Authorities in Brooklyn last week arrested six people and seized knockoff designer goods having an estimated street value of $20 million in a sting on a counterfeiting ring, which operated as a wholesale showroom for the New York City black market.
This story first appeared in the April 27, 2009 issue of WWD. Subscribe Today.
As part of the yearlong probe by state and local agencies, investigators from the Kings County district attorney’s office posed as counterfeit sellers at a Stop and Stor storage facility at 534 63rd Street in Sunset Park. Authorities allege the site was used as an organized bazaar where retail buyers could come to view knockoff goods hung for display in one unit and pick up orders by the caseload in another.
Prosecutors charged Kai Fong Chen, 39, and Min Min Zheng, 24, with trademark counterfeiting in the second degree, a Class E felony with a maximum four-year sentence. Four others — Cheng Jun Lin, 43; Lian Min Guo, 34; Jian Lan, 45, and Xia Dong, 33 — were charged with trademark counterfeiting in the third degree, a Class-A misdemeanor.
The defendants were arraigned Thursday in New York State Court in Brooklyn. The judge released all six on their own recognizance, according to court records. The New York Legal Aid Society, which those records listed as representing the defendants, did not return a call seeking comment.
The investigation was a joint effort by the Kings County District Attorney’s Office, New York State Police and Waterfront Commission of New York Harbor. Counter-Tech Investigations Inc., a private firm, also aided in the operation.
Officers executed search warrants on 118 containers in two waves over the course of several days at the mazelike building, which houses 1,900 storage lockers. Their initial search of 38 storage spaces on Wednesday yielded information, which led them to obtain warrants for 80 more, authorities said.
In all, “Operation Store and Sting” seized more than 100,000 counterfeits of brands such as Polo Ralph Lauren, Coach, Gucci and Prada, as well as financial records related to the ring’s sales.
One item in particular drew the ire of Kings County District Attorney Charles Hynes at a press conference held inside the facility Friday.
Knockoff Ed Hardy bikinis, True Religion jeans and Louis Vuitton purses were laid out before him, but he focused on a pair of fake Nike Air Force Ones with a portrait of President Barack Obama printed over their trademark Swoosh.
“It’s frankly disrespectful to have the President of the United States’ face on this sneaker,” Hynes said. “It’s a disgrace.”
Authorities said the seized goods originated in China, and that most of the wholesale buyers were New York-area shops in the underground economy. The District Attorney’s office and its partners said they are still investigating as to whether the goods could have made it to more reputable retailers.
Hynes said because his office seized financial records along with the goods, it would be able to expand its investigation and it was “just a matter of time” before it could identify buyers. He added, though, that consumers own some of the blame for the counterfeiting problem.
“If the public really understood what they were doing to the economy of this country… [counterfeiters] wouldn’t be able to have this industry,” he said.
He cited studies that showed counterfeiting results in billions in lost sales and tax revenues every year and the loss of 750,000 jobs.
John Hennelly, chief of police for the Waterfront Commission, expanded on the point.
“Think about the sales tax revenue on $20 million worth of goods,” Hennelly said. “How many cops and firemen would that pay for?”
Coach echoed the sentiment Friday.
“Counterfeiters illegally profit at the expense of Coach and affect the entire economy through lost revenues and taxes,” a company spokesperson said. “Therefore, we very much appreciate the joint efforts of the Brooklyn D.A.’s office, The New York State Police, NYPD and Counter-Tech Investigations for their hard work and vigilance in this matter.”
Other brand owners also expressed their gratitude.
“We cooperate with authorities and applaud their work,” said Derek Kent, a spokesman for Nike Inc.
Ed Hardy chief executive officer Hubert Guez said, “We’re very happy and are going to continue to monitor our brands.”