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Beauty Beat: 6 Arrested in Counterfeit Scent Case… EU to China: Ease Import Policies

Counterfeit handbags and apparel have long been hot buttons in the news - now fragrance is poised to join the ranks.

NEW YORK — Counterfeit handbags and apparel have long been hot buttons in the news — now fragrance is poised to join the ranks.

Six foreign nationals were arrested late Tuesday in what is being billed as the first criminal counterfeit case involving fragrances in Manhattan, said sources close to the investigation. And it’s unlikely to be the last, said a source, adding the arrests are expected to be the first in a series of criminal seizures of fraudulent fragrances.

New York police officers on Tuesday raided Price Right Perfume and Watches, located at 1205 Broadway, which was stocked with hundreds of bottles of fragrance bearing the names of leading scent brands, including Armani, Ralph Lauren, Chanel, Kenneth Cole, Liz Claiborne and Davidoff. More than 600 bottles of fragrance, with a total retail value of $36,000, were identified as counterfeit and immediately seized, a police spokesman said Wednesday.

Two members of L’Oréal’s corporate security staff were on site to identify fraudulent fragrances. Both declined comment.

Another source estimated the store’s total inventory — much of which will need to undergo testing by the respective companies involved — had a value of close to $3 million at retail. The source added that more than $100,000 in cash was also seized.

Each of the six men arrested was charged with trademark counterfeiting, a police spokesman said. The names of the suspects and their ages had not been released as of press time.

Officers from the Midtown South precinct, who made the arrests, declined comment at the scene.

Martin Ficke, former special agent in charge of Immigration and Customs Enforcement/Department of Homeland Security, and chief of operations for SES Resources International, a consulting firm, noted that most arrests of this type involve civil litigation, but this particular case could be tried first as a criminal matter, then as a civil issue.

Ficke is working with the Fragrance Foundation, a number of leading fragrance companies and the NYPD to provide assistance in anticounterfeiting matters, he said. “We’re doing this because the government doesn’t have the resources to do this themselves,” he said, another reason most cases of this type end up being tried civilly rather than criminally. Criminal prosecutions require a higher standard of evidence than civil prosecutions. “So we work with them to help build a case, working with former cops and agents who know how to conduct an investigation and how to work within the rules of evidence.”

This story first appeared in the October 18, 2007 issue of WWD.  Subscribe Today.

Because fragrances are applied to the skin — and some counterfeits have been shown to include additives such as urine and antifreeze — fakes can pose a significant public safety issue, said Bradley Schnur, president and chief operating officer of SES and a former assistant district attorney in Brooklyn. “It’s a health issue, in addition to hurting companies in the pocket,” he said.

Concerning the shop in question, “We’ve been here on 10 separate occasions and made undercover buys, and each time the items have proven to be counterfeit,” said Ficke. That information was shared with the NYPD, which then obtained a search warrant for the shop.

The next step? “To try to determine how this merchandise was brought into the U.S.,” said Ficke. Most of the counterfeit items are believed to be manufactured in China or Dubai, said Schnur.

China has long been the number-one source of counterfeit goods of all types to the U.S. Counterfeit and pirated goods from China accounted for 81 percent of the total value of all merchandise seized in the U.S. last year, worth $125.5 million, according to the Customs and Border Protection bureau.
— Julie Naughton

EU to China: Ease Import Policies

GENEVA — The European Union called in a World Trade Organization forum this week for China to scrap its alleged cumbersome, and discriminatory, approval procedures for imported cosmetics.

Brussels claims China’s import procedures differ from those that apply for domestic cosmetics that do not fall under the special use category.

“For imported products, a multitude approval procedure is still compulsory, leading to extensive workload, misallocation of personnel and financial resources and delays in product introduction to the market,” the EU said in a written communication requesting comments from China.

Brussels also argued this measure “is likely to invalidate China’s WTO commitments” and called on Beijing to unify the notification currently in force for imported and domestic (non-special use) cosmetics.
— John Zarocostas