Calling it the largest enforcement action against counterfeit goods on the West Coast, U.S. Immigration and Customs Enforcement said Tuesday that a long-term investigation involving $100 million of counterfeit luxury goods has led to the indictments of 11 merchants and clerks from San Francisco’s Fisherman’s Wharf district.
A 25-count indictment charges the defendants with trafficking in counterfeit goods, smuggling and conspiracy. ICE revealed details of the case late Tuesday, after it was unsealed Monday in federal court. ICE said agents seized apparel and accessories bearing fake trademarks of more than 70 brands, including Coach, Kate Spade, Nike, Oakley, Armani, Burberry, Louis Vuitton and Prada. Goods seized included clothing, jewelry and watches, scarves, handbags and wallets, sunglasses and shoes.
The investigation by ICE and Homeland Security Investigations agents into the Fisherman’s Wharf retailers started in December 2007 when U.S. Customs and Border Protection officers intercepted a container at the Port of Oakland containing more than 50,000 counterfeit accessories valued at more than $22 million. The seizure gave the agents the information necessary to target a total of eight shops, as well as nine residences and three storage units in the San Francisco and San Leandro areas over the next several months.
The 11 defendants face penalties of up to 20 years in jail and a $250,000 fine for smuggling goods, 10 years in prison and a $2 million fine for each count of trafficking in counterfeit goods, and five years in jail and a $250,000 fine for conspiring to traffic in counterfeit goods, according to ICE. The case is being prosecuted by U.S. Attorney Deborah Douglas and is part of the Justice Department’s Intellectual Property Task Force.
“To consumers who think designer knockoffs are a harmless way to beat the system and get a great deal, ‘buyer beware,’” said John Morton, director of ICE. “Trademark infringement and intellectual property crime not only cost this country much needed jobs and business revenues, but the illegal importation of substandard products can also pose a serious threat to consumers’ health and safety.”
Federal officials have increased their focus on stopping the flow of counterfeit goods into the U.S. In April alone, ICE seized an estimated $260 million of fake apparel, accessories and other merchandise, a record month for seizures. In the first half of 2010, the agency has already initiated 560 intellectual property cases. In fiscal 2009, ICE initiated 806 intellectual property theft cases, up from 643 in 2008.
The domestic value of goods seized for intellectual property violations in 2009 was $260.7 million, according to statistics from Customs & Border Protection. Sales of counterfeit goods cost legitimate businesses an estimated $250 billion a year in lost sales and revenues worldwide, and are responsible for the loss of 750,000 jobs, according to estimates from the International AntiCounterfeiting Coalition.