By and  on October 3, 2007

NEW YORK — American production is seeing an uptick — unfortunately, it's the wrong kind.

A federal crackdown on counterfeit imports could be driving an increase in domestic output of fake merchandise, according to investigators and industry executives.

A raid carried out by the New York Police Department on Monday of a commercial building in the College Point section of Queens resulted in 13 arrests and the seizure of an estimated $4 million in counterfeit apparel bearing the logos of brands such as The North Face, Polo, Lacoste, Rocawear, Seven For All Mankind and Fubu. The raid also uncovered a trove of tags, buttons and labels of brands such as Apple Bottoms, Baby Phat, Tommy Hilfiger, Nike, Adidas and Enyce.

While the seizure of three tractor trailers worth of counterfeit merchandise was significant in itself, it was the discovery that the location was being used as a finishing facility for fake goods that has raised new concerns that counterfeiters may be shifting their tactics in an effort to circumvent U.S. Customs. Among the floor-to-ceiling stacked boxes of bogus North Face jackets and National Football League jerseys were four embroidery machines, each capable of putting trademarked logos on up to 18 garments at a time. Sources said the facility easily could embroider thousands of apparel items in a day.

The alleged leaders of the ring, Jung-Ho Ryu and his wife, Ji Young, were arrested Monday and are accused of importing blank shirts, jackets and jeans — primarily made in China — and then finishing the goods with trademarked embroideries, buttons and labels. A spokesman for the NYPD said the Ryus and their workers will face charges ranging from felony trademark counterfeiting to criminal possession of forged instruments.

Finishing goods in the U.S. to avoid Customs seizures isn't a new strategy for counterfeiters, but it's one some private investigators and intellectual property lawyers are beginning to see more frequently.

Kevin Dougherty, president of private investigators Counter-Tech Investigations Inc., which was involved in the case, said it was the first time he had encountered a domestic manufacturing operation in nearly a decade. Dougherty attributed the change to the increasingly successful efforts of U.S. Customs in seizing counterfeit goods before they enter the country.

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