Feds targeting counterfeit merchandise

The makers of Coach, Gucci, Versace and Kate Spade only sell their products in high-end stores such as Neiman Marcus and Macy's, according to Richard Logue, a private investigator from Bowie drafted by the designers to help protect their trademarks.

Gift World, located in a strip mall between a nail salon and a barber shop, just didn't measure up.

"That was the biggest tip," said Logue, a former detective with the Prince George's County Police. "Without even walking in I could tell these weren't legit. Even a regular citizen would be able to tell right away."

If there was any doubt, though, there also were loose Dolce & Gabbana and Jimmy Choo emblems stashed in a corner of the store, labels inside many of the purses indicating they were made in China, and price tags selling the handbags for a fraction of the manufacturers' list prices.

Zhi Cheng Lin, the owner of the shop at 322 Hospital Drive from which federal agents and county police last December seized more than $350,000 worth of knockoff purses, pleaded guilty last week in county Circuit Court in Annapolis to one count of trademark infringement. The 38-year-old Rockville man was granted a probation before judgement, ordered to pay $2,724 in restitution and placed on two years probation.

The raid - a rare occurrence in Anne Arundel County - and subsequent conviction come as federal customs agents and prosecutors work to crack down on the importation and distribution of counterfeit merchandise across the country.

"Intellectual property crimes are a top federal priority," said U.S. Attorney Rod Rosenstein, noting that he is in the process of hiring a prosecutor to handle cases involving nothing but violations of federal trademark laws.

And while his office currently focuses more on suppliers - like the nine men charged in March with trying to smuggle 120,000 pairs of counterfeit Nike shoes and 500,000 counterfeit Coach handbags through the Port of Baltimore - he said his staff could pick up more cases like Lin's in the future.

"Anyone who is profiting from the sale of counterfeit goods definitely should be aware they could face federal prosecution," he said.

Scope of problem

Hard statistics regarding the scope of the problem are unavailable, since counterfeiting is illegal and those behind the manufacturing and sale of the products do not report their activities to any government or association.

The International Chamber of Commerce estimates counterfeit goods account for between 5 and 7 percent of world trade. The International AntiCounterfeiting Coalition - a nonprofit organization representing members of the auto, apparel, pharmaceutical and software industries - claims counterfeiting costs U.S. businesses $200 billion to $250 billion each year.

State, federal and industry officials argued last week there are more than just economic reasons to enforce the nation's trademark laws. They said proceeds from counterfeit goods - whether they be knockoff handbags, unauthorized football jerseys or pirated software - help support sweat shops, organized crime and even terrorist organizations.

"They have factories with kids locked to tables making this stuff," Logue said.

Gift World raid

Located down the road from Baltimore Washington Medical Center in Glen Burnie, Gift World was a long way from the Chinese factories that manufactured many of the purses and wallets that lined its plywood shelves.

It's unclear how Lin got his merchandise, but federal officials said they must have been smuggled into the United States. U.S. Immigration and Customs Enforcement (ICE) officials seize counterfeit items whenever they can stop them at the border.

The store's inventory came to light with the help of a shopper, according to Logue. The shopper called Coach, who in turn called Logue, who in turn called county police and ICE.

Two undercover customs agents purchased five purses Dec. 4 and Logue deemed all five counterfeits. Four days later, armed with a warrant, police and federal agents raided the store and seized hundreds of purses, wallets and scarves. According to court documents, the stitching was "substandard" and the labels were "aftermarket." Logue said many of the purses were "pretty decent" copies manufactured in Chinese factories. Others, he said, were just cheap purses to which Lin or one of his employees attached a designer emblem. Several loose emblems were found in the store, he said.

Sharon Chu, a defense attorney representing Lin, did not return a call Friday for comment. In court, she said her client cooperated with investigators from the beginning. Lin - who closed Gift World after the raid and began studying to become a Christian pastor - told the court last Monday he didn't understand it was illegal to sell counterfeit purses and that he was sorry.

"Although I am an American citizen, I don't know much about American law," he said through a Mandarin interpreter. "I will never do such a thing again."

Hard to stop

While police and prosecutors last week voiced their support for the prosecution of anyone selling goods in violation of state and federal trademark laws, Logue stressed it's not going to be easy to stem the sale of counterfeit merchandise.

He recalled going to a flea market earlier this year in Baltimore County and seizing so many knockoff purses he literally couldn't carry them all. He said he filled three 24-foot long U-Haul trucks and finally had to give up and leave some behind in the parking lot. "There is only so much one person can do," he said. Assistant Special Agent in Charge Freddie Taylor of the Baltimore Office of Homeland Security argued Friday that ICE's increased efforts to stop importers at the border would have a "trickle-down effect" and eventually keep knockoff purses and jerseys from appearing in area stores and flea markets, but Logue pressed for additional changes on the local and state level.

To really make a dent in the market, he said, local police departments need to create special units dedicated to busting counterfeiters. Right now, he said detectives are helpful but also busy chasing burglars and robbers.

Because they are busy, Logue said, detectives basically let dealers of counterfeit football jerseys and handbags post advertisements on Craigslist with near impunity.

"It's not something that you can hit one day and then again next year," he said. "You have to stay on it."

Logue added that if lawmakers in Maryland made the sale of counterfeit goods akin to the sale of drugs and let police seize a dealer's assets, more dealers would give up the business. He said Virginia, Delaware and Washington, D.C., already allow such asset seizures.

"They are coming away with hundreds of thousands of dollars in assets," he said. "Law enforcement need to be able to hit them in the pockets were it counts."

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sdaugherty@capitalgazette.com