Investigation nets $700 million in smuggled merchandise

| 6/28/2007

The federal government has charged 29 individuals involved in three separate schemes with conspiracy to smuggle more than 950 shipments of real and counterfeit merchandise into the U.S., mostly from China.

The investigation included smuggled goods at ports in Newark, N.J.; Houston; Long Beach, CA; Staten Island, NY; and at John F. Kennedy International Airport.

The charges come in the wake of growing concerns about Chinese imports of legal products into the United States, including toothpaste, dog food and auto tires.

In the first scheme, merchandise distributors allegedly smuggled seven 40-foot shipping containers with counterfeit goods valued at $9 million through the Ports of Los Angeles and Long Beach without paying customs duties between November 2005 and March 2006.

The individuals allegedly paid Immigration and Customs Enforcement agents to file false paperwork showing the containers to be passing through the U.S. en route to Mexico, when in fact the containers were delivered to U.S.-based warehouses controlled by Longyi Wang, Amine Mohsen and Ayman Mohsen.

The second scheme included Wang, the Mohsens and others allegedly smuggling about 22 containers with an estimated $25 million in counterfeit merchandise into the country by allegedly lying to Customs and Border Patrol agents about the contents and value of the containers, and by bribing ICE undercover agents to release the merchandise from the CBP’s control. Investigators seized more than $38 million of additional counterfeit merchandise.

The 17-month investigation would have netted $700 million in smuggled goods had all goods been authentic, the release read.

In another scheme that occurred between June 2005 and February 2007, trucking company operators Ronald Depaola and Joseph Depaola conspired with freight forwarders to file fraudulent shipping documents to customs brokers to import merchandise through customs.

The forms “falsely represented the nature and value of the merchandise and falsely identified the importers, frequently listing the name and identity of legitimate importers known to CBP,” according to an ICE news release.

“Counterfeiting has risen to the level of an economic pandemic costing the legitimate U.S. economy more than $200 billion annually,” said Julie Myers, Assistant Secretary of Homeland Security for Immigration and Customs Enforcement, in the release. “Targeting these illicit networks will remain one of the most important crimes we pursue.”

Phony products account for between 5 and 8 percent of all goods sold worldwide, according to the Motor and Equipment Manufacturers Association. MEMA advises that truckers now have to watch out for everything from lights that aren’t quite bright enough to brake pads made of compressed grass.

Bootleg items can be almost anything anymore. In fact, reported that the automotive industry has turned up enough counterfeit products to actually build a car.

While knock-off name brand tennis shoes may just be a style and trademark infringement issue, counterfeit automotive products especially pose a real danger to those who use them. These fake products are being bought, and even sold, without anyone spotting them. And perhaps most disturbing of all, these look-a-likes are not subjected to quality control or safety testing.

“First and foremost, product counterfeiting undermines U.S. and foreign safety standards, putting consumers at risk,” said Paul Foley, president of MEMA’s Automotive Aftermarket Suppliers Association.

Years ago counterfeiters stayed away from the heavy-duty market because of the narrow supply chains and the industry’s overall familiarity with the products, according to MEMA information on counterfeiting. But since counterfeiters have gotten better at forging their fakes, it’s getting tougher to tell the real thing from the phonies.

– By Charlie Morasch, staff writer

Senior Editor Jami Jones also contributed to this article.