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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
Webinar Housekeeping
Audio Support:•Use Telephone or Mic & Speakers•Check Audio Setup for problems•All callers will be on mute throughout the webinar
To ask a Question:•Type a question in the box; click Send•Staff will respond in the ‘Questions’ box
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 [email protected]
Detective Rick [email protected]
This presentation was brought to you withfunding from the Bureau of Justice Assistance