Faking It in the Fashion World

The women wanted the quality stuff. Their contact had told them where and how to get it. So a few days before Christmas, an 18-year-old, her mother and their two girlfriends drove nearly an hour from suburban Orange County into the heart of downtown L.A.

At the prescribed address on Santee Alley, they located the dealer, a middle-aged man with a foreign accent and guarded manner. They showed him they were serious customers by the accessories they wore and their stated intent to buy in volume. The women inspected what he brought them, paid in cash and took off with their illicit prizes: $45 Kate Spade handbags.

Not real Kate Spades, of course. The bags are part of a growing black market in counterfeit fashion accessories that matches sophisticated counterfeiters and brazen scofflaws with label-conscious young women eager for designer looks at bargain prices.

At the moment, Kate Spade fakes--simple nylon or faux fur-covered rectangular handbags that retail for $165 to $500 in upscale stores--are among the newest, hottest items on the market.

Los Angeles, already a hub for counterfeit imports, has become an international center for manufacturing fakes, said Los Angeles Deputy Dist. Atty. Bill Clark. While it is impossible to measure the scope of the black market, Clark said he believes that most counterfeits in the nation, and most bootlegged products sold south of the border, are manufactured in sweatshops in downtown Los Angeles and in suburban industrial parks around Southern California.

In the last two years, about 25 manufacturers have been prosecuted in Los Angeles County, Clark said, adding that no cases have been filed in New York or San Francisco during the same period. Los Angeles is ripe for counterfeiting, he said. Many skilled garment workers are looking for work after their companies have relocated out of the country.

Industry watchdogs say the market for fashion fakes is part of a broader counterfeit market that causes estimated annual losses to the U.S. economy of $200 billion.

At the root of the boom in fashion counterfeits is a widespread demand for fake designer accessories that were considered declasse not so long ago.

“There’s a whole new mentality about paying a high price for something,” said Kristine Cleary, a designers representative at the California Mart in Los Angeles. “It’s completely opposite from 10 years ago. Everybody is proud to say they got an off-price deal or a knockoff. It’s like they’re beating the system.”

Some openly brag about finding a good fake.

“It shows you’re resourceful,” said Alexis White, 20, a junior at UCLA who has bought fake Gucci and Prada bags in Italy and Los Angeles for $60 and less.

Other customers, emboldened by the quality of today’s fakes, try to pass off the counterfeits as real with mixed results.

Tiffany Wheat, manager of Kate Spade’s Los Angeles boutique, said more than two dozen women came into the store after Christmas asking to exchange the bags they’d received as Christmas gifts. Wheat said she could tell right away the bags were bogus. They carried the familiar “kate spade NEW YORK” label, but the stitching was too small, the straps too narrow, the nylon fabric faded or the faux fur too rough.

“We always try to break it gently,” Wheat said, noting that most of the women had no idea that their bags were counterfeit.

“We’re sorry,” we say, “but Kate didn’t make that bag.”

Unlike legitimate off-price products and generic look-alikes, counterfeits have phony labels. Customers are led to confuse the items with the original, even though the quality can range from cheesy copies with glued-on labels to detail-by-detail duplicates.

While buyers usually are not breaking any laws, manufacturers, distributors and some retailers can be prosecuted or sued under state and federal statutes for violating a registered trademark. In California, criminal penalties can be as severe as three years in prison and $250,000 in fines.

During the last five years, sophisticated copies have become increasingly difficult to distinguish from designer handbags, in part because designers themselves have switched from handcrafting to mass production. When they use computer technology to produce the originals, “it’s fairly easy to have a clandestine computer make the clandestine product,” Clark said.

Counterfeiting Is a Major Crime

The U.S. Department of Justice recently placed counterfeiting on its list of major crimes. Even so, counterfeit products--from handbags and shoes to toys and software--continue to flourish. Last year, U.S. Customs officers seized $98.5 million worth of counterfeits, more than twice what they uncovered in 1995, and most from the ports of Los Angeles and Long Beach.

