A recent complaint, unsealed Dec. 27 in Brooklyn federal court, details how the U.S. targeted a Chinese importer of alleged counterfeits by intercepting more than a dozen large shipping containers in ports in New York, and intentionally allowing several more to pass through customs so they could follow the counterfeits to their destination. The complaint was first reported by Quartz.
The allegations indicate that the government targeted shipments that came in from 2012 to 2016, which they said contained counterfeit goods including fake sneakers, though they were outwardly marked as containing ventilation fans and plastic hangers. It’s not clear from the complaint what brands were part of the counterfeit shipments seized from 2012 to 2016. However, the goods, if they had been real, would have been worth some $472 million, based on the manufacturer suggested retail price for the products, according to the government.
“Ultimately, the shipping containers loaded with the counterfeit goods were never sent to the legitimate businesses listed on the manifests,” the complaint said. “Instead, once released from the port, the containers were shipped to various self-storage facilities within Brooklyn, Queens and Long Island, N.Y., where their contents were sub-divided for sale and delivery to wholesalers and retailers.”
Those shipments, as well as a cooperating defendant, helped point the government toward a Chinese importer who allegedly smuggled fake Nike and Louis Vuitton sneakers into the U.S. at various points in 2019.
Though $472 million is a high estimate — retailers tend to sell goods cheaper than the so-called MSRP — the complaint highlights how the U.S. Customs and Border Protection, the Department of Homeland Security and federal prosecutors work together to tackle the large influx of counterfeits. In fiscal year 2018 alone, the government seized $1.4 billion by MSRP value of counterfeit goods, according to the CBP.
The complaint is essentially a precursor to likely criminal charges against the alleged importer in this case, who the government alleges was part of a conspiracy to smuggle counterfeits from China.
A representative for the U.S. Attorney’s office for the Eastern District of New York in Brooklyn declined to comment.
“Respecting the rights of the defendant, U.S. Customs and Border Protection could not comment on the impending court proceedings,” a CBP representative said Thursday.
The complaint indicates also that law enforcement agents worked with authorized representatives for Nike and Louis Vuitton to ascertain counterfeits.
Representatives for Nike and Louis Vuitton did not comment.
The complaint shows how the government uses sting operations to target suspected counterfeits shipped to the U.S., said Peter Quinter, chair of the customs and international trade law group at GrayRobinson P.A., and a former attorney with the Office of Chief Counsel for U.S. Customs in Miami, in the early Nineties.
“Sometimes these undercover operations go on for years, where they move on from the guy selling Nikes on the street, to the importer,” said Quinter, who is not involved in the current case.
“Customs and Homeland Security want to go after actual importers, because they want to be able to identify all the people involved in the conspiracy, and seize as many assets as they can,” he said.
The CBP functions as the primary border enforcement agency, whose uniformed officers man air and sea ports, but the agency doesn’t itself conduct investigations. When it comes across suspicious shipments warranting investigation, the matter is turned over to the Department of Homeland Security’s investigations arm, whose agents are authorized to interview informants and other cooperating defendants.
Homeland Security agents can also make arrests anywhere in the country, while federal prosecutors would initiate any criminal charges at a court that has some connection to the alleged criminal activity.
In this case, the government alleges that the goods were smuggled in from China to be delivered to counterfeit wholesalers in Brooklyn and Queens, according to the complaint, which was filed in Eastern District of New York federal court in Brooklyn.