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Intellectual Property Rights
06/14/2013

Florida man sentenced in counterfeit razor blade scheme

GRAND RAPIDS, Mich. – A Florida man was sentenced Thursday for his role in a scheme to traffic counterfeit razor blades to a Michigan retailer.

The sentencing follows an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

Jeffrey Steven Telsey, 56, of Delray Beach, Fla., was sentenced to 30 months custody followed by three years of supervised release. Telsey was also ordered to pay slightly more than $400,500 in restitution and a $25,000 fine.

In January 2008, HSI special agents learned that counterfeit Gillette Mach3 razor refills were being distributed through Meijer Stores. Meijer Stores purchased the razors from JCA Enterprises, which was owned by Telsey.

JCA was a "diverter" business and collected odd and leftover lots of health and beauty care products for resale to wholesalers and large retail outlets like Meijer Stores. Mixed in with JCA’s legitimate business was the trafficking of counterfeit razorblades.

Special agents coordinated a series of controlled purchases of counterfeit razorblades from Telsey.

In November 2009, special agents executed a search warrant at JCA located in Boca Raton, Fla., and seized approximately 27,000 units of counterfeit Gillette-branded razors. The razors were valued at approximately $425,000. On the same day the search warrant was executed, HSI special agents seized Telsey’s business bank account which contained slightly more than $400,506. In March 2010, HSI discovered that Telsey continued to sell counterfeit merchandise to other distributors for national and regional retailers.

"Counterfeit goods cost American brand holders billions of dollars on an annual basis," said William Hayes, acting special agent in charge of HSI Detroit. "The unfortunate reality is that these losses are then passed on to the end users – you and me. HSI will continue to work collaboratively with our law enforcement partners to aggressively target individuals and groups involved in the trafficking of counterfeit goods."

After a lengthy investigation, HSI determined that Telsey obtained the counterfeit merchandise from an importer in New Jersey. The importer, in turn, obtained the counterfeit razorblades from manufacturers in China. The volume of counterfeit razorblades is estimated to be in the millions of dollars. Proctor & Gamble (P&G), the owner of the Gillette brand, advised that it is committed to the highest quality products and only manufactures its Gillette razorblades in facilities in Boston and Berlin, Germany. P&G reports that sales of counterfeit Gillette razorblades have decreased substantially since HSI’s investigation of Telsey.

"Trafficking in counterfeit products undermines the public trust. Companies like Proctor & Gamble, Meijer Stores, Coach, Ford, Apple and Microsoft, spend billions to establish and promote a brand identity. The public expectation of quality and value in brand names can be easily dashed by one bad experience," said U.S. Attorney Patrick A. Miles Jr. "Much of our nation’s value in the global economy is derived from intellectual property – our ideas, brands, innovations, and creations in music and film. We must be vigilant in protecting those properties. Would-be criminals should know that the U.S. Attorney’s Office will investigate and prosecute those who would steal from companies and the public by committing fraud through counterfeit and pirated goods."

Meijer Stores fully cooperated with P&G and HSI. Once notified, Meijer Stores conducted a company-wide recall of Gillette razorblades to ensure that counterfeit products weren’t sold to its consumers.