Customs officials are unsure whether the increase is driven by more smuggling from Pacific Rim countries or better enforcement. Some believe it could also be linked to Asian manufacturers’ need to keep their plants busy during economic downturns. Counterfeiters try various tricks to avoid detection. With handbags, some counterfeiters ship the fakes in pieces, separately from labels, and have them assembled locally. Some deliberately misspell a label as “kade spade” or “kade spate,” for instance. Ted Max, attorney for Kate Spade in New York, expects the company to take action soon against that type of counterfeiter.

The simplicity and popularity of Kate Spade bags has made them the most recent target of counterfeiters who follow trends with radar-like accuracy. The company was founded in 1993 by Kate Spade, a former Mademoiselle accessories editor, and her husband, Andy Spade. In seven years, the young New York-based company has created a handbag line that lifestyle doyenne Martha Stewart has called “the bag everyone wants to carry.”

When counterfeit bags started showing up in Florida last year, “we were shocked,” said Elyce Cox, a partner in the company, recently acquired by Neiman Marcus. “We thought somebody’s selling old handbags like in a garage sale. We found out they were made in Canada. Then they showed up in New York and Los Angeles.”

Since then, the company has fought back with an unusually aggressive approach. It hired a team of attorneys and investigators who, relying on tipsters, ferret out manufacturers, distributors and vendors, make controlled buys to determine if the products are fakes, and report them to police. They also train police and customs officers in how to spot counterfeits.

Most fakes, for instance, will not have a “made in USA” tag, an extra “kate spade NEW YORK” label inside, internal stays to strengthen the outside shell, an inside zipper marked with the manufacturer’s “ykk” or special patented hardware.

Filipa Richland, a Los Angeles lawyer hired last year by the company to coordinate West Coast investigations, already has more than 100 active files on counterfeiters.

Such strategies may help control the black market, but many in the industry believe that neither stricter laws nor better enforcement will ever eradicate it.

“You have to think of this in terms of the drug problem,” Richland said. “As long as there’s a demand, there’s a supplier.”

In Southern California, the demand for Kate Spade and the even more expensive Prada and Gucci bags spans the generations but is perhaps most evident among starlets, teenagers and young women.

One 22-year-old sales woman, still sensitive about being identified as a buyer of fakes, said that when she first moved to Los Angeles from Virginia and was “getting used to the whole trend thing,” she bought two Kate Spade bags at Bloomingdale’s, one for $150 and another for $270. Last November, however, she bought a fake Kate Spade, a red Chinois print handbag, for $35 in Los Angeles’ downtown garment district. “I got a lot of compliments on it,” she said. Now the young woman buys only fakes.

Prada bags and Kate Spades have become common sights on some middle school campuses. For the very young, the fakes are an affordable ticket to social acceptance.

A Pacific Palisades mother said her 11-year-old daughter had been asking for a Kate Spade handbag for the year leading up to her birthday. Instead, the mother bought her two fakes, feeling sure they would do. After all, she said, “This is L.A. It’s form above substance.”

The trend troubles some school administrators. Open displays of expensive bags were so common among 10- to 14-year-old girls this year that officials at Crossroads School in Santa Monica, worried about the promotion of overly materialistic values, forbade Kate Spades in grades six through eight along with other designer handbags. Morgan Schwartz, director of the middle school, said one girl tried to talk her way out of the ban by claiming her bag wasn’t real. Administrators didn’t buy her appeal.

At USC, Jessica Taylor estimated that half the sorority girls own Kate Spades, either real or fake. In the social hierarchy of fashion labels, even a fake Kate Spade is better than a generic bag from the Gap, said Taylor, a member of the Delta Delta Delta sorority.

“If you have a fake Kate Spade, it really doesn’t matter as long as you have a label on it,” she said.

Operations Covert in L.A.

