US authorities charged 29 people with smuggling $325 million in counterfeit consumer goods from China, including phony Nike sneakers and Coach handbags, through a New Jersey port.
The bust was one of the largest counterfeiting probes in US history, and it involved smuggling cigarettes, handbags and sneakers through the Port Newark-Elizabeth Marine Terminal as US agents secretly watched and listened, US Attorney Paul Fishman said. Agents infiltrated two overlapping criminal rings and lured them to use a front company run by the government.
Authorities arrested 23 people in New York, New Jersey, Texas and the Philippines. Six are at large. Most are Chinese and lived in New York. Prosecutors said they used phony paperwork to import goods in corrugated shipping containers, used distributors and wholesalers, and laundered illicit proceeds.
"The cost of counterfeit goods is not limited to massive financial harm to American businesses and consumers," Fishman said at a news conference in Newark. "Criminals can exploit the same channels to import other material that threatens our health and safety."
Estimates of annual counterfeiting worldwide are "tens of billions" of dollars a year, Fishman said.
"This is an extraordinarily large case but there's a huge amount of this going on out in the world," he said.
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Aside from Nike and Coach, the counterfeited brands including UGG boots; Burberry, Louis Vuitton and Gucci handbags; and Ed Hardy and Juicy Couture clothing, according to criminal charges in federal court in Newark.
Agents from the Federal Bureau of Investigation and from Homeland Security Investigations and the US Customs and Border Protection conducted parallel probes of crimes at the port, which moves 2.5 million containers annually. The rings eventually overlapped, and the agents coordinated their investigations.
The Homeland Security and CBP probe, begun in September 2009, focused on Patrick Siu, 39, of Richardson, Texas, and his associates, who are accused of smuggling $300 million in counterfeit goods. Siu worked with an undercover agent who promised to use his "connections" to help move containers through the port, according to a complaint.
Some defendants would take counterfeit goods to warehouses they controlled and remove generic labels to reveal fraudulent designer labels, or would add phony designer tags, authorities said. Others are accused of supplying retailers with counterfeit goods, and some laundered the proceeds, authorities said.
One defendant, Ning Guo, 38, of China, was known as "The Beijing Kid," prosecutors said. He was also charged separately with a ring investigated by the FBI. That group is accused of importing more than $25 million in counterfeit goods and using a front company, set up by agents, that acted as an importer.
The arrest complaints quote dozens of secretly recorded conversations, including one between Hai Yan Jiang, 32, of Richardson, and Lin Wu, 43, of Maspeth, New York.
They discussed importing counterfeit cosmetics, and Wu asked if the products would be safe, according to their arrest complaint.
Yan said the cosmetics were "counterfeit, but of good quality," adding: "All I care about is to make money, other things do not matter."
When Wu said "business needs to be done with a clear conscience," Yan replied, "Then go be a monk."
Three defendants were charged with trying to import crystal methamphetamine, including Soon Ah Kow, 72, of Hong Kong, who was indicted in January and arrested Feb. 18 in Manila. He was also accused of illegally importing cigarettes and footwear.
Two of those defendants, Hui Sheng Shen, 45, and Huan Ling Chang, 41, both of Taiwan. They discussed selling 50 kilograms of crystal meth to undercover agents, and delivered one kilo as a "sample load" that was concealed in tea bags hidden in a computer inside a cargo container, authorities said.
The cases include US vs Patrick Siu, 12-cr-7061 and US vs Ning Guo, 12-cr-7060, US District Court, District of New Jersey (Newark).