The massive Long Beach warehouse is as well stocked as any big-box discount store, filled with brand-new electronics, designer jeans, famous-label handbags and toys.
And cigarettes. Cartons and cartons of them, seemingly enough to supply a small kingdom.
There are no shoppers, however. All of the goods in this 500,000-square-foot warehouse were seized by federal agents — mostly counterfeits, along with banned items such as elephant ivory and drug paraphernalia.
Smuggling is on the rise, with seizures by U.S. Customs and Border Protection up 35% in fiscal year 2010 from 2009. And the ports of Los Angeles and Long Beach are the front line.
The twin ports account for about 40% of all seizures by Customs and Border Protection. That reflects their status as the nation’s busiest port complex and as the main cargo gateway from Asia, whose workshops are as good at making knockoffs as they are at making the real thing.
Customs officials acknowledge that they are struggling to intercept the vast quantities of illegal goods that make their way into the ports each day, hidden among legitimate shipments of clothing, auto parts and housewares.
Thanks to technological advances such as sophisticated 3-D printers, counterfeiting iPhones, PlayStation game consoles and other goods has never been easier. Selling them has gotten easier too, as the advent of online markets such as Craigslist and EBay has allowed smugglers to bypass fences in the criminal underworld and sell directly to consumers.
Apprehending contraband shipments, meanwhile, has never been harder. About 50,000 cargo containers a day, laden with $1 billion in goods, move through the local ports’ 15,300 acres of channels, wharves and terminals. Each 40-foot container is large enough to carry about 12,300 shoeboxes, 20,000 toy dolls or 6,600 dresses on hangers.
Smugglers also have gotten wiser, mixing in their wares with legitimate shipments to make detection more difficult.
“We’re not seeing containers that are just filled with contraband like we used to. We’re seizing smaller amounts, but we’re finding it more often,” said Todd Hoffman, the Customs and Border Protection director at the ports of Los Angeles and Long Beach.
In January, for instance, Customs and Border Protection officials seized 22,000 cartons of counterfeit Marlboro Light 100s and Marlboro Gold cigarettes, worth $1.1 million, that were found alongside legitimate cargo in a container with a shipping invoice that read “hang tags and hang plugs.”
Authorities also have found knockoffs of True Religion and other designer jeans that had distinctively stitched pockets concealed by innocuous denim patches, or cases in which cheap handbags covered counterfeits of expensive Kate Spades and Louis Vuittons, customs officer Guillermina Escobar said.
After smugglers get their hands on the counterfeit products, they remove the disguises and sell the goods as the real thing.
“They have even begun sending the fake bags and wallets and other items separately by sea cargo containers, and sending the fake logos and decals by air freight so that they can be attached to the counterfeits later,” Escobar said.
Investigators in January raided several discount stores in downtown Los Angeles, where they snared more than $10 million worth of bogus iPods and other counterfeit and stolen merchandise. The fakes arrived through the harbor as parts meant to be reassembled and labeled before being sold, said Ron Boyd, chief of the Los Angeles Port Police’s 200-member force.
To intercept illegal goods, customs officials rely on both electronic scans of containers as well as physical inspections, in which they crack open containers and poke around inside. Now and then, they get lucky with a tip from an informant.
Detection efforts at all seaports, airports and border crossings were stepped up after the 9/11 terror attacks, as authorities sought primarily to prevent weapons and explosives from entering the country. As an outgrowth, they began finding more counterfeit consumer goods as well.
At the L.A. and Long Beach ports, all containers are screened with mobile scanners or pass-through machines resembling giant metal detectors, which test for radiation that might indicate the presence of explosives — or lately, problematic cargo from Japan. The machines are sensitive enough to register a false positive from something as innocuous as cat litter.
Through Customs and Border Protection’s Container Security Initiative, high-risk boxes are scanned overseas, before they depart for the U.S. Currently, 58 of the world’s largest seaports have agreed to allow those inspections and 95% of all high-risk shipments are being scanned at those ports, said Jaime Ruiz, a spokesman for Customs and Border Protection in Southern California.
After arriving in the U.S., 5% to 10% of containers are physically inspected for smuggled goods or other things that don’t belong, according to a customs investigator who didn’t want to be identified because he wasn’t authorized to speak publicly.
Several factors contribute to the decision to open a container for inspection, including the country from which the cargo originates, shipping manifests that arouse suspicions and whether the importer has certified its foreign suppliers through a federal program, as Target Corp. has done.
The U.S. government says it is pushing companies to join this Customs-Trade Partnership Against Terrorism, which requires major U.S. importers to lean on their foreign suppliers to ensure that nothing illegal or dangerous is slipped in with their cargo. More than 10,000 companies have joined.
At the local ports, containers are taken for inspection to Customs and Border Protection’s Long Beach warehouse, where on a recent day nearly 90 boxes were being unloaded. The merchandise warehouse is one of several run by the agency at the ports; others handle items such as food, refrigerated products, drugs and weapons.
Along with counterfeits, the warehouse also stores legitimate products with phony lab test stickers, which could pose a safety risk to U.S. consumers, and banned items such as elephant ivory and whale teeth. The warehouse has also held items that violated export controls and were confiscated on their way out of the U.S., such as high-performance analog-to-digital converters and equipment to manufacture assault rifles.
Smuggling of foreign-made counterfeit cigarettes into the U.S. has become such a problem that legitimate manufacturers are stepping up their own sleuthing.
Philip Morris USA Inc. sends plainclothes investigators to stores to buy and test cigarettes for authenticity, spokesman David Sutton said. The investigators also sift through discarded packs for clues, even digging through the trash at sports events.
The company recently sued dozens of businesses in Southern California and China for allegedly selling counterfeit Marlboro, Parliament and Virginia Slims cigarettes in stores and online.
“For the average consumer, it would be virtually impossible to tell the difference between an authentic pack and a counterfeit pack of cigarettes,” Sutton said. “And every 40-foot container of counterfeits represents a loss of $350,000 in state and federal excise taxes.
Nearly all counterfeit and contraband items are destroyed by outside contractors under federal government supervision. Counterfeit cigarettes, for example, are burned in high-heat incinerators or crushed, Ruiz said.
Perhaps to the dismay of aficionados, confiscated Cuban cigars meet the same fate.
There are exceptions. If brand-owning businesses give permission, seized items can be donated to help the needy in other countries.
“We can’t run the risk of those items being sold back into the U.S. market, so they have to be moved overseas,” Ruiz said.
A recently seized shipment of several thousand pencils with fake National Football League team logos will find its way into classrooms in Africa through World Vision Africa.
“There could be a classroom full of Dallas Cowboy fans there soon,” Ruiz quipped, “although they might not realize it.”