Police swooped down Thursday on six locations where they said low-paid workers were churning out counterfeit copies of chic, ultra-pricey purses and shoes, illegally marketing them as genuine Louis Vuitton and Chanel products worth hundreds of thousands of dollars.
Glendale Police Lt. Raymond Edey said his department raided sites in Glendale, Sun Valley and Hollywood, arresting more than 20 people on suspicion of counterfeiting merchandise and possession of counterfeiting materials, which are felonies.
Vuitton and Chanel executives said they had been in contact for months with informants who work at the alleged counterfeit shops, gathering evidence for the raid.
Police and company representatives said big money was at stake. A genuine oversized Chanel bag that retails for $1,800 in shops in Beverly Hills, Palm Beach and other wealthy enclaves can be copied by a counterfeiter for about $25 and resold for as much as $400, according to Chanel representatives. Police estimated that low-paid employees in the six dusty, out-of-the-way shops were assembling up to 100 handbags a day.
The raiders found bags filled with leather cutouts of Chanel’s famous double Cs.
Chanel attorney Robin Gruber, who accompanied the raiders, said her company has noticed a significant increase in the number of counterfeiters setting up shop in Los Angeles in recent years. Increased production costs and stricter enforcement of anti-counterfeiting laws in such places as Asia and Mexico, where they were based in the past, has pushed some counterfeiters to go into operation in the United States, she said.
“It seems that places like Korea are now more willing to prosecute for [counterfeiting] handbags rather than software,” said Anthony M. Keats, an attorney for Chanel.
Both Chanel and Louis Vuitton executives said they have all but stopped targeting low-level vendors, opting instead to chase after those making or distributing the phony merchandise.
“Once the goods have hit the streets, there’s nothing we can really do,” said Louis Vuitton President Michael Burke from his office in New York. “We have to stop it in Korea or at customs. Going after the plants is the only way that we can have an impact.”
At one of the raids in Glendale, police nabbed five suspects at Albert’s Handbags. Even after he was arrested, shop owner Albert Ghazarian, 39, asked officers why they were seizing the machines he used to make the purses.
Despite Thursday’s raids, Gruber conceded that it will be difficult to put a sizable dent in the illegal merchandising business, which she estimated costs Chanel from $10 million to $20 million a year.
“It’s an intangible loss,” Gruber said. “Though we can partially measure financial losses, we cannot measure what we lose in the Chanel name.” The company fears the name will be tarnished by association with inferior goods and the firm can lose its copyright protection if it does not enforce its rights.
“The more important loss is the theft of the trademark,” Burke agreed. “Like Coca-Cola and Microsoft, our most valuable asset is our trademark. If our trademarks are weakened by this activity, we can lose lots of money down the road.”
In a similar nationwide crackdown in September, authorities seized more than $27 million in phony goods in New Jersey, New York and Los Angeles. Ten suspects and 80 alleged illegal immigrants were arrested in Los Angeles.
With Christmas right around the corner, company representatives said counterfeiters will increase their output to rake in holiday gift dollars.
“Some of these guys have their own catalogues of our products,” Gruber said. “The worst thing is that they are making items we don’t even produce,” she added, laughing.
“Hopefully, this sends out a message that we are not going to let them do this anymore. We are going to bust the people who are producing the counterfeit materials.”
Edey, one of the lead police investigators, said it cannot be proved whether the counterfeiters are linked in a “mafia,” but if one exists, the group is only loosely organized.
“They are all in the same line of business and it’s hard to believe that they are not connected somehow,” he said. But “it’s not like the movies. I don’t think there is some kingpin, just maybe a bunch of illegal entrepreneurs.”
Edey said consumers should beware bargains in such luxury merchandise. “You don’t get anything for free,” he said. “If the price is low, then it’s probably a knockoff.”