http://www.kvia.com/Global/story.asp?S=5368527


09.05.06
Feds indict 2 El Pasoans, 4 others; seize millions worth of counterfeit Nike shoes

Sep 5, 2006 03:43 PM

TUCSON, Ariz. (AP) - Six people were indicted and more than $16 million worth of counterfeit goods were seized in Arizona as authorities broke up an attempt to smuggle counterfeit athletic shoes from China into the U.S., authorities said Tuesday.

A magistrate released Mark Elias, 36, and Manuel Flores Jr., 53, both of El Paso, on cash bonds of $50,000 and $20,000, respectively, but ordered Juan Carlos Martinez Esquer, 46, of Sonora, Mexico; Wei Tung Lam, a resident of Gambia and native of the People's Republic of China, and Sau Kuen Chan of Hong Kong held as flight risks.

The sixth defendant, Peng Liu of Hong Kong, is a fugitive.

The alleged plot involved 15 sea cargo containers holding about 135,000 pairs of counterfeit Nike Air Jordan shoes. But in all, the counterfeit ring is believed to have shipped 82 containers into the country, 77 containing shoes and five counterfeit athletic clothing.

"We approximate that the value of the total amount seized could potentially reach $86 million," said Roberto Medina, special agent in charge of U.S. Immigration and Customs Enforcement's office of investigations in Arizona.

Caroline Joiner, executive director of the U.S. Chamber of Commerce's anticounterfeiting and piracy initiative, said the case is "the largest we've seen." She said U.S. Customs officials reported seizures of $16 million in apparel for all of 2005.

Counterfeiting costs the U.S. economy $250 billion and 750,000 jobs a year, Joiner said. "It's growing by leaps and bounds. The business community has zero tolerance for counterfeiting. This is part of a stepped-up effort by the federal government. We're really happy with that."

Authorities said each container ostensibly was to be transported to Mexico, In reality, the smugglers intended to slip the phony knockoff merchandise into American commerce and reap huge profits based on retail prices of $125 to $135 for each pair of shoes, authorities said.

The 77 containers each carried 9,000 pairs of fake Nikes, or about 690,000 pairs in all. U.S. Attorney Paul Charlton said the smuggling ring brought into the United States "Nike shoes that are counterfeit, Nike shoes that are not allowed to be brought into the United States without the permission of the Nike organization."

As troubling as the counterfeit goods was that the ring "repeatedly attempted to approach Customs officials in attempts to bribe them to allow them to bring in these counterfeit goods," Charlton said.

Several bribes were paid in June and July to an undercover ICE agent posing as a Customs and Border Protection officer, according to the indictment.

Had the smugglers succeeded in their bribe attempts, "the word would have gotten out in the transnational criminal community that we were vulnerable," he said. Donna De La Torre, director of field operations for Customs and Border Protection, called the operation's scope "incredibly enormous ... much more than we're used to seeing."

She gave this scenario: The containers came in a transshipment - a so-called Customs in-bond shipment, by which a manufacturer in one country wants to get his products to another country by moving the merchandise through a third country - in this case the United States.

The shipment came from China into California with the intent of moving through the U.S. for convenience to get to Mexico. Customs officials open a record when the shipment first enters the country and close it out when the shipment leaves the country.

Instead of actually exporting and leaving the country for Mexico, the scheme called for bribing an inspector to sign off on the shipments so the containers could be kept in this country.

The ring included people from Hong Kong, the People's Republic of China, Mexico and the United States, Charlton said. A federal grand jury indicted the six defendants last month on charges of trafficking in counterfeit goods and services and conspiracy to commit to bribe a public official.

An initial Oct. 17 trial date has been set. Conviction for conspiracy could bring up to five years in prison and a $250,000 fine. Authorities said ICE's investigation is continuing in California and Texas.

By ARTHUR H. ROTSTEIN Associated Press Writer

(Copyright 2006 by The Associated Press. All Rights Reserved.)