A federal jury in Richmond found two New York importers guilty in a landmark case involving more than $100 million in counterfeit luxury goods.

This story first appeared in the June 14, 2010 issue of WWD. Subscribe Today.

In one of the largest luxury counterfeit goods prosecutions in U.S. history, Chong Lam and Siu Yung Chan, also known as Joyce Chan, were each convicted of one count of conspiracy to traffic in counterfeit goods imported from China, two counts of trafficking in counterfeit handbags, wallets, purses and carry-on bags and two counts of illegally smuggling counterfeit goods in the U.S. A third defendant, Eric Yuen, was found not guilty of the same charges. The three were charged in January 2008.

Evidence presented at trial showed that Lam and Chan, along with their co-conspirators, operated an extensive international manufacturing, import and wholesale counterfeit goods business. Lam and Chan were controlling officers of at least 13 different companies in the U.S. and overseas, and were running at least eight separate factories that produced counterfeit bags, according to the Department of Justice.

“The Department of Justice will continue aggressively to prosecute intellectual property crimes and to protect business and consumers alike from those looking to cheat their way to a quick profit,” Lanny Breuer, assistant attorney general, said.

“This case is about economic identity theft and blatant disregard of the law,” said U.S. attorney Neil MacBride. “These convictions reinforce the integrity of our nation’s intellectual property laws that the eastern district of Virginia is committed to enforcing.”

From 2002 through October 2005, U.S. Customs and Border Protection seized numerous containers of counterfeit luxury handbags and wallets imported from China. A subsequent U.S. Immigration and Customs Enforcement investigation disclosed that Lam and Chan imported over 300,000 counterfeit goods into the U.S. from China in the names of different companies, all under their control.

In January 2008, ICE investigators searched the defendants’ business address, Coco USA, in Manhattan, and seized about 1,500 cartons of alleged infringing items. According to the government, the total value of corresponding authentic luxury goods manufactured by Burburry, Louis Vuitton, Gucci, Coach, Fendi, Chanel and others is estimated to be worth over $100 million.

Lam and Chan each face a maximum of five years in prison and a $250,000 fine for the conspiracy count, 10 years in prison and a $2 million fine for each trafficking count and five years in prison and a $250,000 fine for each smuggling account.

The government is seeking forfeiture of the illicit proceeds of the enterprise, including funds that the defendants had transferred to bank accounts in the U.S. and overseas in the names of businesses under their control, as well as three properties in New York. All of these assets had previously been frozen by court order.

Sentencing is scheduled for Sept. 15.

Lam and Chan were ordered to pay Louis Vuitton more than $3.5 million in damages for trademark infringement in October 2008.

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