ICE and CBP's "Operation Red Zone" Seizes $13.6 Million Worth of Counterfeit NFL Merchandise

Speaking at a National Football League (NFL) news conference Thursday, January 31, 2013, U.S. Immigration and Customs Enforcement (ICE) Director John Morton and NFL Vice President for Legal Affairs Anastasia Danias announced the record-breaking results of a nationwide enforcement operation. The initiative, dubbed 'Operation Red Zone,' commenced Sept. 1, 2012, and targeted international shipments of counterfeit merchandise as it entered the United States. Authorities targeted warehouses, stores, flea markets, online vendors and street vendors selling counterfeit game-related sportswear and tickets throughout the country.

Fake jerseys, ball caps, T-shirts, jackets and other souvenirs are among the counterfeit merchandise and clothing confiscated by teams of special agents and officers from ICE's Homeland Security Investigations (HSI), U.S. Customs and Border Protection (CBP), U.S. Postal Inspection Service, and state and local police departments around the country - all in partnership with the NFL and other major sports leagues.

"The Super Bowl is one of the nation's most exciting events. Organized criminals are preying on that excitement, ripping consumers off with counterfeit merchandise and stealing from the American businesses who have worked hard to build a trusted brand," said Morton. "The sale of counterfeit jerseys and other sports items undermines the legitimate economy, takes jobs away from Americans and fuels crime overseas. No good comes of counterfeiting American products - whether NFL jerseys, airbags, or pharmaceuticals - and we must go after the criminals behind it."

'Hard goods' seizures

Special agents from HSI and officers with CBP operated in multiple teams with the NFL and law enforcement agencies throughout the nation to identify illegal shipments imported into the U.S., as well as stores and vendors selling counterfeit trademarked items. With only days left before Super Bowl XLVII, these teams have already seized more than 160,000 items of phony Super Bowl-related memorabilia along with other counterfeit items for a total take of more than $13.6 million. Due to the increased activity of counterfeiting operations around the world, this year the operation began Sept. 1, 2012, and will continue through Feb. 6, 2013.

"We're delighted to once again partner with federal law enforcement to help combat the influx of counterfeit merchandise," said Danias. "We are grateful for their tireless efforts to keep counterfeiters from illegally profiting off of the fans' enthusiasm for their team and the Super Bowl and from hurting the local businesses that play by the rules."

"In collaboration with the NFL and our (Department of Homeland Security) partners, we are providing critical support in the effort to protect consumers from counterfeit goods," said Robert C. Gomez, director of field operations in Atlanta and New Orleans for CBP. "The enforcement of iintellectual property rights is a national agency priority, and our CBP officers and import specialists are actively working to intercept these products. Counterfeit merchandise hurts our economy and, in many cases, presents safety issues. It is a potential source of funding illegal activities that present a threat to our national security."

Arrests

In September 2012, HSI Boston - assisted by HSI Providence - executed a search warrant at a residence in Warwick, R.I. HSI seized 226 boxes of counterfeit goods containing 4,016 sports jerseys with a manufacturer's suggested retail price (MSRP) of $724,340 and approximately $477,000 worth of additional counterfeit goods, as well as $130,057 in U.S. currency and checks. The owner of the home was subsequently arrested and is currently facing federal charges of trafficking in counterfeit goods and smuggling.

In November 2012, HSI Indianapolis special agents responded to a call from Indiana State Fairgrounds Security that an individual at the Indianapolis International Fest was selling items suspected to be counterfeit. Upon arriving at the festival, the special agents were able to verify the goods to be counterfeit and seized 1,319 counterfeit sports ball caps from the individual with an MSRP of $30,095 and approximately $7,600 worth of additional counterfeit goods. HSI arrested the man for illegally trafficking in counterfeit merchandise. 

Twenty-one other individuals were arrested in partnership with state and local law enforcement
agencies on state charges at locations around the country.

Website seizures

Furthering HSI's efforts to combat the international counterfeiting supply chain and piracy online, special agents seized a total of 313 websites identified to be selling counterfeit merchandise.

The website seizures during Operation Red Zone are the next iteration of Operation In Our Sites, a long term law enforcement initiative targeting counterfeiting and piracy on the Internet. The 313 websites have been seized by law enforcement, and are now in the custody of the federal government. Visitors to these websites will find a seizure banner that notifies them that the domain name has been seized by federal authorities and educates them that willful copyright infringement is a federal crime. Since the launch of Operation In Our Sites in June 2010, the ICE HSI-led Intellectual Property Rights (IPR) Center has seized a total of 2,061 domain names.

HSI has continued to work closely with payment processor PayPal to identify bank accounts being used to facilitate the transfer of money to these illegal operations. To date, PayPal and HSI have identified and seized more than $66,000 in assets in these accounts.

"PayPal and eBay Inc. pride ourselves in going above and beyond in the fight against the illegal online trafficking of counterfeit goods by partnering with law enforcement and rights owners globally, and as part of providing safe and trusted payments and commerce platforms," said Tod Cohen, eBay's vice president and deputy general counsel of government relations.

