Fake Bags and Counterfeiting in 2007 in New York City
[ NEW YORK, NY - NYC - Updated 12/19/2007 - www.Littleviews.com ]
Is it OK to sell (and buy) counterfeit products?
>> eBay, which has enriched itself since its inception without seriously policing the sales of counterfeit and stolen goods on its site, is fending another lawsuit by Tiffany & Company that's being held in the Southern District Federal Court of New York. eBay is also being sued by the French "Council of Sales," which sets standards for French auction houses, L'Oréal, and LVMH Moët Hennessy Louis Vuitton SA.
L'Oréal sued eBay early in September, followed by Tiffany & Company in October. Do they have a case? A recent eBay search for L'Oréal products, for example, turned up 1,060 items, with some priced as low as $.99. No matter what the price, however, there is no assurance on eBay that what you buy is actually what the product is supposed to be.
According to a November 27th article in the Wall Street Journal, Geoffrey Potter, chairman of the anti-counterfeiting practice at the New York law firm of Kramer Levin Naftalis & Frankel, said "The fact that eBay has chosen to set up its business in a manner that makes it extremely difficult for it to monitor the merchandise that is sold at its auctions is not a defense." Attorney Potter believes that eBay has the same duty as any retail store or flea market to sell legal products and further asks why crime should be tolerated on the Internet when it isn't tolerated on land in our communities.
eBay holds that it is not responsible for the illegal activities of its online merchants because there are too many of them to police. Does this make sense?
Macy's rents floor space to specialty vendors like cosmetics and perfume companies. Would we, as consumers, accept Macy's as a worthy place to shop if Macy's said that it was not responsible for the legitimacy of the companies doing business within the boundaries of its hundreds of stores?
If a store does so much business that it cannot police its own money-making activities, shrugging over illegal profits as "what're you gon'na do?", would we want that store to do business in our community? If there is even a hint of impropriety on Wall Street, the federal government slams it on the upside of the head. So why are online outlets such as eBay not accountable for their storefronts that can easily facilitate criminal activities?
A huge difference between eBay and, say, a newspaper's classified ad section, is that eBay provides all the tools required to support business transactions. Money changes hands on and through eBay and consequently, all of its merchants are an actual (not "accidental") part of eBay's enterprise.
Tiffany has its own multi-million dollar, anti-counterfeit program that digs up the evidence used in its lawsuits. According to Crain's NY, between 2003 and 2004, Tiffany's efforts led to over 19,000 eBay auctions being shut down! In more recent activity, the Wall Street Journal reported that Tiffany found at least 75% of 325 items it purchased from eBay to be counterfeit.
eBay wasn't the only firm targeted by Tiffany. Overstock.com was also nabbed. Overstock.com, however, claims that it purchased Tiffany products from one of its trusted distributors. As of the end of October, Overstock.com began offering refunds to dissatisfied customers and removed the items from its site.
By early December, France's auction regulatory authority, the Council of Sales, took eBay to court. The agency claims that eBay.fr does not protect its over 10-million French customers and eBay should be held to the same standards that France set for auction houses. eBay, of course, doesn't agree, but the Council of Sales argues that, among many things, eBay.fr enjoys an unfair advantage over legitimate auction houses that are required to adhere to a 2000 law.
Police Enforcement - December 2007
The State of New York is on record that "fake bag parties" are, indeed, illegal. By mid-December, seven people in Glens Falls (upstate New York) were charged with felonies related to selling counterfeit handbags at home parties. According to Glens Falls Police Department Capt. Kevin Conine, two of the seven were arrested after leaving a party with $1,500 in hand. In all, some $50,000 to $75,000 in counterfeit goods were seized, with all goods slated to be burned once prosecution is done. Under state law, everyone involved with illegal purse parties, including the people who host them, can be charged.
Earlier in the month, on December 6, US Attorney Michael Garcia announced that it broke up an international counterfeiting and smuggling ring that culminated in the arrest of ten people at a New Jersey shipping port. The ring unwittingly bribed a federal undercover agent $500,000 in hopes of importing more than $200 million in Chinese-manufactured designer knockoffs that were packed into approximately 100 cargo containers. With container contents labeled such things as "noodles," products included fake Chanel bags, Coach bags, Nikes, and designer jeans. The New York Post quotes Garcia as saying that this is "one of the largest counterfeit smuggling cases ever brought in United States history."
Police Enforcement - November 2007
On November 14th, federal authorities picked up six people in New York City who were peddling around $20 million in counterfeit clothing that originated in China, then landed in New York by way of Los Angeles.
November in New York City, in fact, saw a significant increase of police officers monitoring unlicensed street sales, including sidewalk sales of counterfeit goods. Times Square, The Rockefeller Center, Harald Square, and Fifth Avenue all received extra focus. While a few tourists think that browsing merchandise on sidewalks clogged full of vendors operating from blankets, cardboard boxes, and/or black plastic bags is "fun," by encouraging such activity, these tourists make everyone vulnerable to pick-pockets, identity theft, and other crimes.
