Pride of Ownership

A piece in today's Financial Times of London from our own Frederick Mostert, Chairman and Co-Founder of the Authentics Foundation.

Negative Feedback

The Financial Times weighs in today with a nuanced look at the recent French court ruling against eBay. Taking the middle road, the Financial Times argues that while eBay cannot strictly be held accountable for the actions of its users, eBay must try to do more to combat the counterfeiting threat. Such measures, the Financial Times adds, would benefit eBay as well, lest it becomes seen as merely a gallery of rogues, counterfeiters, and cheats.

Commenting specifically on one aspect of the court ruling, the Financial Times takes issue with the finding of eBay's liability for legitimate goods sold on eBay that violate exclusive distribution agreements. Leaks in the supply chain, says the Financial Times, should be the sole responsibility of the manufacturer.

Mayor Bloomberg Orders Counterfeit Triangle Closed

Those who believe Canal Street's abundance of counterfeits are a permanent fixture may be surprised to learn that the infamous "Counterfeit Triangle" has been disbanded, as 32 shops were ordered shut last Tuesday in a series of major civil lawsuits. Mayor Michael Bloomberg noted that the operation was one of his "biggest takedowns ever," calling the profits from counterfeiting "easy and sleazy."

After an undercover investigation spanning 40 shopping sprees, over $1 million in counterfeit goods were seized.

“Whoever you are, wherever you are, we are going to shut you down,” Mayor Bloomberg said at a news conference in the main hall of a mall on Canal St which housed some of the alleged offenders. Speaking among clear plastic bags chock full of hundreds of the confiscated counterfeits, Mr. Bloomberg spoke of money laundering and bloody gang wars over prime counterfeiting turf.

"It is organized crime," he said of counterfeiting--which saps $1 billion in taxes from Manhattan per year.

To read more about the takedown, visit the NYT "City Agents Shut Down 32 Vendors of Fake Items."

Las Vegas Counterfeiter Enslaves Children in Sex Trade

An anti-counterfeiting researcher forwarded The Authentics Foundation an article from 2007 which we had previously not been aware of. On March 10, 2007, Mike Tobin of the Cleveland Plain Dealer wrote a piece titled "Las Vegas man admits arranging sex tourism." It outlined the shocking case of Russell Herman, 52, who plead guilty in U.S. District Court in Cleveland "to charges he operated a business that arranged for tourists to visit brothels with underage girls in Thailand."

Immigrations and Customs Enforcement first began investigating Herman in December 2005 because of a website on which he sold counterfeit Gucci, Prada and Rolex merchandise. Investigators then realized this counterfeiter was also arranging "for tourists to have sex with girls as young as 12. Many of the girls were kept padlocked in cells unless they were having sex, according to court documents."

"The ICE agent contacted Herman and asked about the availability of girls between the ages of 10 and 14, according to court documents. Herman replied, "Thailand is a lot of fun and you'll experience some incredible things here!!!"

Another ICE agent called Herman in November 2006 and said he was interested in traveling to Thailand, where Herman was living. Herman said that for $1,000, he would take the agent to a hotel where 15-year-old girls would be brought to the undercover agent's room.

A few days later, Herman met the undercover agent and took him to several places where they were solicited for sex. Some of the girls appeared to be as young as 12, the ICE agent said in court documents."

Source: Cleveland Plain Dealer

New York Times Editorial on Fakes

The New York Times' editorial board has been making a lot of newsworthy decisions lately--most notably their public endorsement of Hillary Clinton. But they took another big stance this month--against counterfeits. Featured as a main editorial on January 20, "The Real Price of Fakes" is a call to arms against an ever-present and expanding counterfeit market.

"With some $200 billion worth of those pirated or counterfeited goods coming into the United States each year, already weak regulatory agencies are overwhelmed. That means that far too often the burden falls on the buyer to avoid getting stuck with, or hurt by, hazardous fakes. That is not always easy, and the horror stories in recent years have included pet food that harmed or killed hundreds of pets in the United States. More recently, counterfeit batteries have been recalled because they tend to overheat and even explode."

Read the full editorial here.

PICA Seizes $10 Million in Counterfeits, Linked to Cleveland Drug Trade

The PICA Corporation, along with the FBI and ICE, have closed a one year investigation on Cleveland based retail stores proved to be selling counterfeit goods. On December 3, 2007, search warrants and cease and desist orders were issued to five 360 Clothing Studios and one store named Jazzy Looks.

Among the $10 million dollars of seized counterfeit products were also drugs and stolen property. 200 pounds of marijuana and two kilos of cocaine were found with 25,000 pairs of counterfeit shoes and 40,000 pieces of copycat apparel.

"The 360 Clothing Studios were one of the largest suppliers of counterfeit footwear and apparel in the greater Cleveland area. They attempted to legitimize counterfeit product by introducing it into retail stores in the area," said Tim Richissin, PICA operative.

The crime ring of ten people was charged with drug trafficking, burglary, receiving stolen property, weapons violation, trademark counterfeiting and criminal simulation.

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UN Ties Counterfeits to Organized Criminals

Long have experts been linking the multi-billion dollar counterfeiting enterprise with organized crime across the world. The latest political leader to address this serious concern is Sandro Calvani, director of the U.N. Interregional Crime and Justice Research Institute, who just compiled a report calling counterfeits a "21st century gold mine" for criminals who exploit trade routes also used in the drug trade, gun running and human trafficking.

"It is an immense source of profits which are readily reinvested in other illegal activities or used to launder money derived from other crimes," said Calvani.

The UN report discussed links between counterfeit CDs, DVDs, luxury goods and electronics and gangs including the Camorra in Naples, mafia in Russia, as well as Japanese Yazukas.

Read more about the UN report here.

Court orders destruction of fake Honda engines

Philippines--RTC Judge Roberto Chiongson has ordered the destruction of 22 faker Hondo general purpose engines. Chiongson issued search warrants against three business owned by Jose Zulueta in Bacolod and Iloilo, establishments raided in 2005 by the National Bureau of Investigation. As the month of October is Intellectual Property Rights month in the Philippines, Honda officials made public speeches concerning the importance of IP to students at the De La Salle University.

Honda's legal counsel--including Brigido Valmadrid highlighted anti-counterfeiting policies in Asia and the Philippines at the lecture, emphasizing the dangers of buying and using inferior products.

Before the destruction of the counterfeit engines, Honda held a presentation on how to spot a fake engine from the genuine product. Honda noted that counterfeit auto parts can cause fatalities--just one of many reasons why we should all steer clear and purchase through reputable channels.

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Girl Who Came to U.S. for School Busted at Illegal Sweatshop (NY Daily News)

16-year-old Letitia Clemente left her parents corn farm in Mexico last year to learn English in America. She soon became one of 11 workers working 10-hour-days sewing counterfeit Izod, Fubu and NFL gear just to make ends meet. Meanwhile, the counterfeiters running the operation--Jung Ryu and his wife Ji Yung Ryu--sat comfortably in a $1.5 million home in Melville, Long Island. Read what happened to their College Point Factory here.