Operation Red Zone continues

Operation Red Zone will continue this weekend at the Super Bowl, throughout the New Orleans-area and around the nation.

The operation was spearheaded by the IPR Center in coordination with the Department of Justice's Computer Crime and Intellectual Property Section and five U.S. Attorneys' Offices, including the District of Maryland, District of New Jersey, District of Colorado, Eastern District of Louisiana and the District of Utah.

The IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. Working in close coordination with the Department of Justice Task Force on Intellectual Property, the IPR Center uses the expertise of its 21 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to intellectual property theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety and the U.S. economy.

HSI Seizes $100,000 of Counterfeit Goods

U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) seized more than $100,000 of counterfeit cosmetics, designer handbags and electronics after executing a search warrant at a Conway home Jan. 16, 2013. The U.S. Postal Inspection Service and the Conway Police Department assisted HSI with the investigation leading to the seizure.

"Counterfeit products cost law-abiding Americans their jobs and allow criminals to fund illegal activities with black market sales," said Special Agent in Charge of HSI New Orleans Raymond R. Parmer Jr. "Counterfeit cosmetics are a particular danger to the public because of the potential to ingest harmful substances that might be present in an unregulated product."

 Parmer oversees a five-state area of responsibility including Arkansas, Alabama, Louisiana, Mississippi and Tennessee.

HSI Little Rock began its investigation after receiving information from the U.S. Postal Inspection Service regarding multiple suspicious packages addressed to Vanchello Craig, 33, originating from overseas. On Oct. 22, HSI Little Rock subsequently found two parcels containing counterfeit items in Craig's home during a consensual search of the premises.

On Jan. 14, HSI Little Rock learned Craig was the recipient of another suspicious package. HSI conducted an inspection of the parcel pursuant to its border search authority and discovered additional counterfeit items destined for Craig.

New York Man Arrested for Trafficking in Counterfeit Goods

An upstate New York man was arrested and charged by criminal complaint with trafficking in counterfeit goods. The charge carries a maximum penalty of 10 years in prison and a $2,000,000 fine. In addition, 15 websites allegedly selling counterfeit sporting merchandise were seized by federal law enforcement agents. The websites were seized as part of a global enforcement operation that targeted more than 130 websites operating worldwide. All of this is the result of an extensive investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

According to the criminal complaint, in August 2012, Gary C. Hammer, 47, of Cheektowaga, N.Y., listed Microsoft Vista Business and Microsoft Office software for sale on Craigslist.

Further investigation determined that the merchandise being sold by the Hammer was counterfeit. Although the defendant was served Oct. 23 with a cease and desist letter from Microsoft Corporation, he continued to sell counterfeit Microsoft merchandise. He was arrested Nov 21.

Hammer made an initial appearance in court the same day as his arrest. He released on his own recognizance and is due back in court Dec. 12, 2012, at 11:00 a.m.

In a separate action, early this morning HSI special agents seized 15 websites that allegedly sold counterfeit sporting merchandise. According to the affidavit in support of the seizure warrants, some of the websites sold caps allegedly manufactured by New Era Cap, a Buffalo-based company.

 "The manufacturing and selling of "knock off" goods hurts businesses and people across a wide spectrum of our society," said U.S. Attorney William J. Hochul Jr., Western District of New York. "Victims of these crimes include not only those who create intellectual property and the employees of the legitimate businesses who turn the ideas into products Consumers are also hurt by unknowingly obtaining inferior or potentially harmful products, as are taxpayers who are unable to rely on taxes from legitimate sales to fund programs which benefit the community. I would therefore urge all to exercise caution knowing that if a deal sounds too good to be true, it probably is."

 "As we remind consumers, buying knockoffs doesn't pay off," said James C. Spero, special agent in charge of HSI Buffalo. "Those who sell counterfeit merchandise are robbing from the legitimate companies, many of them U.S.-based, that make these products. And perhaps most important, they're hurting the men and women who depend on those companies for their livelihood. Intellectual property theft amounts to economic sabotage, which is why HSI will continue to aggressively pursue product counterfeiters and those who sell counterfeit products."

The arrest and seizures are part of Project Cyber Monday 3 and Project Transatlantic, both efforts to crack down on counterfeit goods sold online during the holiday shopping season. They are the culmination of an investigation on the part of HSI.

Assistant U.S. Attorney Michael DiGiacomo and Kevin D. Robinson, Western District of New York, are prosecuting these cases on behalf of the U.S. government.

Virginia Man Receives 36 Month Sentence for Software Piracy

A man from Annandale, Va., was sentenced Friday, November 9, 2012, to 36 months in prison, followed by three years of supervised release, for selling thousands of units of counterfeit, copyright-infringing computer software.

The case was investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the U.S. Postal Inspection Service.

Quynh Trong Nguyen, 37, was also ordered to pay restitution of $2.5 million and a forfeiture money judgment of $1.4 million, which will be partially satisfied by $650,000 in already seized liquid assets.

