators acquired a product that the vendor listed as "Patriotic Series American Independence Day Doodle Stickers" and resold them as genuine U.S. flag Forever stamps. Forever stamps, introduced by the USPS in 2007, carry no printed denomination and retain full First-Class mailing value regardless of future rate increases, making them particularly attractive to counterfeiters because they can be stockpiled and sold at a discount while still appearing usable indefinitely.

After receiving the counterfeit stamps, Best allegedly leveraged his position at a media company to advertise and sell them through an online vendor marketplace under the newly created business name. Online marketplaces have become a common distribution channel for counterfeit postage, with the USPS Office of Inspector General repeatedly flagging discounted stamps sold through third-party platforms as a persistent enforcement challenge.

Padgett then allegedly packaged and mailed the counterfeit stamps from multiple locations, including post offices in Smiths Station and Phenix City, Alabama.

The use of counterfeit stamps deprives the U.S. Postal Service of revenue and underscores how China serves as a source for many types of counterfeit goods entering the U.S. market.

According to the indictment, the scheme generated at least $1.7 million in proceeds. The government alleges those proceeds were derived from the sale of nearly 6.5 million counterfeit stamps, with an additional 544,596 stamps seized before they could be distributed.

The defendants were accused of moving the proceeds through various bank accounts in an effort to disguise the source and ownership of the funds.

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. Together, the cases illustrate the scale of counterfeit postage operations trafficking through Chinese suppliers, with combined alleged losses to the USPS exceeding $150 million from that case alone.