Knocking Down the Knockoffs : Fraud: A private eye makes like a chameleon in fight to track down counterfeit goods.

Before he was even old enough to drink, Carlos Fernandez had already engineered his first big bust--a three-day police raid confiscating $1.3 million in counterfeit NBA and other major-league sports jackets.

Six years later, the 25-year-old private eye is still going strong, commanding his Intellectual Property Enforcement Co. on the front lines of business’ war against counterfeit goods. Dark hair neatly parted, maroon sweater thrown on casually, Fernandez seems the kind of guy you instinctively want to have a couple of drinks with, confide in about your problems, your romantic life, maybe even a shady business dealing or two.

Joseph A. Kadash, Guess’ domestic anti-counterfeit director, swears by him. And Det. John Rodriguez, a 20-year Los Angeles Police Department veteran, spent nearly an entire afternoon recently going from floor to floor, from judge to judge, helping Fernandez by reworking and getting approval for search warrants on three Los Angeles garment district stores suspected of selling counterfeit brand-name watches. At the height of the Christmas season, time was of the essence for the planned five-person police bust targeting a group of mini-mall merchants.

So widespread have these brand-name knockoffs become that they are costing the national economy an estimated $200 billion and nearly 250,000 jobs a year, according to the Washington, D.C.-based International Anti-Counterfeiting Coalition. So hard to detect have they become that even the National Trademark Investigations Inc., reportedly the largest in the business, recently quit certifying product authenticity even for clients such as Price Costco.

“The imitations have just gotten too good, and we were afraid we might get sued,” says company head Bill Ellis.

So pervasive have they become that without counterfeit goods, some independent retail stores in L.A.’s downtown, where the problem is most serious for the city, “would have to shut down,” says Michael Flynn, an undercover officer who recently fell for a $30 “Seiko”--only to have it go bust in two weeks.

Indeed, says Det. Greg Schwien, head of the LAPD’s consumer fraud division, Los Angeles has become the hub of the counterfeit industry. So many knockoffs are imported through the harbor, come in planes, are manufactured here and then sold throughout the country that the LAPD has insufficient manpower to stem the tide “unless we’re handed cases on a silver platter” by a private investigator.

Enter Fernandez, one of the smaller independents in a field dominated by some dozen major investigative agencies. Fernandez dropped out of Cal State Northridge shortly after taking a part-time job with the independent IPEC; not too long afterward, it was his company. It’s been a six-year run of phones ringing with anonymous tips, half a dozen investigators added to the payroll and an increasing number of major clients, including Seiko and Citizen (watches), Dooney & Bourke (handbags), Nike and Ray-Ban, contracting him at $65 an hour.

IPEC investigator Kris Buckner attributes Fernandez’s success to his being like “a chameleon. He can be anyone you want him to be.”

Thus, while seeking to bypass security at a downtown factory suspected of making counterfeit Guess T-shirts, Fernandez discovered that a garment worker who shared his last name was expecting her long-lost nephew from Chicago. Fernandez became the “nephew,” sharing with his “aunt” news about her brother’s recent “minor accident playing soccer.” Accompanying her to her work stall, Fernandez eyeballed the suspect T-shirts. The police raided the place the next day.

Similarly, to entice a suspected shipper of counterfeit jeans to “sell” him the goods, Fernandez says he became a millionaire, taking the suspect to a fancy restaurant where he was buddies with the maitre d’. Flashing cash and leaving an outsized tip, Fernandez so bowled him over that the suspect not only sold him 22,000 pairs of jeans--half a million dollars’ worth--without even a deposit, he also let slip the name and whereabouts of the illicit factory. The police, Fernandez says, busted it the same week.

So accomplished a storyteller is Fernandez that even his partner, Heather Holdridge, admits that she can’t tell when he’s lying. (Fernandez claims he always tells his associates the truth, which he finds rather dull. He finds it “easier to lie”--but only does so on a case. This, he swears, is true.)

Fernandez doesn’t give up easily, and this tenacity was what finally nailed a garment district business called AZ Watches one afternoon recently. He had long suspected AZ of selling counterfeit Seikos. He had first tried to make the case a year ago but failed to get any evidence. He failed once more early this month. With two strikes against him, the salesmen at the family-operated shop might recognize him and grow even more suspicious.

So Fernandez sent in Buckner laden with a shopping bag full of Christmas ornaments, just like a genuine seasonal customer. It worked; Buckner was shown the goods. On the basis of this, and similar evidence collected at two adjoining shops, Fernandez and Rodriguez obtained warrants to search the three stores.

Soon, McGill was setting up the raid, diagraming the action for the three squad cars like a football coach. Moments later, Fernandez, Buckner and Holdridge were behind the merchants’ counters, collecting and counting their booty.

Amid all of this, Ajaz Ramzan (Mr. AZ) insisted to a reporter, “They’re wrong targeting me. I was told that [the watches] are real. I don’t consider myself a criminal.”

Ramzan’s landlord, Bob Waknine, who happened to be on the premises, was equally indignant, phoning his lawyer and insisting he had the right to close down and throw out the police and investigators. Waknine pointed to the stores he rents out. “These merchants have been suffering [economically] all year. They’re behind on the rent, and now that it’s the busy season, they’re being busted. How are they going to pay? We don’t sell dirty magazines here. I don’t allow it. And when we call the cops for a shoplifter, they’re never there. So why are the cops here now?” he demanded.

As a result of the confiscated evidence, however, the principals of all three shops were charged with knowingly possessing counterfeit goods for sale.

Since AZ Watches and neighboring Ali’s Gifts were in possession of fewer than 1,000 allegedly counterfeit items, their proprietors were ticketed for misdemeanors, which carry a maximum sentence of a year in jail and a $5,000 fine. Nearby Gul’s Gift Shop, however, had more than 1,000 allegedly counterfeit items, raising the charge against proprietor Habibullah Hemani to a felony, with a maximum prison term of three years and a $250,000 fine. Hemani declined comment.

For Fernandez, the raid was all in a day’s work. Tomorrow, he might put on another fake accent, change his sneakers for leather dress shoes and talk through closed doors or mail slots to another “merchant” or “wholesaler” or “distributor.” Although he thrives on the fast pace, he concedes that, “It’s getting tough out there. People these days are so suspicious. It didn’t used to be like this.

“Honest.”

To entice a suspected shipper of counterfeit jeans to ‘sell’ him the goods, Carlos Fernandez says he posed as a millionaire, taking the suspect to a fancy restaurant, where he was buddies with the maitre d’. The suspect sold him 22,000 pairs, worth $500,000.