More than $16 million worth of counterfeit Nike athletic shoes were seized in Arizona in what authorities are calling one of the largest counterfeit-merchandise smuggling schemes in U.S. history, officials said Tuesday.
Authorities announced on Tuesday that at least six people have been indicted after importing about 135,000 pairs of knockoff Nike shoes to Arizona and another 558,000 pairs to Texas and California with plans to sell them in the United States illegally. Federal officials estimated the total value of the shoes seized was nearly $87 million.
According to Special Agent in Charge Roberto G. Medina of U.S. Immigration and Customs Enforcement, in May, authorities received information that a large shipment of counterfeit merchandise was going to come to Long Beach, Calif., from China.
The Arizona shipment, which consisted of 15 sea cargo containers holding 9,000 pairs of shoes each, was to be shipped in-bond, meaning it would pass through the United States and be delivered to Mexico, he said.
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Eight of those containers or 72,000 pairs of shoes were shipped to Nogales. The other seven containers went to Phoenix. Seventy-seven containers were imported overall to the United States.
When anything is shipped in-bond, officials are required to document when the shipment is imported and when it is exported. The in-bond system allows importers to avoid paying U.S. import fees and permits rapid processing.
Because the suspects' true intent was to keep the counterfeit goods in the country, they located what they thought was a corrupt Customs and Border Protection officer and attempted to bribe the officer to falsely document that the shoes were exported, Medina said.
The "corrupt officer" turned out to be an undercover federal agent.
"This case represents one of the most significant investigations into counterfeit goods in recent U.S. history," Medina said. "Taking down an organization that sought to introduce millions of dollars worth of counterfeit goods into our economy is a victory for both consumers and legitimate businesses."
U.S. Attorney Paul Charlton said, "This indictment reflects efforts to not only counterfeit goods illegally, but also to bribe officials whose job it is to protect and monitor the flow of goods across our borders."
According to the indictment, several of the suspects met at least eight times with the undercover agent, giving him $25,000 as bribery payments.
The shoes were to go to Miami and New York City.
Medina would not say if any of the shoes actually got into the market.
Six suspects have been named in the indictment returned by a federal grand jury in Tucson on Aug. 16. They are:
● Mark Elias, 36, of El Paso.
● Juan Carlos Martinez-Esquer, 46, of Sonora, Mexico.
● Manuel Flores Jr., 53, of El Paso.
● Wei Tung Lam, also known as Tony Lan Wen Jung, a resident of Gambia and a native of the People's Republic of China.
● Sau Kuen Chan, also known as Edith Chan, of Hong Kong.
● Peng Liu, also known as Charleyworld, a resident of Hong Kong.
All six are facing charges of bribery of a public official and trafficking in counterfeit goods and services, according to the indictment.
Martinez-Esquer, Wei Tung Lam and Sau Kuen Chan were arraigned Aug. 24 and will go to trial Oct. 17. They are being held in federal custody. Elias and Flores will be arraigned Thursday and have been released on $50,000 and $20,000 cash bond respectively.
Liu has not been caught.
Officials say depending on what Nike would like to do with the shoes once the trial is over, they will either be destroyed, sent to correctional facilities for prisoner use or be used as relief items in a natural disaster.
Nike applauded the work done by the U.S. Attorney's Office, U.S. Customs and Border Protection, and U.S. Immigration and Customs Enforcement, said Derek Kent, a Nike spokesman.
Last year, Customs and Border Protection reportedly seized $16 million in counterfeit apparel nationwide, according to Caroline Joiner, executive director of the U.S. Chamber of Commerce's Anti-Counterfeiting and Piracy Initiative.
This is a significant break, Joiner said. "We are sending a strong signal that we will not tolerate these crimes."
For more information about the Anti-Counterfeiting and Piracy Initiative, visit www.thecacp.com.
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Containers seized*
