The Real Cost of Fakes

17 May

When one walks down Los Angeles Street, it is easy to miss a small storefront with a prominent yellow awning reading “Caprichos.” In the middle of downtown Los Angeles, near the Fashion District, Caprichos is one of the many stores that sells fashion items and accessories for a discounted price. Though unimposing in nature, stores like Caprichos are the gateway to a festering underbelly of counterfeit goods that are making their way through the country.

Los Angeles has become a hub of counterfeit trade within recent years with millions of items being smuggled across the Pacific from China each year and billions being made within the counterfeit economy alone.

The production and sale  of counterfeit and pirated goods, including but not limited to clothing, shoes, CDs and DVDs, led to the creation of the LAPD Anti-Piracy Task Force, which is devoted solely to stopping criminals who trade these illegal goods.

“After we received several tips regarding the store [Caprichos], the department decided to send someone undercover to investigate the issue,” said Detective Rick Ishitani, who has worked with the anti-piracy since 2003 and served with LAPD for 14 years.

The Anti-Piracy unit decided to send Rosie Vega, an LAPD consultant, to Caprichos to find evidence of the sale of counterfeit goods. The store had been under suspicion for selling fake Gucci, Coach, Chanel, Prada and Lois Vuitton bags in addition to the genuine designer bags. Upon arriving at the store Vega looked at the display case of genuine Gucci bags and after conversing with the store clerk about the cost and quality of the bag, the clerk, who identified herself as Alondra, said she had additional Gucci bags in the back of the store.

Alondra then showed Vega several counterfeit Gucci bags at a significantly reduced price from several boxes in storage. One of these bags was purchased and then examined by Hector Villegas, an investigative consultant who is an expert in identifying fake bags. He was quickly able to find several discrepancies in the bag that proved it to be fake.

“Counterfeiting goods is very attractive for people because you don’t pay any taxes, everything is pure profit. The owners at Caprichos could have been making anywhere from $160,000 to $200,000 a month selling those fakes,” said Ishitani.

Caprichos is only one of countless, innocuous-seeming storefronts in Los Angeles that sell counterfeit goods. The days of Santee Alley, the downtown block with open air markets that was a former mecca for frugal shoppers looking for a great knock-off, are over, replaced by actual retail stores. The anti-piracy unit is the reason for this shift as the new unit began cracking down on counterfeit dealers, forcing them to be more clandestine.

“They’re getting smarter. Instead of doing it blatantly out in the open, they’re hijacking the legitimacy of stores,” said Ishitani. “You’ll walk into a hand bag store and once you get the worker to trust you, you’ll be taken to the back room where the fakes are kept.”

Despite increased attention to counterfeiters given from LAPD, the illegal business is still burgeoning. It’s a difficult problem to suppress, according to Ishitani, because the benefits often outweigh the risks.

“You make more selling counterfeits than you would dealing narcotics, which is a major draw. It’s also less dangerous than selling drugs and appeals to a larger pool of buyers, since while everyone doesn’t do drugs, everyone does want to own nice things,” said Ishitani. “This is why gangs are transitioning from narcotics to the manufacturing and sale of counterfeit goods.”

Also the punishment for selling counterfeit items is not as severe as punishment for selling other illegal items. The owner of Caprichos will most likely just be put on probation and pay several fines, according to Ishitani.  It isn’t until she is caught a third time that she could face several months of jail time.

“From the standpoint of the seller, it’s worth it,” says Ishitani.

The efforts of Vega would culminate in a search warrant being requested for the property at 1262 S. Los Angeles street on March 2, asking the judge for permission to scour the property, confiscating all fake merchandise, taking all money made from the illegal sales for evidence and booking all receipts and records that would serve as proof of a felony.

LAPD has been striving harder to squash the sale of counterfeit goods because, unknown to consumers who are just hunting for a bargain, fake bags have a real cost. According to a report from the Los Angeles Economic Development Corporation, it takes more than $5 billion from the Los Angeles economy every year, costs 100,000 jobs to be lost and costs the real distributors more than $2 billion in sales dollars a year.

“In the end, there are people who lose from this, and that’s who we’re trying to protect,” said Ishitani.

“You think you’re getting a bargain but that knockoff has a price tag you don’t see.”

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