Finding fakes in sprawling Los Angeles isn’t as simple as it is in more centralized cities, such as New York or Florence, Italy, where vendors sell counterfeits on busy sidewalks, sometimes in front of the very stores whose products they’ve copied, to take advantage of the high foot traffic.

In Los Angeles, Richland said the business is more covert.

“You’ve got people with pagers, cell phones, phony names and phony post office box numbers that they change routinely every month to avoid detection,” Richland said.

Vendors in Southern California fan out to swap meets, flea markets, small boutiques in malls and charitable events. Itinerants sell the bags door-to-door in Beverly Hills nail salons and at USC sorority houses. Fakes are sold on Internet auctions and at special parties in hotels and suburban homes, investigators say. Deputy Dist. Atty. Clark said vendors even have set up shop in his building, filled with government offices.

While counterfeiting attracts recent immigrants, often from countries where the black market is a common way of doing business, investigators say it also lures middle-class suburbanites who buy in volume and resell the bags like Tupperware to girlfriends and neighbors.

“For every big Middle Eastern or Senegalese counterfeiter, there are 10 or 15 middle-class people who buy and sell in the suburbs,” said Gary White, an East Coast security consultant for Kate Spade.

Some dealers and customers believe they are trafficking in legitimate products, “seconds” or the legal gray market of overruns. And sometimes that might be true.

Other distributors know exactly what they’re doing and, as Richland suspects, may enjoy the frisson of a brush with the underworld.

“It’s as close as they’ll ever get to living on the edge,” she said.

Regular Police Sweeps

In downtown Los Angeles, Santee Alley is a four-block, open-air bazaar, an aromatic and boisterous back street lined with discount retail and wholesale shops. Police estimate every fourth vendor sells fakes, sometimes intermingled with legitimate goods. Regular sweeps of the booths net about 60 felony arrests each year. Police said they focus more on manufacturers and distributors because the sellers are too numerous and often too mobile.

Customers say only a handful of dealers carry the high-quality fakes; newcomers must learn how to deal to get what they want.

The Orange County mother, too uncomfortable about her purchases to be identified, said it all started innocently enough when she saw the bag her daughter wanted on the arm of another woman. The woman admitted it was a fake and, as they talked, gave her directions to the alley. Another friend familiar with the garment business schooled her in counterfeit shopping strategy.

Following their tips, she and the other women went to a particular booth whose owner was said to have some good fake Kate Spades.

“We go to this storefront,” she recalled. “We go in. He has some bags. I ask him if he has any Kate Spades. He says no. Never. He looks nervous.”

The man asked where they got the Kate Spade bags they were carrying. They said Bloomingdale’s.

As instructed, she then told him, “We want more than one. We want a few. I said we’d be willing to wait.”

The man left the store, returned 15 minutes later with a black plastic trash bag. The handbags looked good, but they were not the styles they wanted. He left again. After 20 minutes more he returned with the right ones. They paid in cash and left.

The woman said she felt “a little shady” afterward but reasoned the purses, made of cardboard and cloth, probably weren’t even worth $45.

Kate Spade is upset, but not too worried that her products will be permanently harmed by the boom in counterfeits, her partner Cox said.

“We worked really hard for a lot of years to get this business up and running,” she said. “It’s outrageous for someone to market your name.”

Despite the competition from fakes, other designers like Prada have continued for years without apparent damage, Cox said. So far, sales are strong; this year, the company will earn $50 million to $60 million and is expanding beyond handbags into shoes, fragrance, eye wear, and a new line, Jack Spade, for men.

Cox said she doesn’t believe it’s the loyal customers buying fakes on the street. The true Kate Spade customer knows the difference and, the designers trust, would prefer to pay full price for an original.

At USC, senior Meredith Moore, a Delta Delta Delta sorority member, said she owns two original Kate Spade handbags as well as the pencil case, the makeup bag and the wallet--a collection worth about $700. She is not even tempted to buy a fake.

Said Moore, “I don’t want anybody to think I couldn’t afford a real bag.”

Lynn Smith can be reached at lynn.smith@latimes.com.