Hamilton raid sheds light on trafficking of counterfeit goods

By Cory Ruf, CBC News

Posted: Apr 12, 2013 7:51 AM ET

Last Updated: Apr 12, 2013 9:10 AM ET

 

The RCMP announced on Thursday it raided an east Hamilton flea market on Sunday, arresting two vendors and seizing $100,000 in counterfeit merchandise. The raid sheds light on the trafficking and sale of fraudulent consumer goods in Canada.

Among the confiscated goods were knockoff sunglasses, jewelry, jeans, purses and DVDs, items that bore brand-name labels (or offshoots of them), but were on sale for less-than-brand-name prices.

In addition to apprehending the two men, one from Guelph and the other from Mississauga, police issued cease-and-desist letters to three other vendors.

Given the secrecy surrounding the industry, it's difficult to put a dollar value on how much the counterfeiting and intellectual property fraud is worth in Canada.

The Canadian Chamber of Commerce has suggested the figure lies somewhere between $20- and $30-billion annually.

"I tell people that stopping counterfeiting is the second-fastest-growing industry in the world," laughed Lorne Lipkus, a lawyer with Kestenberg Siegal Lipkus, a firm that specializes in anti-counterfeiting claim. "Of course, the fastest growing industry is counterfeiting itself."

Counterfeit goods have been seized in malls and plazas of all sizes in Hamilton, he said. The practice is rampant across Canada.

Health risks

Forgers don't just merely shill knockoff handbags and faux designer sunglasses, Lipkus said. Counterfeit prescription drugs and food products are also common — copies that pose obvious health threats. He's heard of bogus refrigerant for air conditioners and fridges and faulty ball bearings that get installed on long-haul transport trucks.

"Every time I think I couldn't be amazed, I'm amazed," Lipkus said.

'It's not a matter of just getting a purse at a great price. It's what's behind that purse.'—Arlene Flynn, RCMP

Even buying a pair of counterfeit sunglasses carries serious health and safety risks, he noted. Knockoff shades that purport to block out the sun's harmful rays often provide little-to-no protection, Lipkus said.

"We've had people cut themselves" with fake designer sunglasses, he added.

Moral hazards

Buying counterfeit goods doesn't only threaten a consumer's health; it also represents a troubling moral hazard, according to Arlene Flynn, an RCMP inspector who led the Hamilton investigation.

"It's not a matter of just getting a purse at a great price. It's what's behind that purse," she told CBC Hamilton.

The sale of fraudulent goods supports global crime rings, some of which use child and slave labour in countries such as China and India, Flynn said.

While doing research for her 2007 book Deluxe: How Luxury Lost Its Luster, American journalist Dana Thomas tagged along with Chinese police as they raided a sweatshop that produced knockoff handbags. The group found "two dozen sad, tired, dirty children, ages eight to 14, making fake Dunhill, Versace, and Hugo Boss handbags on old, rusty sewing machines," Thomas wrote in a 2009 article for Harper's Bazaar. "It was like something out of Dickens, Oliver Twist in the 21st Century."

"Let's face it," Lipkus said of tales of the counterfeit industry's use of forced labour. "These aren't stories that are fanciful."

Suspected counterfeiters 'known to police'

After Sunday's raid, two men —a 45-year-old from Guelph and a 61-year-old from Mississauga — face charges in connection with the sale and distribution of counterfeit goods.

The RCMP said the arrests came as part of a five-month investigation, a campaign that will continue.

The two accused were "known to police" and had been served cease and desist letters ordering them not to sell counterfeit wares.

Tips from the public spawned the investigation, said Flynn, who encourages shoppers to notify law enforcement if they spot goods on sale that appear to be fraudulent.

The public is "one of the best investigational aids that we have," she said.

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