Courts take aim at thriving online knockoff industry

NORFOLK

Holiday shoppers looking to avoid crowded malls and sales tax by going online for faux fashion will have fewer choices this year after a massive Internet crackdown on counterfeit designer clothing, jewelry and accessories.

The push has been nationwide, but in recent months, federal judges in Norfolk alone have ordered the shutdown of dozens of websites selling counterfeit Chanel and Abercrombie & Fitch products.

Judges across the country in recent years have issued orders shuttering thousands more involving all the big-name designer labels.

Some say, what's the harm? But attorney Stephen Gaffigan, who makes his living suing counterfeiters, says it costs the U.S. economy billions of dollars.

"We actually hear that argument quite a bit," Gaffigan, based in Fort Lauderdale, Fla., said. "I think the plain simple answer is it's theft. It causes a loss of revenue to all companies. It causes a loss of jobs in the United States."

And perhaps tossing in a bit of societal guilt, he added, "When you go and buy a $40 knockoff, you're not paying taxes. People selling are not paying taxes. Those are the taxes that fund parks and schools."

Business for Gaffigan, who is being assisted locally by Norfolk's Willcox & Savage law firm, and other attorneys in his field picks up during the holiday season as companies like Chanel seek to halt at least some of the online faux sales.

"All the counterfeiters are going wild for the holiday season," Gaffigan said. "We see a big uptick in the number of websites being set up. Its whole intent and purpose is to mimic the real market."

Gaffigan and lawyers at Willcox & Savage went to federal court in Norfolk seeking injunctions against websites selling phony Chanel and Abercrombie & Fitch products. In court papers, they laid out their evidence.

In September, private investigator Brandon Tanori went to the website www.chaneloutletmall.org and purchased a black wallet with the Chanel label. He paid $193 and had it shipped to his address in Richmond.

Tanori then went to another website with the Chanel name and purchased a black-and-white ladies leather handbag with the Chanel logo on it for $255.

Gaffigan and Chanel hired Tanori, who works for the California private-eye company Investigative Consultants, to make the purchases. Tanori shipped the items to Chanel headquarters in New York, where they were analyzed and determined to be fake, according to court filings.

Private investigators hired by Chanel and other designer labels conduct these purchases over and over across the country, mostly in Virginia, Florida, New York and California. They then take their evidence to a federal judge in the jurisdiction they made the purchase and obtain a restraining order and an injunction shutting down those websites.

In Norfolk, U.S. District Judge Robert G. Doumar earlier this month issued an injunction shutting down 85 websites with the Chanel name. They include buy-chanel.com and chanelbags.org.

Today, when clicking on one of those websites, a shopper won't find the cheap knockoffs but instead will be redirected to a website detailing the lawsuit against the counterfeiters.

Gaffigan said his investigation has found that these 85 websites are connected to an organized crime syndicate in China. He said he's been to China to investigate but would not elaborate or comment on what the Chinese government is doing to stop it.

The website www.chanel.com appears to be the only legitimate Chanel website.

Chanel has actually taken over other websites, through other lawsuits. Shoppers looking for a cheap but genuine-looking Chanel purse at www.chanelpurse.net, for example, will be greeted by this message:

"To those of you out there who may be considering the purchase of counterfeit items, we urge you to recognize that by purchasing a counterfeit product you are supporting criminal activity and ask therefore that you refuse to purchase counterfeit goods."

Earlier this year, U.S. District Judge Mark S. Davis ordered 46 Chanel-knockoff websites shut down and ordered the website operators to pay a $610,000 penalty. Gaffigan says he realizes collecting on this and other judgments is fruitless.

But you can still get the knockoffs at www.fakechanelbags.net. The website doesn't even try to hide that it is selling counterfeits, with "Fake Chanel bags" and "knock off Chanel purses" in large bold letters on its home page. There, a faux Chanel accordion handbag in lambskin was selling for $209 this week. (A new Chanel lambskin purse sells for a minimum of $3,900 at the company's Madison Avenue boutique in Manhattan.)

Chanel limits the sale of its products to its own boutiques and to high-end department stores, but a search of "Chanel handbags" under the Google shopping channel resulted in 181,000 hits.

Gaffigan figures 90 percent of them are being run from China, probably by a relatively small number of people.

"They're not running one website," he said, "they're running thousands."

The federal government and trade groups estimate that some $600 billion in counterfeit goods were sold last year, triple the amount from 15 years ago. It's not just clothing and accessories.

It's software, pharmaceuticals, movies, music, auto and military parts. Authorities say products are made using child labor and profits sometimes support drug rings and terrorists.

"If you're a purchaser of these goods, you're participating in basically the downfall of your own society," Gaffigan said.

Efforts to reach a spokesperson for Chanel were unsuccessful. Tanori also did not respond to messages. Emails sent to addresses listed on some of the counterfeiters websites were not answered.

Tim McGlone, (757) 446-2343, tim.mcglone@pilotonline.com