Nguyen pleaded guilty Aug. 9 to copyright infringement. According to court documents, over a three and a half year period, Nguyen sold $2.5 million in copyright-infringing computer software and defrauded more than 2,000 customers. The software, much of which was shipped from overseas, included popular titles, such as Adobe Acrobat, Microsoft Office, and Autodesk AutoCAD.

Nguyen sold the software through Internet websites that he operated from his residence in Annandale. In addition to selling counterfeit software, Nguyen falsely represented to suppliers that he was eligible to purchase and resell educational software in connection with George Mason University. Nguyen altered the educational software, which he later sold at higher prices, by painting over labels and modifying the product packaging.

Assistant U.S. Attorneys Ryan K. Dickey and Jay V. Prabhu prosecuted the case on behalf of the United States.

5 Plead Guilty to Counterfeit Trade and Intellectual Property Theft Conspiracy

Five individuals have pleaded guilty to conspiring to import misclassified merchandise. Each faces up to five years in federal prison and a $250,000 fine. This case is being investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

"The trademark laws in the United States were created to protect the investment of American manufacturers such as Nike as well as consumers," said U.S. Attorney William J. Hochul Jr., Western District of New York. "These laws are designed to create a level playing field for businesses and protect consumers who might unwittingly purchase inferior counterfeit goods. Our office will continue to aggressively enforce customs laws for the benefit of American businesses and those who purchase their products."

"Selling counterfeit goods is stealing," said James C. Spero, special agent in charge of HSI Buffalo. "HSI is committed to ensuring the legitimate copyright holders are protected from individuals who are only motivated by greed. People and organizations which produce and sell counterfeit products undermine the U.S. economy; create inferior and sometimes dangerous products; and jeopardize public safety."

Xiao Cheng Lin, 50, and his wife, Ling Zhen Hu, 51, both of New York, pleaded guilty before U.S. District Judge Richard J. Arcara to conspiring to import misclassified merchandise. Hu, a native of China, worked for an individual who imported thousands of pairs of sneakers from China that bore the Nike "swoosh" logo and Nike labeling, but were not genuine Nike sneakers. Hu then negotiated the sale of large quantities of the mislabeled sneakers to Malik Bazzi, 44, of Montreal, who then sold them to customers throughout the United States - including in Buffalo - via his warehouses in Manhattan and Brooklyn. Bazzi is currently scheduled to be sentenced Feb. 1, 2013. Hu admitted that she negotiated the sale of 7,500 pairs of sneakers to Bazzi.

Lin, also a native of China, worked with his wife, delivering the 7,500 pairs of sneakers to Bazzi. The HSI investigation revealed that Bazzi's customers then sold the counterfeit Nike sneakers on the street and in retail stores to customers for about half the price of genuine Nike sneakers.

As part of their plea agreements, both Lin and Hu agreed to abandon any claim to more than $600,000 and dozens of pairs of counterfeit sneakers seized from their New York residence following their 2007 arrest.

The defendants were arrested along with 21 others. To date, 20 of the defendants have been convicted.

On Sept. 5, 2012, LaKeith Fowler, 32, of Dallas, pleaded guilty before Judge Arcara to conspiring to traffic in counterfeit sneakers. Fowler, one of Bazzi's customers, purchased and sold approximately 12,000 pairs of counterfeit Nike sneakers he obtained from Bazzi from April to September 2007. Fowler sold the sneakers in a retail store he owned in the Dallas-area. As part of his plea agreement, Fowler agreed to forfeit two bank accounts to the government which contain over $44,000 in deposits. The accounts were used to conduct counterfeit sneaker transactions.

On Sept. 7, 2012, Davion Briant, 37, of Milwaukee, pleaded guilty before Judge Arcara to conspiring to traffic in counterfeit sneakers. Briant, another of Bazzi's customers, purchased and sold approximately 4,500 pairs of counterfeit Nike sneakers he obtained from Bazzi from April to September 2007. Briant owned a retail store in the Milwaukee-area where he sold the counterfeit sneakers.

On Sept. 10, 2012, Hussien Sara, 30, of New York, pleaded guilty before Judge Arcara to conspiring to traffic in counterfeit sneakers. Sara worked in Bazzi's warehouses where, on behalf of Bazzi, he took delivery of over 13,000 pairs of counterfeit sneakers from several suppliers, including Hu and Lin. In addition, Sara assisted in packaging the sneakers for shipment to Bazzi's customers located throughout the United States.

Lin and Hu will be sentenced Jan. 24, 2013; Fowler Dec. 14, 2012; Briant Jan. 7, 2013; and Sara Jan. 11, 2013. All will be sentenced by Judge Arcara in Buffalo.

As the largest investigative arm of the Department of Homeland Security, HSI plays a leading role in targeting criminal organizations responsible for producing, smuggling and distributing counterfeit products. HSI focuses not only on keeping counterfeit products off our streets, but also on dismantling the criminal organizations behind such illicit activity.

This investigation was supported by the HSI-led National Intellectual Property Rights Coordination Center (IPR Center) in Washington. The IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting/piracy. As a task force, the IPR Center uses the expertise of its 21 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.

Assistant U.S. Attorney John E. Rogowski, Western District of New York, is prosecuting this case on behalf of the U.S. government.