Counterfeit Abatement
Targeting the PLACES where counterfeit goods
are manufactured, sold, stored
Deputy City Attorney Kevin A. Gilligan
Office of the Los Angeles City Attorney
Detective Rick Ishitani
Los Angeles Police Department
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COUNTERFEIT ABATEMENTS
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Civil enforcement action brought by criminal
prosecutors in civil courts
Seeks injunctions, penalties and other remedies
to stop chronic counterfeit activity
Primarily targets the PLACES counterfeit occurs
Defendants: property owners, business owners,
individuals who are causing the illegal
counterfeit activity and/or nuisance
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Brief Overview of Counterfeit
Goods Enforcement
PERCEPTIONS ENCOUNTERED WHEN ENFORCING
LAWS AGAINST COUNTERFEIT GOODS AND PIRACY
Defendants/Jurors:
It’s not like I’m hurting anyone buying a
little counterfeit….
“It’s just T-shirts”
“Kids just want to share a little music”
“It’s just a little handbag”
“The entertainment industry makes enough money”
Prosecutors/Police
“Purse police”
I’m a prosecutor/police officer
“I only handle SERIOUS crimes….”
Education:
Part of our job is to educate our audience about why
counterfeit is serious. This webinar will give you the
information you need to begin this process.
Who is your audience?
-Investigator/Police Officer
-Prosecutor
-Your boss
-Judge
-Juries
-People who can fund your program
-Potential buyers of counterfeit goods
-Media
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MOST PEOPLE DON’T UNDERSTAND THAT
COUNTERFEIT GOODS ARE UBIQUITOUS
Apparel and Entertainment….yes, but also…
Pharmaceuticals
Heart meds, cancer meds (Avastin), birth control, internet pharmacies
Food & Beverages
Powdered baby milk
Counterfeit Vodka in Russia killed hundreds 2006
Personal Hygiene
Toothpaste US 1 million tubes of Colgate with diethylene glycol
Mach 3 razor blades - 1 estimate had 80% of ebay razors counterfeit
Electronics
Counterfeit Game boy charger electrocutes 7 year old Connor O’Keefe
British family on vacation in Thailand in ‘07
Circuit breakers
Counterfeit certifications
Law Enforcement
Badges and identification
Police Car Brake Pads-Ford Motorsports
Defense Industry
Routers, computer chips, military parts, software
Financial Industry
Phising attacks, counterfeit cashier’s checks, money orders
Why Counterfeit?
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Extremely profitable
Low barriers to entry
Draws little attention from law enforcement
Minimal criminal penalties-probation
Perceived as a “victimless” crime by many
Explain this in your civil pleadings
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Intellectual Property Theft
Education
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National Crime Prevention Council
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NCPC and BJA Public Education Campaign
http://www.ncpc.org/topics/intellectual-property-theft
Rand Report on Film Piracy, Organized Crime
and Terrorism
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Cite in your pleadings, your expert may use it
http://www.rand.org/pubs/monographs/MG742.html
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THE SCOPE OF THE PROBLEM
500 BILLION A YEAR – BIGGER THAN DOPE
10% OF GOODS IN MARKETPLACE
NOT LIMITED TO LUXURY GOODS
PUBLIC SAFETY ISSUES
AIRPLANE & AUTOMOBILE PARTS
MEDICINE & MEDICAL EQUIPMENT
FOOD ITEMS
LAPD ANTI PIRACY - 110,000 PIRATED CDS RECOVERED 8/07/08
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Italian authorities bust counterfeit Ferrari ring
WHO IS INVOLVED IN COUNTERFEITING?
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Busted U.S. Drug Ring
was funding Hezbollah
2007
Los Angeles - A seemingly small-time drug ring
busted this week in Los Angeles was actually
targeted for funding the Lebanese militia group
Hezbollah, the Daily News has learned.
Ali Khalil Elreda , 32, of Bell;
Mohamad Elreda, Ali's brother, 25, of Bell
Susanne Elreda, Ali's sister, 34, of Smyrna, Ga.
Hussein Saleh Saleh, 37, of Bell
Robert Bell, 36, of Corona
Dalisa Johnson, 37, of Corona
Moussa Matar, 48, of Cudahy
Mohamad Matar, Moussa's son, 28, of Cudahy
Ali Matar, Mohamad's twin brother, 28, of Cudahy
Juan Gonzalez, 26, of Lynwood
Frankie Higuea, 24, of Downey
Crystal Hill, 25, of Hawthorne
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HEZBOLLAH / AL-QAEDA
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36TH STREET / 38TH STREET
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ASIAN ORGANIZED CRIME
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18TH STREET
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MS 13
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CRIPS / BLOODS
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EAST COAST CRIPS
RAYMOND STREET
COMPTON CRIPS
HELLS ANGELS
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PROPERTY ABATEMENTS AS A
TOOL TO FIGHT COUNTERFEIT
ACTIVITY
When arrests aren’t enough to
solve the problem
PROPERTY ABATEMENTS
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Civil Enforcement Action
Filed by Prosecutors in the
Name of the People
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Narcotic abatements
Red light abatements
L.A. City Attorney began
filing narcotic abatements in
1990.
