On trail of traders aiming to make €150m from fake goods

It was an innocuous enough online advertisement. A top brand pair of trainers, size eight, never worn and still in their packaging. The cost was a third of the high-street price. A potential buyer was keen, but wondered would size eight fit? Some size eights were bigger than others and really he felt he might be a size nine.

“I can get you a size nine,” came the reply from the seller. “I can get any size you want.”

Neither party realised, however, there was more than trainers coming down the line as gardaí were monitoring the online conversation.

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The watches, boots and the rest of the “Aladdin’s cave” are deemed to be counterfeit with the aid of brand-protection officers employed by major manufacturers.

Some weeks previously, customs officers working at the national mail centre in Portlaoise had opened a box labelled as sports trainers that had a low but probably correct declared commercial value. X-rays revealed no hidden panels and the next step was to assess the package for liability for VAT. Routine stuff: no great issues for the Revenue Commissioners.

That was except for an eagle-eyed customs officer who noted the address on the box was the same as a smaller package on the conveyor belt. When this package was opened it was found to contain several thousand labels, each bearing the logo of an expensive, top-brand sports shoe.

The shoes and labels were taken to the Revenue Commissioners fenced area of the mail centre, where officers Siobhán and Martina were working.

On a typical day when The Irish Times called, Siobhán opened a box bearing a customs declaration stating "declined watch" with a value of $50. The watch, which came from China, bore the logo of probably the world's best-known watchmaker. To the trained officer it was clearly a counterfeit. Her colleague Martina was working on a package containing "sample boots" with a value of $30. Inside the boots bore the logo of designer but a quick test of the lining and the stitching showed they too were not the real thing.

Brand-protection officers

The watches, boots and the rest of the “Aladdin’s cave” are deemed to be counterfeit with the aid of brand-protection officers employed by major manufacturers. Revenue also works hand in glove with the Garda National Bureau of Criminal Investigation, and the discovery of ostensibly legitimate trainers and subsequent logos are of great interest to the bureau’s Det Supt Kyne.

The trainers are a legitimate import, until the logos are placed on them, so gardaí effect a “controlled delivery” to the intended recipient – watching and following the trail, establishing the scope of the network and the “factory” where the logos are attached.

"So far this year we have knowledge of about 100,000 of this brand's logos coming into Ireland in small packages," said Det Supt Kyne.

With a potential counterfeit 50,000 pairs, the damage that can be done to a top brand by criminals is severe.

Det Insp Eamon Henry said “factories” are frequently set up in the Republic to match labels with otherwise cheap clothes.

Legitimate company

He said a controlled delivery of labels was being taken by a legitimate courier company to a fashion warehouse in Dublin.

Gardaí had secured a search warrant in advance but on the day of delivery the premises was found to be a derelict building. The operator of the building next door claimed the delivery, saying the number on the address must have been a slight mistake. As a result the Garda search warrant was not valid for next door. The gardaí who were operating covert surveillance withdrew and returned later with a new warrant before the rogue importer realised he was being watched.

According to Det Insp Henry, who co-ordinates raids and sting operations on such premises, the range of counterfeit factories is restricted only by imagination. “Handbags, shoes and particularly alcohol,” he said, before adding that gardaí were currently aware of an operation placing fake labels on bottles of spirits.

Gardaí and Revenue are targeting traders who are expected to try to sell €150 million worth of illegal goods in the run-up to Christmas.

Revenue officers have warned of a “Christmas rush” in fake designer goods, including handbags, shoes, toys and designer trainers, among other items.

Counterfeit goods are not just an issue of defrauding Revenue but hurt "real taxpayers and jobs", said assistant principal officer with Revenue Mick O'Hanlon. He recalled the recent consignment into Dublin Port of fake French perfumes and top-brand aftershaves.

The value of fake goods in the two containers was €2 million on the streets. The comparable value for genuine goods in the shops was €8 million.

To put it in context, the Revenue 2014 annual report showed 9,915 detections with a total value of €4 million.

The consignment, from China, was identified as “of interest” by routine profiling. While the criteria were not disclosed, Mr O’Hanlon agreed French perfume coming via China could be a clue that something was extraordinary.

On arrival at Dublin Port the two containers were placed in one of three secure compounds awaiting customs paperwork. When the paperwork arrived, Mr O’Hanlon gave the order for the containers to be brought to the inspection warehouse.

Customs officers opened the doors and found the 69,000 bottles, all labelled as high-profile brands and all later identified as fake.

Damage to legitimate retailers

While many people think little of depriving Government and multinational manufacturers of a small portion of their revenue in the acquisition of a cheap bottle of perfume, Mr O’Hanlon maintained it was not just Government, retailers and manufacturers who lost out.

He said counterfeit perfumes sold on the street for a third of the price of the genuine article in nearby shops damaged retailers “where genuine taxpayers work”. There was also the question of safety.

He instanced fake children’s toys which do not have European Union certification, pointing to a seizure last year that included 20,000 stuffed toys that came apart in the hands of small children.

Fake phone and tablet chargers frequently go on fire, hair straighteners burn hands and “people put creams and sprays on their bare skin”, all of which may have originated outside the EU and have no safety certification and no comeback for purchasers, he said. Particularly worrying, he said, was the arrival of unapproved medicines sourced on the internet. Whatever about creams and sprays, people who bought medicines online were taking a huge risk with their health, he said.

Some 500,000 containers a year come through Dublin. Routine profiling identifies about 5 per cent of these as “of interest” and nearly every one of these would be opened and physically inspected, he said.

Those seeking a cheap bottle of perfume or alcohol this Christmas could be risking their health from homemade products sold as top-name brands, gardaí in the National Bureau of Criminal Investigation have also warned.

The bureau said it was targeting a number of illegal distilleries, as well as manufacturers of fake goods, including washing powders and unlicensed medicines. Det Supt Kyne said a campaign targeting those who sold illegal goods on streets, particularly in Dublin, and in markets across the State was under way. According to Revenue, the main categories of goods seized included cosmetics, clothing, sports shoes, mobile phones and accessories and toys. For its part, the Garda National Bureau of Criminal Investigation has uncovered counterfeit foodstuffs, washing powders, alcohol, music and books.

Second-hand websites

Det Supt Kyne and the National Bureau of Criminal Investigation said these were frequently among the goods offered on fraudulent websites or websites selling second-hand goods. However, it was not certain that those who bought illegally traded items online knew that they were doing so, he said.

Among the pitfalls facing customers are stolen credit card details, the imposition of duty and VAT when the parcel is assessed and the risk of having fake goods confiscated.

Websites can look as if they are based in Ireland or in the EU, but goods may be coming from anywhere. One of the advertisements perused for this article offered a premium brand mini-tablet computer for €100. Those who inquired were told the seller was a retailer of a top brand, based in the US. However, they were also told no tax and duty was payable.

The Revenue advice is that anyone using a website should check where the sellers are based and if possible get a company name and address on which the customer might at least run a Google check.

The advice from the National Bureau of Criminal Investigation is caveat emptor – buyer beware.