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May 25, 2016New York, NY, United StatesIntellectual Property Rights and Commercial Fraud

5 arrested in phony perfume ring following ICE HSI probe

NEW YORK — Five men from Queens, New York, were arrested Wednesday for allegedly participating in a scheme to distribute counterfeit name brand perfumes in New York and around the United States. The arrests stem from a U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigation (HSI) with assistance from U.S. Customs and Border Protection (CBP) and the New York Police Department.

Patrick Badal, Kaium Shah, Kenny Ni, Abul Kashem, and Parvez Shazzed face charges of conspiracy to traffic in counterfeit goods, trafficking in counterfeit packaging and smuggling goods into the United States.

“These counterfeit perfumes often contain hazardous products that may be harmful to the health of consumers who unwittingly purchase and use them,” Angel M. Melendez, special agent in charge of HSI New York. “ The manufacture, illegal importation, marketing, distribution, and sale of these products amount to theft and threaten the economic security of the United States.  HSI maintains a zero-tolerance policy when it comes to the illegal importation of smuggled goods.”

“These seizures by U.S. Customs and Border Protection provided the critical link to an ongoing investigation that resulted in the takedown of an elaborate criminal enterprise,” CBP Director Robert E. Perez said.  “It is through our interagency partnerships, and collaborative approaches like the one leading to today’s arrests, that law enforcement successfully combats modern criminal organizations.”

According to investigation, from December 2014 to May 2016, the defendants, and others, (collectively, the “Counterfeit Perfume Ring”) allegedly imported generic liquid fragrances from China, separately imported boxes and packaging bearing counterfeit trademarks from China, packaged the generic liquid fragrances into the branded and trademarked packaging, and then sold counterfeit perfumes to wholesalers in New York and at least six other states, including out of a store located in or around Lafayette Street in New York City.

Based on physical surveillance conducted by HSI and the NYPD, the ring used seven primary locations to receive, prepare, and distribute its products:

The Port. Inbound shipping containers arrived at the Port of Newark and were transported to a bonded warehouse in Elizabeth, New Jersey, (the “Port”) regulated by CBP.

The Temporary Warehouse. Once shipping containers had been released by CBP, members of the Counterfeit Perfume Ring arranged for the containers to be moved from the Port to a temporary warehouse located in Elizabeth, New Jersey (the “Temporary Warehouse”). The Temporary Warehouse was operated by a trucking company (the “Trucking Company”).

Packaging Facilities. From the Temporary Warehouse, the Trucking Company typically delivered the containers to premises in Queens, New York, for packaging (the “Packaging Facilities”). 

The Storage Facility. The Counterfeit Perfume Ring then transferred the goods from the Packaging Facilities to a self-storage facility located in Queens, New York (the “Storage Facility”).

The Freight Forwarder. The Counterfeit Perfume Ring distributed certain of its goods to wholesalers located outside of the New York City area. To accomplish this, the Counterfeit Perfume Ring used a freight forwarding service (the “Freight Forwarder”) to pick-up pallets of goods from the Storage Facility. The Freight Forwarder, in turn, delivered parcels to out-of-state addresses.  In addition to distributing its products out-of-state, the Counterfeit Perfume Ring distributed its products throughout New York City. Shazzed operated one of these locations, a store located in or around Lafayette Street in New York City.

Badal, Shah, Ni, Kashem, and Shazzed are each charged with one count of conspiracy to traffic in counterfeit goods and one count of trafficking in counterfeit goods, each of which carries a maximum penalty of 10 years in prison.  Badal, Shah, Ni, and Kashem are also each charged with one count of trafficking in counterfeit packaging, which carries a maximum penalty of five years in prison.  Badal and Shah are also charged with smuggling goods into the United States, which carries a maximum sentence of 20 years in prison.