NEW YORK — Fifty New York City Police Department and U.S. Homeland Security officials swept into a Queens storage facility Tuesday afternoon to seize counterfeit goods with an estimated street value of $2.2 million.
The well-executed 30-minute operation, known internally as “Operation Treasure Hunt,” was the culmination of a seven-month investigation that resulted in seven arrests at Treasure Island Storage at 190-09 180th Street.
This story first appeared in the December 10, 2014 issue of WWD. Subscribe Today.
As torrential rain doused the streets of Queens shortly before 1 p.m., an assortment of unmarked cars trailed a few of the suspects from their homes or kept track of their location from parked cars. When it was time to take action, a fleet of cars made their way to Treasure Island Storage and officers entered the sprawling 1,100-unit facility while a few others remained outdoors guarding the various exits. When approached, the accused stopped cold, in some cases while dealing with customers. One suspect tried to nonchalantly close the grate to her storage unit, as investigators approached.
Police arrested Nanqing Zhang, 31; Wei Wei Dong, 32; Pizhong Zhou, 22; Sai Chen, 39; Ying Jian Xi, 38; Chen Chin Chu, 42, and Wei Liao, 41.
Medeco locks, what one investigator described as “the Louis Vuitton of locks” appeared to be the security measure of choice. They proved to do the trick, as it took some time for police officials to snap them with a rotating saw.
Knockoff Michael Kors, Chanel, Louis Vuitton and Gucci handbags were neatly displayed in several of the units, piles of North Face jackets, Gucci watches and stacks of boxes of fake Ugg boots also filled several of the areas. One storage unit had a table full of copycat Gucci and MCM wallets, as well as imitation Beats by Dr. Dre headphones, Hermès-inspired belts, Nike sneakers and Kors flip-flops. Some of the reproductions, such as a Gucci messenger bag, were surprisingly similar to an authentic version, the packaging for some of the items was also close to the real deal. An assortment of Hermès belts was coiled in what looked like the luxury brand’s signature tangerine box with a pebbled exterior.
While some of the dealers sold directly to consumers, others also sold to distributors who then sold the knockoff goods themselves. At least one of the accused had also set up what police described as “a filler room” in another storage unit, which basically served as a mini-distribution center to stock inventory for its storelike unit at Treasure Island Storage. Six bins worth of goods were seized. While some counterfeiters sell knockoff goods to fuel drug dealing or other illegal trades, investigators consider Tuesday’s arrests to be rooted solely in counterfeit goods.
Upon arrest, one or two of the accused acted as though they did not speak English though investigators were not convinced that actually was the case. NYPD Capt. Brian Sayre said, “They can tell you that they have a child at home who needs to be met at the school bus but they can’t tell you their name. You know what I mean? They know what’s important and what’s not important.”
The suspects are facing felony charges that could lead to a year or more of jail time, or potential civil penalties. The Queens District Attorney will prosecute the case.
Sayre, who was overseeing the sweep, said, “With a lot of them, I think they’re just hoping you’re not going to their business.” Sayre, who works in the Organized Crime Investigation division, supervises a couple of different teams including the trademark infringement unit. The team’s Homeland Security officials come from its Intellectual Property Rights division.
When one suspect’s whereabouts delayed the start of Tuesday’s raid, Sayre and his team were in near-constant contact via handheld radios. He also took a few minutes to discuss some of the challenges of cracking down on counterfeiters. “It’s almost like a spider web. You don’t know where it ends. The way to get to it is to try to get the midlevel dealers and see who sells to them. That way we can work our way up to the tops of these organizations,” Sayre said. “It’s not just bags and things that people wear. They’re doing [fake] cosmetics, makeup so there is a concern about how these things are made.”
Waiting a few blocks from Treasure Island Storage, Sayre said he didn’t think any of the suspects had any kind of inclination that they were about to be arrested. “It’s almost as though they think they’re not committing a crime because no one is getting hurt. If they get arrested once or twice, it’s part of doing business,” he said.
In one unit that had about 40 boxes, one box alone had around 40 Kors knockoff bags. When one observer noted that “his fakes are sold in every subway,” Sayre added, “Yeah, he’s in every storage bin too. They’re not selling the [phony] purses for extreme amounts of money but when you factor in what Michael Kors could be sold for…”
Further complicating investigators’ efforts is the fact that often handbags, as well as garments, will be sent through customs without a label of any kind. The labels will be shipped in a different package at a later time. “Even if you find a shipment of generic purses, you don’t have a crime committed — until they put the labels together.” Sayre said.
In addition, a significant amount of the goods appear to have been produced or to have been sourced from Asia, according to investigators. “We don’t have a lot of Asian undercover officers or informants, so it’s hard to break into their little world other than buying their merchandise,” Sayre said.
As for whether Sayre ever fears for his safety during raids such as Tuesday’s, he said, “I’m always cautious about it and I remind my guys all the time that we never know what’s going to happen. This is a significant amount of money for a person. There is always a chance that someone is going to snap over that. They’re not going to want to give up their property or their money, so we remind them of that before we go out. We try to remain as vigilant as we can. It’s different when we’re smashing doors open and looking for drugs and guns, and you know there’s a bad guy in there.”
With most of these midtier counterfeiters selling their goods almost strictly on an all-cash basis via word of mouth, investigators initially put their search in motion by having undercover NYPD officers purchase a few items from the accused and then gradually earn their trust over time to buy more goods. Prior to the raid, Sayre said that all of the suspects were subject to arrest for that reason regardless of what was found in their respective storage units.
As of Tuesday, police had no knowledge or evidence that the management of Treasure Island Storage had any hand in the illegal sales that were taking place on its property. However, upon entering the Queens facility visitors must stop at a sizeable reception desk which has two banks of video monitors showing a myriad of real-time shots in the labyrinthine building. In addition, several of the suspects were in the habit of keeping the gates of their respective storage units open to show off their goods throughout the day. “Whether they’re taking money from these people or not, you’d have to be blind not to know this is going on here.”
Further compounding the problem is the fact that many consumers and tourists know “with a wink” that they are buying counterfeit products, Sayre said. Buying from a storage facility may make people feel a little more comfortable rather than buying bags displayed on a sheet on Canal Street, he added.
For the fiscal year 2013, Homeland Security reported the number of intellectual property rights seizures increased 7 percent to 24,361 compared to fiscal 2012. In addition, the manufacturer’s suggested retail price of the goods, had they been genuine, jumped 38 percent to $1.74 billion.
Just last week NYPD made three arrests for selling counterfeit goods — two on Mulberry Street and one in Midtown as well as a few more in the Bronx, Sayre said. “Companies are losing money because they’re not getting these sales. I think if someone wants a Michael Kors purse they’re going to buy one whether it’s legitimate or counterfeit,” Sayre said.
Getting designers, luxury brands and other companies more involved with anticounterfeiting measures is a priority. “I am trying to reach out to more people so that we’re not just running around quite as much, and our work is more intelligence-driven and focused so we know where to go,” he said. In turn, brand owners can reach out to Sayre’s team when they dig up counterfeit goods so that both parties might have a dual investigation.
Given how counterfeiting primarily runs on an all-cash basis in what essentially amounts to a storelike atmosphere, Sayre said, “It’s a store that’s not paying rent, they’re not paying taxes and they’re selling the goods for 10 percent of the price [authentic brands charge at retail.]”
One investigator, who requested anonymity, said, “You really have to give them credit. You have to really know your stuff to know a lot of this is fake. We know it’s fake because it’s what we do, but other than that…”