Police Enforcement - October 2007
Countefeit activity in NYC during October included a lawsuit against Zachys Wine Auctions, Inc. by William Koch who claims that Zachys sold him counterfeit French vintages. Zachys pleads innocent, of course, and the case is pending. During this time, the Federal Bureau of Investigations has increased the pace of its investigations of counterfeit wines, causing leading wine auctioneers, such as Sotheby's and Christie's Inc., in addition to Zachys, to become prime targets.
Early in October, NYC Police busted a factory in Queens, seizing knockoff jerseys and other clothing worth $4 million, and arresting eleven workers. The New York Post quotes NYPD Detective Lt. Thomas Conforti, who was responsible for the bust, as saying, "It was a full-blown factory setup." Detective Conforti further observed, "There were numerous work stations with the embroidery machines. It appeared to be in operation for awhile." Among the labels found were NFL jerseys, Polo, Lacoste, and FUBU. Boxes were found "stacked to the rafters," along with three, fully-packed tractor-trailers.
Included in the arrests of ring operators, Jung-Ho Ryu and his wife, Ji Young Ryu, was a 16 year old girl who had came to the US to go to school, but was put to work making counterfeit clothing, instead.
Police Enforcement - September 2007
According to the New York Post, September saw the largest counterfeit roundup in the city's history, with several busts being carried out. Among the people arrested for $26 million worth of counterfeit clothing, electronics, and software were Yue Huang and his wife, He Bin Huang-Wang (clothing), Hananya Ederi and Jacab Eran (Motorola Bluetooth earpieces), and Verdim Gendel and Zinoy Gliner (Microsoft software). Eighteen people in all were arrested during the sweep.
And then there are fake CDs and DVDs. A Bronx distributor of counterfeit DVDs was busted, but this arrest only slightly dented the problem faced by New York's nine, full-time, DVD-ring investigators. These detectives pay particular attention to Broadway's side streets, just south of 34th Street, which collectively are known as "Counterfeit Alley." The majority of businesses in this area, of course, are legit wholesalers and distributors who resent the bad name and other problems that counterfeit operations (and the people who shop them) bring.
Beyond fake CDs, DVDs, clothing, and accessories, fake name-brand guitars were discovered in Long Island. Bernard Musumeci of Oakdale Music Store was busted for selling fake versions of Gibson and other high-end guitars to customers in his store and over the Internet. His prices ranged from $1,500 to $2,000, whereas legitimate models often sell for more than $4,000 each. Musumeci's excuse? He bought the guitars himself from a vendor on eBay . . .
Police Enforcement - August 2007
Mid-August featured two spectacular counterfeit roundups, with the highest impact being the arrest of a "designer" counterfeit ring operating on the upper floors of 1145 Broadway in the Flatiron District.
This particular building has repeatedly housed the counterfeit trade since at least 2004. In 2005, Littleviews wrote about this location in Counterfeit Merchandise Seized in New York City. And in November 2006, the building was busted again for its bootleg DVD operations. Since then, violations multiplied, prompting the Mayor's Office of Special Enforcement to get a court order to shut down the parts of the property that were continuously in violation.
According to a New York Post article on the subject, more than a million dollars of fake Louis Vuitton, Gucci, Coach, Prada, Prada, and Nike merchandise was seized, as well as 20,000 bootleg porn and standard CDs and DVDs.
The building owner, Sol Wahba of Brooklyn, must now negotiate with the city before parts of his building can be reopened. Legitimate businesses, however, unrelated to the counterfeit trade still operate on the ground-, second-, and fifth-floors.
Around the same time, a trucker smuggling $250,000 worth of bogus Nike sneakers was busted on the Triborough Bridge. The illegal haul was identified during a standard truck weight check. When the driver, Khattar Bazi, couldn't produce documentation for his cargo, police were brought in to check the trailer. The New York Daily News reported that a Nike investigator was also called to the scene to verify the cargo and as a result, the driver, Bazi, was charged with third-degree trademark counterfeiting.
Questions? Just ask!
|Read Littleviews' Series on Fake Bags and Counterfeiting in NYC:|
Copies are a Canal Street specialty, 7/6/03
How real designer bags compare with fakes, 8/6/03
Pictorial essay on illegal activity, 9/18/03
Learn about a TimeOut New York article on this subject, 9/26/04
Counterfeit merchandise seized in New York City, 6/30/05
Fake drugs, wine, handbags, and designer goods in New York City, 10/3/2006
Fake bags and counterfeiting in 2007 in New York City, 12/8/2007
Louis Vuitton Wins Federal Counterfeit Case in Manhattan Court, 10/26/2008
Counterfeitting Activity in New York - January 2009 through January 2010, 2/23/2010
Article by Karen Little. First published on 12/8/2007. All rights reserved by www.Littleviews.com.