Case

Holland & Knight – Minh VU – charged in a sweeping federal indictment with money laundering and trafficking in counterfeit goods.

In 1 on January 27, 2009 at 11:37 pm

Cache of knockoff bags triggers federal case

Chelsea residents accused in fraud

Thousands of counterfeit designer purses crowded the shelves of a Revere storage facility unit.
Thousands of counterfeit designer purses crowded the shelves of a Revere storage facility unit.

By Shelley Murphy, Globe Staff  |  November 4, 2005

Three sisters from Chelsea, and the boyfriend of one, were allegedly running a brisk business selling knockoff handbags of designers like Gucci, Kate Spade, and Louis Vuitton for $40 apiece at ''purse parties" hosted by suburban moms and at a weekly flea market.

Then last November, after more than 200 purse parties over 16 months, one of the sisters, Katherine Luong, 26, reported to police that a locker she rented at Extra Space Storage in Revere had been broken into by another renter who stole 75 handbags, valued at $1,500.

The alleged thief struck back.

He tipped off the Suffolk district attorney's office that he suspected Luong was running a counterfeit handbag ring at the storage facility.

When State Police raided 13 units that Luong rented there in January, they found cartons stacked to the ceiling, stuffed with counterfeit handbags and wallets bearing labels from Louis Vuitton, Prada, Kate Spade, Coach, Burberry, Gucci, and Fendi. The inventory totaled 46,000 bags and wallets, worth an estimated $1.4 million, according to police.

The real designer purses can cost from $200 to more than $1,000 apiece.

The raid, touted as one of the biggest counterfeit seizures in New England, drew the attention of the US Department of Justice, which has made cracking down on counterfeit goods a national priority in the same category as pirated software and CDs.

And yesterday, Luong, her sisters Camphung Luong, 24, of Chelsea, and Kim Luong, 22, now of Quincy, along with Katherine's boyfriend, Minh Vu, 25, of Chelsea, were charged in a sweeping federal indictment with money laundering and trafficking in counterfeit goods. Federal authorities have seized their cars and homes in Chelsea and Texas.

Katherine and Camphung Luong and Vu had been arrested in April on state charges of selling counterfeit goods but those charges will now be dropped.

Defense lawyers said yesterday the Luongs and Vu are hardworking young people who weren't hurting anybody with their business and shouldn't be charged in federal court.

Boston attorney Francisco Napolitano, who represents Vu, said, ''I don't think Mr. Gucci or Mr. de la Renta have anything to fear from somebody who is selling a $30 or $40 bag. It's not the same product."

Napolitano said that anybody who bought a purse from the Luongs or Vu knew they were buying a knockoff. He also said the sellers weren't attempting to hide anything; they sold their goods openly and accepted checks.

''This is a waste of the government's time and money to prosecute these people in the federal court," said Dorchester attorney Michael Doolin, who represents Camphung Luong and described her as a college student. ''These allegations against her are completely ridiculous. She isn't involved in any money-laundering or anything like that."

The indictment handed down yesterday by a grand jury in US District Court in Boston alleges that the Luong sisters and Vu ran a ring that bought counterfeit bags in New York, then peddled them weekly at the Revere flea market for two years and at some 230 purse parties — where people gathered to eat, drink, and shop — between July 2003 and last December.

The indictment details parties last year in Lowell and West Bridgewater, at which the hostesses were given free knockoff bags. When one recipient complained that her purse quickly ''fell apart," it was promptly replaced the indictment said.

''The public needs to know that when they buy a counterfeit purse at a house party or on the street, their dollars are ultimately helping to finance large-scale counterfeiting organizations," said Matthew J. Etre, the acting special agent in charge of the US Immigration and Customs Enforcement in Boston. ''And every time they buy a knockoff purse, they are contributing to legitimate companies losing billions of dollars in revenue to counterfeiting every year."

Affidavits filed in federal court in Boston in July, when the government initially moved to forfeit homes, cars, and cash belonging to the Luongs and Vu, disclosed additional details about the alleged operation. The papers say that Vu, who worked for two years as a clerk at the Boston law firm of Holland & Knight, told co-workers he was resigning last November because he could no longer handle both that job and his ''retail business."

The Luongs and Vu have yet to appear in federal court and will be summonsed for arraignment at a date yet to be set. None of them could be reached for comment yesterday.

US Attorney Michael J. Sullivan said the public can expect to see more cases like yesterday's indictment because John Ashcroft, the former US attorney general, formed task forces around the country to go after intellectual property violations, and his successor, Attorney General Alberto Gonzales, recently affirmed that commitment.

Counterfeit goods, including designer bag knockoffs, fall under the category of intellectual property because they represent stolen trademarks, Sullivan said.

''It's probably tens of billions of dollars a year that legitimate businesses have lost and oftentimes consumers have been defrauded by the purchase of what they think is a legitimate product, only later to find out it's counterfeit."

Andrea Powers, of Powers & Associates, a Sandwich-based private investigative firm that represents Gucci, Louis Vuitton, and all of the other trademark owners whose products were counterfeited, said they want the public to know that if you buy counterfeit bags ''you are funding criminal activity."

But David Procopio, a spokesman for Suffolk District Attorney Daniel F. Conley, said the state decided to hand the case over to federal authorities for prosecution because the ring was allegedly funneling money to Texas and appeared to be large in scope.

The federal indictment and documents filed in federal court suggest the operation was a huge money maker.

Some 600 e-mails that Vu generated while at Holland & Knight, which were subpoenaed by federal prosecutors, reveal that he was scheduling purse parties every week and sending large sums of money to his sister in Texas, according to an affidavit.

In one e-mail, Vu's sister asked him to send $100,000, in addition to the $50,000 he had already sent, so she could purchase a dry cleaning business, according to an affidavit.

The affidavits also allege that Katherine Luong deposited $236,784 into one bank account between August 2003 and January 2005.

Source:

Posted via email from HKLaw Investigation

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