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Counterfeit AbatementTargeting the PLACES where counterfeit goods

are manufactured, sold, stored

Deputy City Attorney Kevin A. GilliganOffice of the Los Angeles City Attorney

Detective Rick IshitaniLos Angeles Police Department

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COUNTERFEIT ABATEMENTS

Civil enforcement action brought by criminal prosecutors in civil courts

Seeks injunctions, penalties and other remedies to stop chronic counterfeit activity

Primarily targets the PLACES counterfeit occurs Defendants: property owners, business owners,

individuals who are causing the illegal counterfeit activity and/or nuisance

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Brief Overview of Counterfeit Goods Enforcement

PERCEPTIONS ENCOUNTERED WHEN ENFORCINGLAWS AGAINST COUNTERFEIT GOODS AND PIRACY

Defendants/Jurors:It’s not like I’m hurting anyone buying a little counterfeit….

“It’s just T-shirts”“Kids just want to share a little music”“It’s just a little handbag” “The entertainment industry makes enough money”

Prosecutors/Police“Purse police”I’m a prosecutor/police officer“I only handle SERIOUS crimes….”

Education:Part of our job is to educate our audience about why counterfeit is serious. This webinar will give you the information you need to begin this process.

Who is your audience?-Investigator/Police Officer-Prosecutor-Your boss-Judge-Juries-People who can fund your program-Potential buyers of counterfeit goods-Media

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MOST PEOPLE DON’T UNDERSTAND THAT COUNTERFEIT GOODS ARE UBIQUITOUS

Apparel and Entertainment….yes, but also…

PharmaceuticalsHeart meds, cancer meds (Avastin), birth control, internet pharmacies

Food & BeveragesPowdered baby milk Counterfeit Vodka in Russia killed hundreds 2006

Personal HygieneToothpaste US 1 million tubes of Colgate with diethylene glycol Mach 3 razor blades - 1 estimate had 80% of ebay razors counterfeit

ElectronicsCounterfeit Game boy charger electrocutes 7 year old Connor O’KeefeBritish family on vacation in Thailand in ‘07

Circuit breakers

Counterfeit certifications

Law Enforcement Badges and identificationPolice Car Brake Pads-Ford Motorsports

Defense IndustryRouters, computer chips, military parts, software

Financial IndustryPhising attacks, counterfeit cashier’s checks, money orders

Why Counterfeit?

Extremely profitable Low barriers to entry Draws little attention from law enforcement Minimal criminal penalties-probation Perceived as a “victimless” crime by many Explain this in your civil pleadings

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Intellectual Property TheftEducation

National Crime Prevention Council NCPC and BJA Public Education Campaign http://www.ncpc.org/topics/intellectual-property-theft

Rand Report on Film Piracy, Organized Crime and Terrorism Cite in your pleadings, your expert may use it http://www.rand.org/pubs/monographs/MG742.html

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THE SCOPE OF THE PROBLEM

500 BILLION A YEAR – BIGGER THAN DOPE

10% OF GOODS IN MARKETPLACE

NOT LIMITED TO LUXURY GOODS

PUBLIC SAFETY ISSUES

AIRPLANE & AUTOMOBILE PARTS

MEDICINE & MEDICAL EQUIPMENT

FOOD ITEMS

LAPD ANTI PIRACY - 110,000 PIRATED CDS RECOVERED 8/07/08

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Italian authorities bust counterfeit Ferrari ring

WHO IS INVOLVED IN COUNTERFEITING?

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Busted U.S. Drug Ring was funding Hezbollah2007

Los Angeles - A seemingly small-time drug ring busted this week in Los Angeles was actually targeted for funding the Lebanese militia group Hezbollah, the Daily News has learned.

Ali Khalil Elreda , 32, of Bell;Mohamad Elreda, Ali's brother, 25, of BellSusanne Elreda, Ali's sister, 34, of Smyrna, Ga.Hussein Saleh Saleh, 37, of BellRobert Bell, 36, of CoronaDalisa Johnson, 37, of CoronaMoussa Matar, 48, of CudahyMohamad Matar, Moussa's son, 28, of CudahyAli Matar, Mohamad's twin brother, 28, of CudahyJuan Gonzalez, 26, of LynwoodFrankie Higuea, 24, of DowneyCrystal Hill, 25, of Hawthorne

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HEZBOLLAH / AL-QAEDA

36TH STREET / 38TH STREET

ASIAN ORGANIZED CRIME

18TH STREET

MS 13

CRIPS / BLOODS

EAST COAST CRIPS RAYMOND STREET COMPTON CRIPS

HELLS ANGELS

PROPERTY ABATEMENTS AS A TOOL TO FIGHT COUNTERFEIT

ACTIVITY

When arrests aren’t enough to solve the problem

PROPERTY ABATEMENTS

Civil Enforcement Action Filed by Prosecutors in the Name of the People

Narcotic abatements Red light abatements L.A. City Attorney began

filing narcotic abatements in 1990.