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PROJECT T.O.U.G.H.
(Taking Out Urban Gang Headquarters)
PROPERTY ABATEMENTS
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Abatements evolved to include gangs as
well as drug abatements
Staff joint federal/local investigations in LA
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ATF, FBI, DEA, CBP and LAPD/LASD
Now includes counterfeit and organized
crime locations
COMMON CAUSES OF ACTION IN
PROPERTY ABATEMENTS
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Narcotics Abatement
CA Health & Safety Code section 11570
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General Public Nuisance
CA Civil Code section 3479
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Unlawful Business Practices
aka Consumer Protection
B&P section 17200/allege counterfeit
violations as a predicate act (CA PC 350)
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Actions can be combined
with code enforcement
PROPERTY ABATEMENTS
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Defendants are:
 Engaged in nuisance
activity
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Gang members
Property managers
Tenants
Business owners
Property owners*
*Depending on facts,
notice, and statute
used.
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Abatement Remedies
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Injunctive relief (owner, business
owner, gang members,
counterfeiters)
Stay away orders
Evictions
Closure & demolition
Receiver
Attorney’s fees
Investigative costs
Civil penalties
Judgment recovery
Search and seizure conditions
VARY BASED ON FACTS, CAUSE OF ACTION
NOW WHAT CLOTHING
9229 S. Broadway
NOW WHAT CLOTHING
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Activity:
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Multiple Gangs Involved!!
Counterfeit goods
(sales)
Gang loitering
Guns (illegally
possessed by felons)
Marijuana and Ecstasy
2 Shootings, homicide
Stolen property
Multiple arrests and
search warrants!!!!
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NOW WHAT CLOTHING
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Gang members and
counterfeiting*
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Lucrative
Rarely investigated
Public perception
(jurors and prosecutors)
Lesser penalties
Generally safer than
dealing dope
*Increase in gang
members involvement in
counterfeit in Los Angeles
California B&P 17800
Counterfeit Abatement Statute
Nonresidential building or places used for willfully
manufacturing, intentionally selling, or knowingly
possessing for sale any counterfeit goods shall be deemed
a nuisance.
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Powerful remedies, injunctive relief, damages
Remedies per PC 11225
Valid until 2015
REQUIRES COUNTERFEIT CONVICTION PRIOR TO FILING
California PC 350(2) or 653w
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Owner must be given 30 days notice prior to filing
California Trademark Protection
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Penal Code 350 (2)
Willful manufacture, intentional sale or knowing
possession for sale of a counterfeit mark
registered with Secretary of State or the Principal
Register of the US Patent & Trademark Office of
1,000 or more items OR has a total retail or fair
market value equal to or greater than grand theft
(PC 487)-Currently $950.
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Counterfeit CD’s or DVD’s
California Penal Code Section 653w
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Failure to disclose the origin of a recording or
audiovisual work, if for commercial advantage or
financial gain, (s)he knowingly advertises or offers
for sale or resale, or sells or resells, causes the
rental, sale or resale, rents, manufacturers, or
possesses any recording or audiovisual work, the
cover, box, jacket, or label of which does not
clearly and conspicuously disclose the actual true
name and address of manufacturer and name of
actual author, artist, performer, producer etc…
Unlawful Business Practices
California B & P 17200
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Prohibits unlawful, unfair, deceptive
business practices
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Extremely broad
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Applies if business violates any law –
municipal, state or federal
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We allege violations of state trademark
law, but also cite the federal Lanham
Act
Unlawful Business Practices
aka the Unfair Competition Law (UCL)
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“(T)he UCL’s purpose is to protect both
consumers and competitors by promoting fair
competition in commercial markets for goods
and services.”
By alleging violations of UNLAWFUL and UNFAIR
prongs you can bring in many facts including
lost revenue to city, courts, effect on other
businesses
Educate the judge, tends to drive defense
counsel crazy.
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Unlawful Business Practices
California B & P 17200
Injunction & receiver—possible closure
 $2,500 penalty per violation, per day
 Current examples:
 drug/gang apt. buildings
 tattoo shop
 counterfeit goods
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NOW WHAT CLOTHING
CONSIDERATIONS
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Legal options
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Causes of action???
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Abatement (injunction)
Case conference
Eviction
Narcotic abatement action
Nuisance
B&P 17800 Counterfeit
Defendants
NOW WHAT CLOTHING
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Filing Decision
 Did not use 17800 in our case
because we did not have a
counterfeit conviction*
 17200
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350 PC
3479 Civil Code - Nuisance
*Teamwork - Police, prosecutors, abatement attorneys, investigators to seek
Conviction for counterfeit where an abatement is needed
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NOW WHAT CLOTHING
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Remedies Sought
 Closure of the business
 Stay away from location
 Pay business taxes
owed to City of LA
 Work restrictions in
state
 Do not engage in
counterfeit
 PERMANENT
INJUNCTION
 Led to other ATF case
Counterfeit Abatement
Considerations
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How long has the location been a problem? Repeated arrests
Define the goal of your case, property based?
