LAPD investigation reveals that gangs have turned to counterfeiting to balance their criminal portfolios

June 14, 2010 § Leave a comment

Flip on the local news for a few minutes and you are sure to be bombarded by stories about the battered economy. And while evidence of this financial anathema may seem overwhelming, we are resilient creatures designed to take a few knocks, grow some calluses and move on. We adapt. But it is not just the happy elements of society that adapt, it is all parts: from the highest echelon of grandmothers and confectioners all the way down to the skeezier sort that prefers to hold tea socials at dog fights. The recession, it can be said, has caused some gang leaders to adjust as well, and they have become savvier business managers because of it.

The only thing is that they are using counterfeits to do so.

A recent series of investigations by the LAPD uncovered that gang bangers have started treating their catalog of criminal activities like a stock portfolio. They are using the sale of counterfeit goods to offset the risk of more traditional illicit enterprises. By slinging bootleg CDs and DVDs, they are making dollars faster than they would with traditional crimes. Better still for them, they can do it without all the usual hazards.

Classic criminal enterprises like drug sales, prostitution, kidnapping, burglary, extortion, shakedowns, and the like require violence to make a profit, whether it is actual or threatened. The drug trade is the only industry on the planet where building a better product or improving a manufacturing process will not help you grow. Instead, growth requires that you violently dispossess competitors of their trade routes and assets. Because the demand for drugs is so high and the quality is of relatively little importance, you can succeed in the business by maintaining a good supply chain and having the dry powder and buckshot to keep the deed.

Gang leaders are concerned with casualties only as far as it affects their profits. If your crew is band-aided up watching Maury Povich instead of slinging rock, it is going to be tougher to make your mortgage payments. Unfortunately, the counterfeit trade seems to have bridged this gap, by keeping “employees” out of harm’s way and selling product.

The LAPD report claimed that the money made by the gangs through the sale of fake goods has funded the purchase of weapons and the growth of other illegal businesses. Because counterfeits are relatively cheap to make and the distribution cost, or the amount it costs to successfully get the goods in the hands of consumer and the cash in the hands of the gang members, is relatively low, it has been a very effective way for the criminals to raise capital.

This is another example of how a seemingly ‘victimless’ crime is anything but. In the case of the fake trade, there are the victims that produce the fakes against their will and do so in at great risk to themselves and others. Then, there are the other victims harmed indirectly by the sale of sham goods, like those who are wounded by terrorist attacks or gang shootings.

The LAPD claims, as we do, that the best way to prevent this activity is to curb the demand for the fake goods. The police will keep fighting on their end, as all enforcement agencies will, but at the end of the day, it can feel like throwing haymakers in a steam bath. Where we need to focus our efforts as civilians is to stop the demand for fake goods.

Once the world knows just how parasitic and abusive the fake trade is, it will only be a matter of time until the sham industry’s lifeblood runs out of it, like a cheap dye seeping from some shoddy material. So spread the word and encourage your friends to do the same. We can end this abuse in our lifetime.

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The anticounterfeiting partnership of Coach and the city of Chicago hits a snag, but all is not lost.

June 3, 2010 § Leave a comment

In battle, success depends on the ability to draw distinct lines between our allies and our adversaries. Sounds like a simple enough task, no? But when the counterfeiting landscape is full of fissures and gaps, determining your friends and foes is not as easy as drawing bright lines on a dry-erase board. Getting your bearings in the counterfeiting world is like being handed roller skates and a blindfold in the middle of a minefield – now take a lap.

An unfortunate example of this kind of confusion recently happened with Coach Inc., the maker of leather goods and other fine satchelry. The company has sued the city of Chicago for allowing counterfeit versions of its products to be sold in one of the city’s markets.

For reasons we hope will be revealed during the legal proceedings, what began as a solid working partnership between the city and the luxury manufacturer in the fight against fakes has ended in a lawsuit.

There’s no doubt that for the time being it is going to be tough sledding in Chicago: Coach, claiming that the city neglected its demands to halt the illegal sales, is seeking $2 million in damages per violation, plus punitive damages.

According to the lawsuit filed in late May of this year, the company had been working with Chicago police to stop the sale of the fake goods at the market, but after a successful joint raid, netting two peddlers and over 350 fake bags, a return visit by Coach’s inspector to the same market space months later revealed vendors selling sham bags as before.

As indicated by the lawsuit, Coach sent an investigator to the New Maxwell Street Market in August of 2009 to determine whether or not seedy vendors were hawking counterfeit goods in the area. The investigator’s first visit to the market found several vendors openly selling fake Coach handbags without reprimand or punishment.

After Coach presented the evidence to the city’s police department, the groups worked together to organize a series of recorded buys at the market. Two weeks after the inspector’s first findings, the new group returned to the market and managed two buys from different vendors that resulted in the arrests and seizures.

Now, if the saga had ended here, this type of operation would be shared with other enforcement agencies as a blueprint for future actions. But somewhere between the last weeks of August when the Coach/Chicago Police taskforce were kicking down the stalls of counterfeiter sellers and two weeks ago when the City of Chicago received the lawsuit, there was a serious miscommunication.

We can only theorize what split the two groups to the point of legal fisticuffs. It may be fair to assume the police lost interest or that there may have been disagreements between the two parties over how future investigations were to take place, but regardless of how sensible these theories are, all of it is at best conjecture. The only thing that can be taken from this event is that it is a tough blow to the already limited resources of the agencies fighting counterfeiting.

While it is a setback, we can take something positive from the event: by learning what went wrong between Chicago and Coach, Inc., this kind of rift can be avoided in the future and we will be able to cultivate smoother working partnerships between corporations and law enforcement.

This was a needless mess, but the opportunity to accomplish some significant work in the fight against fakes is not lost. While this wounded relationship needs to be repaired at a time when they are better spent fighting the counterfeiters, there is definitely a bright side.

Let’s hope both sides can bear the discomfort of this call to arms and find a quick solution. If Coach and the city of Chicago get back to doing what they do best – creating luxury and protecting citizens, respectively – and we take a workable case study away from this that will help us avoid snags in the future, we may just churn this garbage into a lush compost.

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