The federal government said it had seized enough counterfeit Gucci bags, Hermes belts and Tory Burch purses to fill 22 shipping containers, in a six-year investigation into the importation and sale of fake luxury goods that ended today with charges filed against 33 people.
The individuals were charged with conspiracy, trafficking in counterfeit goods and trademark counterfeiting.
The goods were part of a scheme originating in China that stretched to warehouses in New York and even to retailers in Illinois and California, officials from Homeland Security Investigations, a branch of the US Customs and Immigration Enforcement agency, announced at a news conference in New York on today.
"This is the largest investigation that our agency has had regarding the amount of counterfeit items," Angel Melendez, the special agent in charge of Homeland Security Investigations in New York, said in an interview.
The goods seized were knockoffs of popular brands, including Gucci, Tory Burch, Hermes, Coach, Burberry, Michael Kors and Louis Vuitton. There was knockoff Chanel perfume, too, which concerned investigators since previous schemes had involved using animal urine instead of the perfume company's formula.
Officials estimated that the loss in retail value to the United States was nearly a half-billion dollars. In 2012, federal officials in Newark, New Jersey, charged 29 people with trying to smuggle US$325 million ($493.3m) worth of fake goods into the country.
Melendez said at the news conference that 32 of the men and women had been arrested. All of them are of Chinese heritage. One was living in the country illegally.
Melendez said the federal government had attacked the supply chain rather than going after people who sell counterfeit goods on the streets.
The investigation began in 2012, when Customs and Border Protection agents at the Port of Newark noticed anomalies in a shipping manifest; upon opening a 40-foot cargo container, the agents inspected the goods and realized they were counterfeit, said Leon Hayward, assistant director of trade and cargo security for the border agency.
Melendez said the fraud scheme had two parts. In one, counterfeit goods were made in China and then shipped to the United States through as many as eight legitimate shipping companies.
The importers represented themselves as employees of legitimate importing companies with email addresses and phone numbers. The goods were trucked to warehouses in New York City and Long Island, and then wholesale distributors sold the goods to other distributors.
In the other part of the scheme, he said, defendants traveled to China to purchase generic items, which could be exported legally. A separate factory then produced knockoff logos, which were smuggled into the United States and affixed to the goods.
Three retail businesses in the borough of Queens and two in Manhattan were part of the scheme, Melendez said, adding that they had closed.
But an employee at one of the businesses identified by officials, Proya Fashion, in the Manhattan garment district, said it was still operating, and insisted that no one was arrested. The employee hung up before giving her name.
None of the other businesses could be reached for comment.
Twenty of the containers came in through the Port of New York and New Jersey, and two through the Port of Los Angeles, Melendez said.
As part of the indictment, officials for the agency, known as ICE, said they also seized personal property belonging to the defendants in the New York metropolitan area worth a total of US$12m.
ICE is better known for its operations in domestic immigration enforcement, which have led some Democratic candidates around the country to call for the agency to be abolished.
Some officials within Homeland Security Investigations, which conducts investigations of crimes such as counterfeit goods, money laundering, drug trafficking, human smuggling, child exploitation and cybercrimes, have sought to distance themselves from immigration enforcement.
In June, 19 investigators sent a letter to Kirstjen Nielsen, secretary of the Department of Homeland Security, requesting a stand-alone agency.
Ronald Vitiello, deputy director of ICE, who had come to New York for the announcement of the investigation, said that the agency's two arms should remain together.
"I think the work that both big halves of the organization do are mutually dependent," he said.
"Part of my vision going forward is to make sure each of us understands that."
- New York Times