Counterfeit fashion products — bearing names like Burberry, Coach, Fendi, Prada, Louis Vuitton and True Religion — represented 93 percent of the total $76.8 million worth of products seized by federal authorities in the U.S. as part of a six-week sting operation that spanned the U.S., Mexico and South Korea.
A multiagency federal task force conducted the operation in the U.S., dubbed “Operation Holiday Hoax,” at ports, retail outlets and swap meets across the country for 46 days beginning on Nov. 1, the start of the holiday season.
Among the 327,000 counterfeit items seized, bogus apparel, accessories and footwear items figured prominently in the U.S., accounting for $71.3 million of the total, Lev Kubiak, director of the National Intellectual Property Rights Coordination Center, told WWD.
Authorities also seized fake cell phones, chargers, DVDs, perfume, computer software and sports jerseys as part of the bust.
An additional $7.1 million worth of counterfeit products was seized in Mexico, bringing the total operation’s seizures to slightly under $84 million, Kubiak said.
The scope of the operation was massive, covering 66 cities in the U.S. and 55 cities in Mexico as well as Seoul, leading to 33 arrests in the U.S.
Among the other fake fashion items found were labels from Jimmy Choo, Rolex and Ugg products, officials said.
In Los Angeles alone, authorities seized $4 million worth of counterfeit merchandise, including clothing with fake trademarks. Approximately 70 percent of the counterfeits seized in Los Angeles were falsified True Religion apparel products, amounting to roughly 16,000 units, 20 percent were labeled The North Face, 5 percent Gucci and the rest bore the names of other brands.
“We are always pleased when customs finds a large shipment because that tells us that our efforts in trying to eradicate counterfeits are working, and we know that this product is not going to get out on the streets,” said Deborah Greaves, secretary and general counsel for True Religion Apparel Inc.
No arrests have been made yet in connection with the seized counterfeit apparel in L.A., but Kevin Kozak, deputy special agent in charge of U.S. Immigrations and Customs Enforcement, expects apprehensions soon. “We are often asked why aren’t arrests immediately made. We need to prove knowledge and intent, and look at each element of the federal offense,” he said, adding, “We are not looking at those merely responsible for the low-end labor. We are going after those who are responsible for the manufacturing, importation and distribution.”
In the U.S., the task force included U.S. Immigration and Customs Enforcement, U.S. Customs and Border Protection, the U.S. Postal Inspection Service and Consumer Product Safety Commission. Mexican and South Korean authorities also participated in the operation.
“Literally these days, counterfeiters will counterfeit anything that they can make a profit on with name-brand recognition,” said Kubiak. “We see everything from brake parts to automobile and airplane parts…but the majority of what we see is typically [counterfeit] footwear and clothing in the luxury goods market as far as quantity.”
As counterfeit operations adjust to the down economy and law enforcement diligence, Greaves warned that premium apparel makers aren’t the only ones that now have to deal with counterfeiters. “They have resorted to doing some lower-priced items because they have got these factories that are not busy, and they need to keep them busy, so now they will just counterfeit anything,” she said. “You don’t have to be a Louis Vuitton or a Gucci; you could be a Lands’ End or an Old Navy and possibly be counterfeited.”
Kubiak said the Mexican government contributed significantly to the operation, and, as part of their efforts, seized 10 tons worth of counterfeit clothing. Mexican authorities conducted 845 inspections at main ports of entry, executing 160 search warrants in Mexico and seizing 2.3 million pieces of counterfeit items.
Brands have spent millions of dollars to combat counterfeiting and were left largely on their own in the past to go after fake goods through civil enforcement actions. But companies that have worked with ICE and the National Intellectual Property Rights Coordination Center that it manages said there is now a new level of commitment from federal authorities.
In the most recent government data for counterfeit seizures — the fiscal year ended Sept. 30, 2010 — fashion products were among the top 10 items seized by U.S. officials. Federal officials reported that the volume of counterfeit seizures increased by 34 percent to a total of 19,959, valued at $188.1 million. Authorities believe that figure will be surpassed in fiscal year 2011, although the data haven’t been finalized yet.
Customs and ICE officials seized $45.7 million worth of bogus footwear, the top commodity seized in that fiscal year. Authorities seized $18.6 million worth of counterfeit apparel, giving it a ranking of third and representing 10 percent of the total value of seizures. Seizures of fake handbags, wallets and backpacks totaled $15.4 million, representing another 8 percent of the total, ranking it fourth, while, ranking ninth, seizures of jewelry were $6.7 million and accounted for 4 percent of the total.
For True Religion, Greaves said the level of counterfeiting has remained consistent in recent years, but the ways in which counterfeiters sell fake goods has changed. “We see more Internet sales from Web sites based in China, where they are actually shipping items using EMS or a similar carrier and sending items one at a time rather than bulk shipments,” she said. “You used to have a lot of bulk shipments, and law enforcement methods over the last few years have been so diligent and so many people have lost their product that they don’t want to risk holding onto product.”
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