International smuggling ring used Baltimore as entry to U.S., authorities say
An international counterfeiting ring smuggled tens of millions of dollars worth of fake Coach handbags, Nike sneakers, Gucci shoes and Cartier watches into the United States though the Port of Baltimore, federal authorities charged Friday in announcing the indictment of the ring's members.
In the culmination of a two-year undercover investigation, a federal grand jury in Baltimore indicted nine people in a scheme to bring the bogus goods, made in Malaysia and China, into the country.
In a related investigation, London police nabbed six suspects Thursday and collected fake Versace, Ralph Lauren, Gucci and Nike clothes, shoes and other items, in what officials said is among the largest seizures ever of counterfeit goods in England.
“This was not a mom-and-pop organization,” said John Morton, a U.S. Immigration and Customs assistant secretary, at a news conference. “This was organized crime on a grand scale. Millions were made by crooks, millions were lost by legitimate U.S. companies.”
Authorities said the ring planned to expand to counterfeit drugs next, and in September, one of the defendants sent a sample of counterfeit Viagra to a business in Maryland in hopes of finding a market.
The Maryland business, which purported to import and export products without paying taxes and customs duties, was actually part of the government’s undercover operation.
Three New Yorkers were indicted: Josephine O. Zhou, 32; Kin Yip Ng, 43, and Yenn-Kun Hsieh, 45.
Also indicted were Wai Hong Yong, 43, and Eng Cheng Kee, 40, of Malaysia; and Hexing Yang, 38, Chan Hong Xu, 40, Lidan Zhang, 39, and Kai T. Jaing, 25, all of China.
Yong, Kee and Yang were arrested in Guam, while other defendants were picked up in Maryland, New Jersey, New York and North Carolina. Xu is still at large.
Officials won’t say how they first got wind of the ring. But when a container filled with 10,000 pairs of counterfeit Nike sneakers entered the Baltimore port in May 2008, undercover Immigration and Customs Enforcement officers who had infiltrated the ring were there to receive it, according to court papers.
The next month, the undercover officers delivered the sneakers to defendants in Brooklyn and were paid a $25,000 smuggling fee in cash.
The shipping containers kept coming, court papers say. First, thousands more Nike sneakers. Then, in January 2009, a container arrived with 25,000 fake Coach bags. That April, about 10,000 pairs of bogus Coach and Gucci shoes arrived.
In total, the ring smuggled in 500,000 fake Coach bags, 120,00 pairs of counterfeit Nike shoes, 10,000 pairs of bogus Gucci and Coach shoes and 500 counterfeit Cartier watches, the indictment alleges.
The undercover officers were paid a smuggling fee for the deliveries. But they also were given tens of thousands of dollars of additional cash, and instructions to wire that money to accounts in Malaysia or a company in Asia. That cash was “laundered” through the undercover business, authorities said.
The fake items were headed to New York or New Jersey, where they would make their way onto the streets, into stores or to Internet sales sites.
"Most people don’t think twice about the Nike sneakers, Coach handbags, Gucci shoes and Cartier watches sold on the streets, in stores and over the Internet that aren’t what they appear to be," said U.S. Attorney Rod J. Rosenstein. But he said supporting the counterfeit market cheats U.S. companies and employees.
The defendants face charges including conspiracy to smuggle goods into the United States, trafficking in counterfeit goods and money laundering.
-- Maria Glod
March 19, 2010; 1:00 PM ET
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