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Intellectual Property Rights

Los Angeles shop owners plead guilty to selling Chinese-made counterfeit designer jewelry containing hazardous lead levels

LOS ANGELES - The owners of a downtown Los Angeles jewelry store pleaded guilty to federal charges stemming from an investigation by U.S. Immigration and Customs Enforcement (ICE) into allegations they illegally imported and sold counterfeit designer costume jewelry, some of which tested positive for hazardous levels of lead.

Il Keun Oh, aka James Ken Oh, 57, and his wife Jacqueline Oh, 55, owners of Elegance Fashion Mart on East Olympic Blvd., and her brother, Joon Yeop Kim, 47, a manager at the store, appeared in U.S. District Court Monday. The three pleaded guilty to one count of conspiracy and one count of introducing and delivering a hazardous substance.

The defendants, who face a maximum penalty of more than five years in prison, are scheduled to be sentenced October 18.

The hazardous substance charge was lodged after lab tests showed some of the counterfeit jewelry seized in the case contained nearly 20 times the amount of lead deemed safe by the Consumer Product Safety Commission for handling by children. Despite that, the items were labeled as "lead free."

"To people who think designer knockoffs are a harmless way to beat the system and get a great deal - buyer beware," said Claude Arnold, special agent in charge for ICE in Los Angeles. "Part of what you're paying for when you buy established brands, regardless of the product, is quality control. As this case shows, when you purchase counterfeit items, you can easily get something you hadn't bargained for, something that could put you and those around you at risk."

Monday's pleas are the culmination of an ICE investigation that began in 2007 when the agency received a tip that the Oh's jewelry store, which operated as both a retail and wholesale business, was selling counterfeit designer merchandise. During the course of the investigation, ICE agents seized more than 25,000 counterfeit pieces of jewelry and accessories ranging from necklaces, rings and bracelets to watches, hair ornaments and cell phone charms. The goods were manufactured in Qingdao, China.

The fakes featured nearly a dozen well-known designer brands, including Tiffany and Co., Bvlgari, Louis Vuitton, Baby Phat, Chanel, Tous, Bebe, Christian Dior,Van Cleef and Arpels, Hello Kitty and Juicy Couture. Had the seized products been genuine, they would have had an estimated retail value of more than $18 million.

Sales records recovered during an execution of a search warrant at the business in April 2008 indicated the defendants were distributing counterfeit items to merchants in at least four other states - Texas, Florida, Georgia and Illinois. Eight months after the execution of that warrant, the three were indicted by a federal grand jury on 28-felony counts, including smuggling, trafficking in counterfeit goods and money laundering.

ICE received assistance with the investigation from U.S. Customs and Border Protection; the Federal Deposit Insurance Corporation Office of the Inspector General; and Investigative Consultants, a Los Angeles-area private investigative company that specializes in intellectual property investigations.

In fiscal year 2009, ICE launched more than 1,400 investigations into intellectual property rights violations. Those investigations resulted in 164 indictments and 203 convictions, as well as the seizure of more than $62 million in counterfeit merchandise.

For more information, visit www.ice.gov.