Website seizures target counterfeits

Article by: DAN BROWNING , Star Tribune
Updated: November 28, 2011 - 9:26 PM

Federal authorities say the products on those sites are economic and safety, hazards.

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As online shoppers combed the Internet looking for deep discounts on "Cyber Monday," federal authorities announced the "seizure" of some 150 sites nationwide that sell counterfeit products.

Fifteen federal seizure warrants were issued in Minnesota alone in November -- second only to Washington, D.C., where the investigation was spearheaded, authorities said.

Agents with Homeland Security Investigations have targeted everything from fake sports jerseys and collectibles to counterfeit handbags, Christmas tree lights and prescription drugs.

It's unclear how big an impact the seizures will have, though. The sites were traced to China and other overseas locations, and authorities say they're likely to pop back up again before too long.

Mike Feinberg, special agent in charge of Homeland Security Investigations (HSI) in Bloomington, said Monday's announcement about the seizures is designed to alert consumers to "beware of what they're purchasing this holiday season." Shoppers should take the same care when they're shopping online as they would going into a brick and mortar store, Feinberg said. If something seems too good to be true, he said, "then it may be."

"Selling and buying counterfeit goods is not a victimless crime. In fact, it hurts American innovation, it hurts American jobs, it retards job growth, and it also can be very dangerous," Feinberg said. "Buying counterfeit electrical cords can cause a Christmas tree to catch on fire ... counterfeit clothes that aren't flame retardant when they ordinarily would be can catch fire, and counterfeit batteries can explode in kids' toys."

Timed to Cyber Monday

This is the second year in a row that an announcement about the seizures has been pegged to Cyber Monday, the online shopper's equivalent of the door-busting Black Friday sales following Thanksgiving.

Since October, authorities in Minnesota have obtained seizure warrants for 19 sites pitching White Sox jerseys, P90X exercise equipment, Uggs boots and other women's shoes, football jerseys, DVD sets, Louis Vuitton products and miscellaneous luxury goods.

The investigations of sthcool.com was prompted by a tip from an industry group organized to protect the intellectual property of professional sports teams. The site sold National Football League jerseys for an average of $18, National Hockey League jerseys for $33, and Major League Baseball jerseys for $19, special agent David Whereatt wrote in a seizure warrant application. "It was known that officially licensed jerseys similar to the jerseys offered for sale on sthcool.com were priced at $110 to $285," he said.

After making undercover buys of products determined to be bogus, Whereatt said, investigators traced the site registration to Internet.bs Corp. in Nassau, Bahamas. The website was hosted on a server in North Kansas City, Mo.

A similar investigation of minnestoatwinsstore.com and twinsjerseysproshop.com traced the website registration to Fujian, China, and the websites were hosted in Provo, Utah.

'Tip of the iceberg'

The Star Tribune reported in August that the brand protection company MarkMonitor tracked 100 websites providing counterfeit or pirated items for a year. The study revealed 53 billion visits. Most went to illegal file-sharing websites that let visitors download music or movies for free but left consumers vulnerable to computer viruses and identity theft. Sites selling potentially dangerous fake prescription drugs got 51 million visits a year, MarkMonitor found. Other counterfeit-products sites attracted 87 million visits.

"These findings are just the tip of the iceberg," a MarkMonitor report concluded. "The true scope of the problem is exponentially higher in terms of user traffic, lost revenue and risks to public health and safety."

A new report by the National Intellectual Property Rights Coordination Center said there's no consensus about the value of the harm done by counterfeits, but estimated it runs in the "hundreds of billions to trillions of dollars."

"Offenders in China pose the greatest threat to United States interests in terms of the variety of products infringed, the types of threats posed (economic, health and safety, and national security), and the volume of infringing goods produced there," the report says.

Feinberg said organized crime often is the culprit in such schemes. Though seizing websites and pasting buyer-beware public service announcements on them won't necessarily bring intellectual property thieves to justice, he said, it keeps up the pressure and helps educate consumers that they may just be giving their credit card information to crooks.

Dan Browning • 612-673-4493