Civil service of gang members -- challenges – DISCUSS!!
Investigative partners - narco, customs, other jurisdictions
private investigators
Look for links to other criminal activities
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Most of our counterfeit defs. are involved in other things
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Researching web pages, my space etc
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Drugs, violence, burglary rings, prostitution, human trafficking, murder
STRENGTHENING YOUR
ABATEMENT CASE
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ID everyone on site—ID
role, i.e., managers, sales,
etc.
Determine business
ownership
Photos and photocopies
Any shipping labels?
Get it to us early
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Useful Evidence For Abatements
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Explain to officers, abatement vs. arrest
Proving ownership/control of location
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Utility bills
Lease agreements
Mail
Property records
Wit/defendant statements
Corporate filings
Doing Business As - statements
Bank accounts/pay and owe sheets
Gangster writing/graffiti/apparel – (Nuisance) Photos
PHOTOS of condition of location
PHOTOS of employees – for court/case conference
Invoice Showing Rent From
Business Owner to Property
Owner
Useful Info – Tips for Officers
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Abatements are different than arrests
Lock employees into story
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How long have you worked there
Who hired you
Who runs the store/business
Who pays you, when, how often
When do you see the owner/manager of location
How often are they present
When is the last time you saw them
How do you contact them
Who stocks the shelves
Who collects the money
Where does the money go
Who has keys to business
Who opens/closes business
Other agencies/investigators working location? RISS? Contact all
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Criminal Case vs. Civil Abatement
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Free lawyer
Defendants familiar with
criminal court
Limited discovery
Can be speedy (months)
Jurisdiction easy
Right to jury trial
Minimal paper
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No free lawyer
Defendants and lawyers often
unfamiliar with civil court
Civil discovery broad
Can be slow (year or more to
trial)
Jurisdiction can be hard – have
to serve defendants with paper
*** Timing of investigation
and filing important
No right to a jury trial
LOTS OF PAPER
Remedies
Criminal Prosecution vs. Abatement
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Primarily targets people
Penalty: Jail/prison (maybe)
Probation limited: 3 yrs?
Restitution
Probationary terms limited to term
of probation-can be terminated if
they pick up another case
Sentence affected by jail
overcrowding, at least in CA
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Primarily targets place
Penalty: potentially massive
fines, permanent injunction,
closure, receiver, perm stayaway orders
Restitution
Property closure
Restriction on future business
activities
Perm. Search and seizure orders
Sentence not affected by jail
overcrowding
Service of Defendants
People vs. Barrios, Guerra
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Counterfeit Abatement
Considerations
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Who will be your counterfeit expert?
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To file or not to file (an abatement)
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Police vs. private investigators – issues include training, storage
Limited law enforcement and prosecution resources
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Would an owner notification letter solve the problem?
Would a case conference with owner solve it?
Do you have a counterfeit conviction
Do you have prior cease and desist letters
Did you give owner notice, if needed
What other causes of action, options do you have?
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(17200 B&P - UCL) – I.E. Consumer Protection Laws
(HS 11570 Narco) – I.E. Narcotic Abatement Laws
(3479 CC Nuisance) – I.E. Public Nuisance Statute
Grounds for eviction – Statutory or lease based?
Code enforcement, tax and labor law enforcement - POWERFUL
Additional Considerations
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Put $$ value in arrest report
Document gang, OC connections
Document investigative cost
Consider a 1271.1 bail motion
(proceeds of crimes cannot be used for bail,
burden on defendant to prove)
Cite expert reports, RAND, LA Economic
Development Corp report to educate audience
(Judge, Jury – if criminal, Defense bar that you
are serious).
FUTURE BJA WEBINAR
Counterfeit Abatement Advanced
Strategies
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Working with private investigative agencies
-Evaluating, evidence tracking, reports,
Investigative strategies/collaboration
Pretrial motions in counterfeit case
Educating the judge with your pleadings
Justifying civil penalties
Restitution
Injunctive relief – remedies to seek, restrictions on
individuals, businesses, employment
Let us know what issues you want to know about
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Result of Counterfeit Lawsuit
People vs. Barrios, Guerra
Deportes Si Se Puede 1325 S. Main St.- Oct 11
COUNTERFEIT GOODS RECAP
(EDUCATE YOUR AUDIENCE)
Economic Threat
$200-$250 BILLION lost by US business annually
Responsible for loss of 750,000 American Jobs*
National Security Threat
Defense industry, military parts, airport routers,
computer software
Public Safety Threat
Gangsters, organized crime, terrorist links, funds
bad guys and their goals-RAND REPORT
Counterfeit Abatement
When arrests just aren’t enough!
This presentation was brought to you with
funding from the Bureau of Justice Assistance
Kevin Gilligan, Deputy City Attorney
[email protected]
Detective Rick Ishitani
[email protected]
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