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Abatements evolved to include gangs as well as drug abatements

Staff joint federal/local investigations in LA ATF, FBI, DEA, CBP and LAPD/LASD

Now includes counterfeit and organized crime locations

PROJECT T.O.U.G.H.(Taking Out Urban Gang Headquarters)

PROPERTY ABATEMENTS

COMMON CAUSES OF ACTION IN PROPERTY ABATEMENTS

Narcotics Abatement CA Health & Safety Code section 11570

General Public Nuisance CA Civil Code section 3479

Unlawful Business Practicesaka Consumer ProtectionB&P section 17200/allege counterfeit violations as a predicate act (CA PC 350)

Actions can be combined with code enforcement

PROPERTY ABATEMENTS

Defendants are: Engaged in nuisance

activity Gang members Property managers Tenants Business owners Property owners*

*Depending on facts, notice, and statute used.

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Abatement Remedies

Injunctive relief (owner, business owner, gang members, counterfeiters)

Stay away orders Evictions Closure & demolition Receiver Attorney’s fees Investigative costs Civil penalties Judgment recovery Search and seizure conditions

VARY BASED ON FACTS, CAUSE OF ACTION

NOW WHAT CLOTHING9229 S. Broadway

NOW WHAT CLOTHING Activity:

Counterfeit goods (sales)

Gang loitering Guns (illegally

possessed by felons) Marijuana and Ecstasy 2 Shootings, homicide Stolen property Multiple arrests and

search warrants!!!!Multiple Gangs Involved!!

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NOW WHAT CLOTHING

Gang members and counterfeiting* Lucrative Rarely investigated Public perception

(jurors and prosecutors) Lesser penalties Generally safer than

dealing dope

*Increase in gang members involvement in counterfeit in Los Angeles

California B&P 17800Counterfeit Abatement Statute

Nonresidential building or places used for willfully manufacturing, intentionally selling, or knowingly possessing for sale any counterfeit goods shall be deemed a nuisance. Powerful remedies, injunctive relief, damages Remedies per PC 11225 Valid until 2015

REQUIRES COUNTERFEIT CONVICTION PRIOR TO FILING California PC 350(2) or 653w

Owner must be given 30 days notice prior to filing

California Trademark Protection

Penal Code 350 (2) Willful manufacture, intentional sale or knowing possession for sale of a counterfeit mark registered with Secretary of State or the Principal Register of the US Patent & Trademark Office of 1,000 or more items OR has a total retail or fair market value equal to or greater than grand theft (PC 487)-Currently $950.

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Counterfeit CD’s or DVD’s California Penal Code Section 653w

Failure to disclose the origin of a recording or audiovisual work, if for commercial advantage or financial gain, (s)he knowingly advertises or offers for sale or resale, or sells or resells, causes the rental, sale or resale, rents, manufacturers, or possesses any recording or audiovisual work, the cover, box, jacket, or label of which does not clearly and conspicuously disclose the actual true name and address of manufacturer and name of actual author, artist, performer, producer etc…

Unlawful Business PracticesCalifornia B & P 17200

Prohibits unlawful, unfair, deceptivebusiness practices

Extremely broad

Applies if business violates any law –municipal, state or federal

We allege violations of state trademark law, but also cite the federal Lanham Act

“(T)he UCL’s purpose is to protect both consumers and competitors by promoting fair competition in commercial markets for goods and services.”

By alleging violations of UNLAWFUL and UNFAIR prongs you can bring in many facts including lost revenue to city, courts, effect on other businesses

Educate the judge, tends to drive defense counsel crazy.

Unlawful Business Practicesaka the Unfair Competition Law (UCL)

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Injunction & receiver—possible closure $2,500 penalty per violation, per day Current examples: drug/gang apt. buildings tattoo shop counterfeit goods

Unlawful Business PracticesCalifornia B & P 17200

NOW WHAT CLOTHING CONSIDERATIONS

Legal options Abatement (injunction) Case conference Eviction

Causes of action??? Narcotic abatement action Nuisance B&P 17800 Counterfeit

Defendants

NOW WHAT CLOTHING Filing DecisionDid not use 17800 in our case

because we did not have a counterfeit conviction*

17200 350 PC 3479 Civil Code - Nuisance

*Teamwork - Police, prosecutors, abatement attorneys, investigators to seekConviction for counterfeit where an abatement is needed

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NOW WHAT CLOTHING

Remedies Sought Closure of the business Stay away from location Pay business taxes

owed to City of LA Work restrictions in

state Do not engage in

counterfeit PERMANENT

INJUNCTION Led to other ATF case

Counterfeit Abatement Considerations

How long has the location been a problem? Repeated arrests Define the goal of your case, property based? Civil service of gang members -- challenges – DISCUSS!! Investigative partners - narco, customs, other jurisdictions

private investigators Look for links to other criminal activities

Most of our counterfeit defs. are involved in other things Drugs, violence, burglary rings, prostitution, human trafficking, murder

Researching web pages, my space etc

STRENGTHENING YOUR ABATEMENT CASE

ID everyone on site—ID role, i.e., managers, sales, etc.

