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Intellectual Property Rights
08/31/2010

Feds, local law enforcement team up to seize millions in counterfeit goods

Fakes include designer clothing, jewelry, handbags, sunglasses and cell phones

LOS ANGELES - Federal and local law enforcement agencies arrested 30 individuals over the past week and seized millions of dollars worth of designer knockoffs and pirated products, including clothing, jewelry, leather goods, movie DVDs, music CDs, even phony iPhones, in a closely coordinated crackdown targeting counterfeit goods vendors in the greater Los Angeles area.

The enforcement actions involved the U.S. Immigration and Customs Enforcement (ICE) Office of Homeland Security Investigations (HSI); the Los Angeles County Sheriff's Department; the Los Angeles, Torrance and Garden Grove police departments; as well as investigators from the Riverside County District Attorney's Office.

All told, the searches resulted in seizing more than 47,000 individual items, ranging from counterfeit watches and wallets, to athletic shoes and workout wear. Authorities estimate the collective value of the merchandise seized during the operation to be more than $12 million, based upon the items' suggested retail price had they been legitimate. The largest cache of counterfeits, estimated to be worth nearly $9.8 million, was confiscated during a warranted search last Thursday by ICE-HSI agents and Los Angeles Police Department investigators at a warehouse in Santee Alley.

The seized knockoffs represent more than 30 well-known designer brands, including foreign labels like Burberry, Hermes, Chanel, and Cartier, along with U.S.-based companies such as Oakley, Dooney and Bourke, Nike, Ray Ban and Kate Spade. In addition to the merchandise, investigators also recovered a variety of equipment used for manufacturing counterfeit apparel, including heat-transfer and silk-screening machines.

In a related enforcement action in Orange County, ICE-HSI agents and Garden Grove police detectives executed a state search warrant at a business called iProducts in Garden Grove, Calif. There, investigators seized four counterfeit iPhones and dozens of counterfeit phone covers that included Louis Vuitton knockoffs. The company's owner, David Nguyen, 26, is one of 30 vendors taken into custody during the operation who now face state criminal charges for possessing and selling counterfeit goods. ICE-HSI officials emphasize the agency's investigation is ongoing and subsequent federal prosecution is a possibility.

"People need to realize that the sale and purchase of counterfeit goods is not a victimless crime," said Claude Arnold, special agent in charge of ICE-HSI in Los Angeles. "Commercial piracy and counterfeiting undermine the U.S. economy, rob Americans of jobs, stifle American innovation, and promote other types of crime."

Los Angeles County Sheriff Lee Baca echoed those concerns and predicted more joint enforcement efforts targeting this type of criminal activity will be forthcoming.

"By conducting these sweeps, we hope to increase global awareness of the negative impact of organized intellectual property crimes," Sheriff Baca said. "Counterfeiting and piracy impact public safety by funding organized crime, street gangs, and even terrorism through the sales of these counterfeit products. These criminals cost society billions of dollars in lost government revenues, foreign investments and local business profits."

Investigators from the Los Angeles and Torrance police departments also played a prominent role in the enforcement effort.

"This operation shows yet again the important role law enforcement partnerships are playing in the effort to combat crime here in Los Angeles," said Capt. Ann Young, who oversees the Los Angeles Police Department's detective support and vice division. "By pooling our resources, expertise and investigative leads, we can have far greater impact than we might by working these cases individually."

"The sale of counterfeit goods is a serious crime that has a profound and negative impact on the local and national economy," said Torrance Deputy Police Chief Michael Browne. "The Torrance Police Department will continue to work diligently with local and federal law enforcement agencies to ensure that suspects committing these types of crimes are located, arrested and prosecuted to the full extent of the law."

ICE-HSI's participation in the crackdown on counterfeit goods vendors is part of Operation Fire Sale, an agency initiative targeting intellectual property crime in several major cities nationwide, including Los Angeles, New York, Miami, Philadelphia and Las Vegas. Spearheaded by the ICE-HSI-led National Intellectual Property Rights Coordination Center (IPR Center), Operation Fire Sale resulted in the seizure of more than $16 million worth of counterfeit merchandise in those cities last week.

ICE-HSI plays a leading role in investigating the production, smuggling and distribution of counterfeit products and combating intellectual property rights (IPR) violations. While many ICE-HSI enforcement actions involve counterfeit designer clothing and accessories, some of the top commodities seized in ICE-HSI IPR investigations are products that pose disturbing risks to public safety and security, including counterfeit pharmaceuticals and critical technology components, such as computer chips for defense systems and airplane equipment.

ICE-HSI's intellectual property theft enforcement efforts have continued to escalate in the past 18 months under this Administration. In fiscal year 2008, ICE initiated 643 intellectual property theft investigations during the entire year. In the first two quarters of this fiscal year, ICE-HSI initiated 560 intellectual property theft investigations. At that pace, ICE-HSI expects to increase its intellectual property theft enforcement by 40 percent compared to just two years ago.