JUSTICE SEIZES NEARLY $900,000 FROM ALLEGED ONLINE COUNTERFEIT APPAREL RETAILER

FROM:  DEPARTMENT OF JUSTICE
Tuesday, April 10, 2012
Department of Justice Seizes More Than $896,000 in Proceeds from the Online Sale of Counterfeit Sports Apparel
WASHINGTON – The Department of Justice has seized more than $896,000 in proceeds from the distribution of counterfeit sports apparel and jerseys as the result of an investigation into the sale of counterfeit goods on commercial websites, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; Ronald C. Machen Jr., U.S. Attorney for the District of Columbia; and John Morton, Director of the Department of Homeland Security’s Immigration and Customs Enforcement (ICE).

The investigation also resulted in the seizure of seven domain names engaged in the sale of counterfeit goods.  The funds were seized from interbank accounts and three PayPal accounts.  The seizure warrants were unsealed in U.S. District Court in the District of Columbia on April 5, 2012.

The investigation is a product of Operation In Our Sites, a law enforcement initiative targeting online commercial intellectual property crime announced by ICE’s Office of Homeland Security Investigations (HSI) in June 2010.  Operation In Our Sites targeted online retailers of a diverse array of counterfeit goods, including sports equipment, shoes, handbags, athletic apparel, sunglasses and DVD boxed sets.  To date, 758 domain names of websites engaged in the sale and distribution of counterfeit goods and illegal copyrighted works have been seized as a result of Operation In Our Sites.
According to court documents, investigation by federal law enforcement agents revealed that several subjects whose domain names had been seized in a November 2010 In Our Sites operation continued to sell counterfeit goods using new domain names.  In particular, the individuals, based in China, sold counterfeit professional and collegiate sports apparel, primarily counterfeit sports jerseys.  Law enforcement agents made numerous undercover purchases from the websites associated with the new domain names.  After the goods were confirmed to be counterfeit or infringing, seizure warrants for seven domain names used to sell the infringing goods were obtained from a U.S. Magistrate Judge in U.S. District Court for the District of Columbia.

According to court documents, the individuals conducted sales and processed payments for the counterfeit goods using PayPal Private Ltd. accounts and then wired their proceeds to bank accounts held at Chinese banks.  Under warrants issued by a U.S. District Judge, law enforcement agents seized $826,883 in proceeds that had been transferred from PayPal accounts to various bank accounts in China.  The funds were seized from correspondent, or interbank, accounts held by the Chinese banks in the United States.  Under additional seizure warrants issued by a U.S. Magistrate Judge, law enforcement agents also seized $69,504 in funds remaining in three PayPal accounts used by the subjects.

“We are working hard to protect American businesses and consumers from the damaging effects of intellectual property crime,” said Assistant Attorney General Breuer.  “This investigation disrupted an online counterfeit goods operation and also struck at the heart of the criminal enterprise by seizing hundreds of thousands of dollars in illegal profits.  The Justice Department, together with our partners at ICE, will continue to do all that we can to punish and deter the sale and distribution of counterfeit goods.”
“Those who traffic in counterfeit goods harm the American economy as well as the consumers who purchase the substandard merchandise,” said U.S. Attorney Machen.  “Seizing the domain names of these unscrupulous operators was one big step, and seizing their ill-gotten proceeds should send them another message that these counterfeit sales will not be tolerated.”

“Counterfeiting and intellectual property theft are seriously undermining U.S. business and innovation,” said ICE Director Morton.  “Consumers are at risk, American industry is harmed and U.S. jobs are lost.  As a country, we can ill afford the toll that intellectual property theft exacts on our economy and industries.  Operation In Our Sites and the related efforts of the National Intellectual Property Rights Coordination Center are critical to combating intellectual property crime and consumer fraud over the Internet.”
The investigation was conducted by the National Intellectual Property Rights Center and ICE-HSI.  The case is being prosecuted by Assistant U.S. Attorneys Jonathan Hooks and Diane Lucas and Special Assistant U.S. Attorney Katharine Wagner of the District of Columbia, Senior Trial Attorney Pamela Hicks of the Asset Forfeiture and Money Laundering Section in the Justice Department’s Criminal Division and Trial Attorney Thomas Dougherty of the Computer Crime and Intellectual Property Section in the Justice Department’s Criminal Division.

This enforcement action is one of many efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force).  Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation’s economic security against those who seek to profit illegally from American creativity, innovation and hard work.  The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders.