Counterfeit Bags Seized in Raid

In an attempt to crack down on a surging counterfeit trade in Orange County, state investigators and police raided a Westminster residence Wednesday where they seized bogus Chanel handbags and arrested three people suspected of manufacturing the fakes.

The three workers were charged with counterfeiting a registered trademark. If convicted, they face fines of up to $1,000 each and as much as a year in jail.

Although the haul was small--police confiscated only 30 fake Chanels, some raw materials and five sewing machines--experts say it confirms the latest trend in Southland counterfeiting.

Stung by police raids on major counterfeiting operations in Los Angeles over the past year, savvy organizers have taken to farming out work to a network of home workshops in Orange County. The tiny shops attract little notice from law enforcement, while their modest production allows operators to avoid a felony conviction for possessing more than 1,000 illegal knockoffs at one time.

Bill Ellis, a veteran private detective who specializes in anti-counterfeiting work, suspects the Westminster shop is just a tiny piece of a much larger counterfeiting ring.

“We’ve put a lot of heat on Los Angeles and the counterfeiters are trying to escape it,” said Ellis, who is investigating the case for Chanel. “They’re coming down to Orange County and setting up shop in homes, garages and anyplace else they can find. It’s far-flung, but it’s very organized.”

No one knows how many mom-and-pop counterfeiters are currently at work in Orange County. But one thing is certain: The potential profits for illegal manufacturers are huge. The International Anti-Counterfeiting Coalition estimates that trademark forgeries cost U.S. industry about $200 billion each year, and the number continues to grow.

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While the leaders of the counterfeit rings prosper handsomely, the trade thrives on the exploitation of immigrant workers who toil long hours for low wages, often in unsafe working conditions.

That’s where the latest trend in counterfeiting intersects with a recent upswing in “home work”--that is, contractors giving employees sewing work to take home, which is illegal under California law.

State labor investigators led Wednesday’s raid, looking for potential labor and safety violations in the cramped Westminster residence. Four sewing machines were wedged into the low, dimly lit garage, whose sides were piled high with rolls of leather and fabric, the floor littered with glue barrels and garment scraps.

Inside the residence, another sewing machine--still warm from recent use--was set up in the living room decorated with family snapshots and a framed portrait of Minnie Mouse.

Investigators have yet to issue any labor violations in connection with the alleged counterfeiting operation. But records seized in the raid led to the shutdown Wednesday of a Huntington Beach leather goods manufacturer for whom one of the arrested suspects worked sewing industrial gloves at the Huntington Beach plant and at the Westminster home.

Investigators say that Tomislav Stefanovic, president of Nikolai’s European Leather Concepts Inc., did not carry workers’ compensation for the 32 employees at his factory. He faces more than $30,000 in fines.