On August 7th the U.S. Attorney’s Office for the Southern District of New York announced the arrest of five (5) persons for operating a counterfeit operation that resulted in the seizure of fake Nike Air Jordan sneakers valued at over $70 million.
U.S. ATTORNEY STATEMENT
“The five defendants are charged with importing hundreds of thousands of athletic shoes from China into the United States. Once those shoes arrived, the defendants and other co-conspirators affixed counterfeit Nike-trademarked logos to those shoes in New York, and sold the now-counterfeit Air Jordans in the United States.”
LAW ENFORCEMENT COOPERATION
It was another fine example of a major brand working with federal and local law enforcement to dismantle a major counterfeit enterprise. The takedown was the culmination of a two-year investigation. (NYPD and Homeland Security Investigations (HSI), respectively)[1]
PRIVATE INVESTIGATORS (PIs) INITIAL INVESTIGATION PLAYED KEY ROLE
“The Investigative Firm learned of the containers being shipped to the United States for the benefit of the Counterfeiting Company and believed that the containers might contain counterfeit Nike products. As a result, the Investigative Firm began conducting surveillance to ascertain the individuals involved with the Counterfeiting Company.”
HIGHLIGHTS OF THE CRIMINAL COMPLAINT
A review of the 11-page complaint filed in the U.S. District Court against the five defendants provides insight into how Nike’s contracted private investigators initially developed the case, as well as law enforcement’s professional and thorough follow-up.
PHASE I
- January 2016 – The PIs receive information that containers coming into a New Jersey port from China could contain counterfeit Nike products
- June 2017 – PIs retained by Nike started a surveillance in which they observed containers arrive in the Port of New Jersey and moved to two locations in Queens, New York.
PIs INITIAL OBSERVATION
“…individuals would remove large brown boxes bearing a diamond emblem from the containers and move those boxes into Location-1 and/or Location-2”
PHASE II
- January 2018 – NYPD/HSI investigators begin to inspect containers at the New Jersey yard
Question: How did they know what containers to inspect?
Answer: Based on the information the PIs had developed, law-enforcement identified containers from China consigned to the same company that the PIs had previously observed being transported from the New Jersey yard to multiple locations in Queens, New York
RESULTS OF LAW ENFORCEMENT INSPECTION OF FIRST CONTAINER
The first container inspected by law-enforcement, “…held 560 large brown boxes, each containing 16 pairs of Generic Air Jordans.”
HOW ABOUT THESE TELLING MARKINGS ON THE BOXES
“The boxes had lettering printed on the side that includes a code, for example, “CF1701507-2…the two digits immediately preceding the dash…a code that ended with “07” before the dash referred to Air Jordan VII shoes, and a code that ended with “13” before the dash referred to Air Jordan XIII shoes.”
PHASE III
- February 2018 NYPD/HSI initiated their mobile surveillance of the containers. The following is essentially how the criminals moved the fake Nikes
MOBILE SURVEILLANCE OF THE FAKES
Container arrives in the New Jersey Yard from China…moved to another location in New Jersey…then to a storage location in Brooklyn or Queens…then placed in the loading docks of those locations…where counterfeit crew unloads some of the boxes from the container onto trucks…and trucks full of boxes of fakes eventually delivered to other locations.
UNDERCOVER BUYS
PHASE IV
- March – June 2018 – “Confidential Source” makes at least nine (9) buys of the fake Nikes from the criminals. Trucks were loaded from the New York storage locations and delivered to the pre-arranged location of the “Confidential Source.”
ARREST WARRANTS ISSUED
PHASE V
- August 3, 2018 – the five counterfeiters were arrested and charged with trafficking and conspiring to traffic counterfeit goods
TOTAL SEIZURE
- 42 Shipping Containers; Estimated 380,000 pairs of sneakers from China
FINAL THOUGHTS
Again this case is an excellent illustration of law enforcement and a major brand working together, but it also represents the value of retaining private investigators to develop more information on a counterfeiting operation prior to its presentation to law enforcement. It was this information that identified the potential magnitude of the operation and, as a result, drew the commitment of the authorities.
[1] https://www.justice.gov/usao-sdny/pr/5-defendants-charged-manhattan-federal-court-multimillion-dollar-counterfeiting-scheme
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