Determine business ownership

Photos and photocopies Any shipping labels? Get it to us early

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Useful Evidence For Abatements

Explain to officers, abatement vs. arrest Proving ownership/control of location

Utility bills Lease agreements Mail Property records Wit/defendant statements Corporate filings Doing Business As - statements Bank accounts/pay and owe sheets Gangster writing/graffiti/apparel – (Nuisance) Photos PHOTOS of condition of location PHOTOS of employees – for court/case conference

Invoice Showing Rent From Business Owner to Property

Owner

Useful Info – Tips for Officers

Abatements are different than arrests Lock employees into story

How long have you worked there Who hired you Who runs the store/business Who pays you, when, how often When do you see the owner/manager of location How often are they present When is the last time you saw them How do you contact them Who stocks the shelves Who collects the money Where does the money go Who has keys to business Who opens/closes business Other agencies/investigators working location? RISS? Contact all

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Criminal Case vs. Civil Abatement

Free lawyer Defendants familiar with

criminal court Limited discovery Can be speedy (months) Jurisdiction easy Right to jury trial Minimal paper

No free lawyer Defendants and lawyers often

unfamiliar with civil court Civil discovery broad Can be slow (year or more to

trial) Jurisdiction can be hard – have

to serve defendants with paper *** Timing of investigation and filing important

No right to a jury trial LOTS OF PAPER

Remedies Criminal Prosecution vs. Abatement

Primarily targets people Penalty: Jail/prison (maybe) Probation limited: 3 yrs? Restitution Probationary terms limited to term

of probation-can be terminated if they pick up another case

Sentence affected by jail overcrowding, at least in CA

Primarily targets place Penalty: potentially massive

fines, permanent injunction, closure, receiver, perm stay-away orders

Restitution Property closure Restriction on future business

activities Perm. Search and seizure orders Sentence not affected by jail

overcrowding

Service of DefendantsPeople vs. Barrios, Guerra

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Counterfeit Abatement Considerations

Who will be your counterfeit expert? Police vs. private investigators – issues include training, storage

To file or not to file (an abatement) Limited law enforcement and prosecution resources

Would an owner notification letter solve the problem? Would a case conference with owner solve it?

Do you have a counterfeit conviction Do you have prior cease and desist letters Did you give owner notice, if needed What other causes of action, options do you have?

(17200 B&P - UCL) – I.E. Consumer Protection Laws (HS 11570 Narco) – I.E. Narcotic Abatement Laws (3479 CC Nuisance) – I.E. Public Nuisance Statute Grounds for eviction – Statutory or lease based? Code enforcement, tax and labor law enforcement - POWERFUL

Additional Considerations

Put $$ value in arrest report Document gang, OC connections Document investigative cost Consider a 1271.1 bail motion

(proceeds of crimes cannot be used for bail, burden on defendant to prove)

Cite expert reports, RAND, LA Economic Development Corp report to educate audience (Judge, Jury – if criminal, Defense bar that you are serious).

FUTURE BJA WEBINARCounterfeit Abatement Advanced

Strategies Working with private investigative agencies

-Evaluating, evidence tracking, reports, Investigative strategies/collaboration Pretrial motions in counterfeit case Educating the judge with your pleadings Justifying civil penalties Restitution Injunctive relief – remedies to seek, restrictions on

individuals, businesses, employment Let us know what issues you want to know about

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Result of Counterfeit LawsuitPeople vs. Barrios, Guerra

Deportes Si Se Puede 1325 S. Main St.- Oct 11

COUNTERFEIT GOODS RECAP(EDUCATE YOUR AUDIENCE)

Economic Threat$200-$250 BILLION lost by US business annuallyResponsible for loss of 750,000 American Jobs*

National Security ThreatDefense industry, military parts, airport routers, computer software

Public Safety ThreatGangsters, organized crime, terrorist links, funds bad guys and their goals-RAND REPORT

Counterfeit AbatementWhen arrests just aren’t enough!

Kevin Gilligan, Deputy City AttorneyKEVIN.GILLIGAN@LACITY.ORG

Detective Rick Ishitani34227@LAPD.LACITY.ORG

This presentation was brought to you withfunding from the Bureau of Justice Assistance