Case Studies

Airbags

In September 2010, a counterfeit airbag shipment was discovered by CBP during Operation Safe Summer at a DHL facility.  The shipment from China contained 68 counterfeit airbags destined for Chattanooga, TN.  This investigation exposed the new threat of counterfeit airbags to law enforcement.  HSI Chattanooga special agents executed search warrants and conducted controlled deliveries at several locations in the Chattanooga area which resulted in the seizure of 264 additional counterfeit airbags.  Dai Zhensong, a Chinese national, was arrested and convicted for trafficking in counterfeit goods and was sentenced to 37 months in prison. As a result of the Chattanooga investigation, numerous spin-off investigations were initiated which resulted in numerous other convictions.

Copy Cat

In July 2012, Homeland Security Investigations seized 70 domain names as part of Project Copy Cat, an iteration of Operation in Our Sites (IOS).  Project Copy Cat targeted websites which closely mimicked legitimate websites selling authentic merchandise and duped consumers into unknowingly buying counterfeit goods.  Many of the websites so closely resembled the legitimate websites that it would be difficult for even the most discerning consumer to tell the difference.  Counterfeit products and websites are increasingly of a higher quality and price points for many counterfeit items in many cases are no longer drastically cheaper than the legitimate products.  “Red flag” indicators which point to the illegitimacy of a web site are increasingly hard to find or not present at all.  Furthermore, these fraudulent websites displayed Secure Sockets Layer (SSL) certificates, which are used to provide authentication for financial information. 

Cyber Monday 3

In November 2012, Homeland Security Investigations targeted websites selling counterfeit trademark merchandise as part of the holiday shopping season.  This was the third year that the IPR Center has targeted websites selling counterfeit products online in conjunction with Cyber Monday.  Cyber Monday 3 resulted in the seizure of 218 websites, approximately $179,000 USD in illicit proceeds and yielded two arrests.  During this operation, federal law enforcement officers made undercover purchases of a host of products; including professional sports jerseys, DVD sets, and a variety of clothing, jewelry and luxury goods from online retailers who were suspected of selling counterfeit products.

TransAtlantic

Recognizing the global nature of Internet crime, the IPR Center has partnered with Europol, who, through its member countries, target websites involved in the distribution of counterfeit goods, utilizing foreign based country code top level domains (ccTLDs) such as .eu, .be, .dk, .fr, .ro and .uk.  EUROPOL member countries conduct independent investigations and execute coordinated seizures in conjunction with HSI initiative, Operation in Our Sites.  The enforcement action is titled Project TransAtlantic.  To date there have been two iterations of Project TransAtlantic which have resulted in the seizure of 182 domain names.

Yao Bao

In September 2009, HSI Newark, along with FBI, CBP, and the Department of Justice's Organized Crime and Gangs Section's Office of Enforcement Operation and Office of International Affairs conducted a joint investigation into a criminal organization responsible smuggling counterfeit goods into the U. S. from China.  This HSI- led investigation uncovered a massive scheme to smuggle counterfeit goods manufactured in China into the U. S. through containers falsely associated with legitimate importers. The organization, allegedly owned and operated by Yao BIAO, a Chinese national, used stolen corporate identities and false personal identification documents to compromise security at Port Newark-Elizabeth Marine Terminal to import or attempt to import more than 135 containers of counterfeit goods.

Some conspirators acted as wholesalers, supplying retailers who sold counterfeit goods to customers in the United States.  A number of conspirators also engaged in a money laundering conspiracy to disguise and conceal the source of the profits of this unlawful activity.  This investigation into the smuggling of counterfeit goods also uncovered an alleged scheme to import 50 kilograms of crystal methamphetamine.  Approximately 1 kilogram of nearly pure crystal meth was purchased from the defendants as part of the operation.  The operation stopped the importation of dozens of additional kilograms of this drug.

Through this investigation, law enforcement identified the infrastructure of the organization as well as assets obtained from proceeds of the criminal activity. To date, 30 (14 HSI and 16 FBI) arrests have been made, more than $3 million in seizures/proceeds have been recovered, and more than $300 million in counterfeit merchandise has been seized.  Additionally, HSI has seized approximately 75 shipping containers smuggled into the United States using stolen corporate and fraudulent personal identities during the course of the investigation. 

This organization was responsible for laundering millions of dollars in illicit profits to China without filing Currency Transaction Reports as required by Federal law. The profits of their crimes were used to maintain lavish lifestyles, which included purchasing luxury automobiles and tens of thousands of dollars in jewelry.

Red Zone

'Operation Red Zone' nabs $17.3 million in fake NFL merchandise

The IPR Center-led nationwide enforcement operation dubbed 'Operation Red Zone' came to an end Feb. 6, 2013. The operation, which began Sept. 1, 2012, included the seizure of 196,333 items including fake jerseys, ball caps, T-shirts, jackets and other souvenirs. The items had a manufacturer's suggested retail price (MSRP) of more than $17.3 million. Special agents from ICE's Homeland Security Investigations (HSI), U.S. Customs and Border Protection, U.S. Postal Inspection Service, and state and local police departments around the country worked in partnership with the NFL and other major sports leagues during the operation.

Operation Red Zone not only targeted international shipments of counterfeit merchandise as it entered the United States, but also focused on warehouses, stores, flea markets, online vendors and street vendors. This year, additional focus was placed on identifying and seizing counterfeit tickets to the Super Bowl. In all, 168 tickets were seized with an MSRP of more than $154,000. Forty-one individuals were arrested nationwide during the operation including six federal and 35 state and local arrests.

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 seized websites are now in the custody of the federal government.

The operation was spearheaded by the National Intellectual Property Rights Coordination Center in coordination with the Department of Justice's Computer Crime and Intellectual Property Section as well as 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.