A handful of tourists strolling along the Presidio’s Crissy Field Tuesday morning were drawn to a booth displaying Louis Vuitton bags, Coach wallets, Oakley sunglasses and other designer goods. Upon closer inspection, it became clear that these items were not for sale. Rather, these items once belonged to San Francisco merchants who were involved in trafficking counterfeit apparel and accessories worth millions of dollars. They are now property of the U.S. Department of Justice and soon to be destroyed.
Surrounded by these counterfeit goods, U.S. Attorney Joseph Russoniello and U.S. Immigrations and Customs Enforcement Director, John Morton, proudly announced that after a two-year investigation, the owners and operators of eight shops in San Francisco’s Fisherman’s Wharf district and several of the stores’ employees are being charged in a 25-count indictment as part of a federal enforcement action taken against the retailers suspected of selling counterfeit designer apparel and accessories, such as these.
“This is the single largest counterfeiting case ICE has ever conducted against retailers on the West Coast,” Morton announced.
Not only did Morton and special agents in ICE’S Office of Homeland Security Investigations (HIS) expose eight San Francisco stores and indict 11 defendants, they seized well over 200 thousand individual counterfeit goods, whose legitimate retail value would have been close to $100 million. Over 70 different brands were counterfeited, both foreign (Channel, Gucci and Louis Vuitton) and American (Oakley, Nike and Coach).
“The significant impact of trafficking in such merchandise on the American economy should be obvious. Wherever evidence leads to the identification of persons engaged in that enterprise, the Department of Justice will vigorously pursue the case and prosecute the offenders,” U.S. Russoniello said.
The eleven individuals, ten of whom have been apprehended, began making their initial appearances in magistrates court in San Francisco yesterday morning. They’re facing charges that carry charges penalties in the case of 20 years for smuggling, 10 years for trafficking and 5 years for conspiracy. The Indictment, which was filed in federal court on July 22 and unsealed yesterday morning, charges the defendants with all of these offenses: conspiracy, smuggling goods into the U.S., and trafficking counterfeit goods.
The investigation began in December of 2007, when alert inspectors at U.S. Customs and Border Protection intercepted a “suspicious” shipping container in the port of Oakland, bound for C&K Gifts, a store owned by one of the defendants being indicted in this case. The container held over 50 thousand counterfeit items, sent from China under false invoice and shipping documents. The seizure of this container set into motion a long term, undercover investigation by HIS agents, that ultimately led to today’s indictments.
U.S. Attorney Russoniello ended the press conference by saying that the Federal Government is involved in enforcement activities in order to make our communities safer for the public, but also to ensure the integrity of the marketplace and to create a level playing field in the environment of commercial enterprise.
“[Involvement in] counterfeit goods is not just a game, not something that people work the corners and take advantage of; it undermines the entire retail marketplace; it creates an uncompetitive environment for retailers who are trying to play by the rules; it creates for the customer confusion and uncertainty about the quality of goods that bear very important labels, that developers have spent enormous amounts of money creating the branding for; and of course it creates enormous dysfunction of the whole business of warranty and reliability of the product and cost industry a veritable fortune, in having to best it can, work to interdict goods that it knows are ripping off its on product,” Russoniello said.
Russoniello made it clear that interdicting and destroying counterfeit and trademark infringing goods has long been a priority of the federal government and people who are even thinking of getting into this business “should think twice.”
The charges made today are part of a larger department-wide effort by the Department of Justice’s Intellectual Property Task Force (IP Task Force), which was created by Attorney General Eric Holder to combat the growing number of domestic and international intellectual property crimes.
Photos: Julia Wallerstedt for the Appeal