Authorities say counterfeit sneakers can finance organized crime, terrorists

Federal authorities say the resale value of rare shoes can send mark-up prices into the thousands and criminals are hoping to cash in.
6:13 | 09/08/17

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Transcript for Authorities say counterfeit sneakers can finance organized crime, terrorists
Reporter: Today we're on the hunt with the LAPD on a raid in Inglewood, on the hunt for one of the most counterfeted commodities coming into the U.S., sneakers. So they're in there right now? That's correct. Two undercover officers just walked in, posing as customers. There needs to be a sale, right? Yes. Or at least an attempt sale. Reporter: Undercover agents working for Nike have been surveilling this store for months. They say they've already bought fake sneakers here. And now they're bringing the LAPD along, hoping to make arrests. That's our undercover officer now. Good? We're going to come in. Police. Open the door. HAPD. Hi there. Reporter: Fake Nikes for sale. As of right now you're under arrest. Reporter: And why should we care? Those dollars are not going to some legitimate business. Those dollars are going to support drug trafficking organizations, organized crime, and in some cases terrorist organizations. Reporter: Yes, he said terrorist groups. Officials say that terrorists who attacked French magazine "Charlie Hebdo" financed their weapons partly by selling fake Nikes. Counterfeiting is big business, and it's big business that's controlled by criminals. Reporter: Authorities are tracing the money through wire transfers. They say a lot of it goes through France and then on to the Middle East. Here in a warehouse in new Jersey the feds say they are trying to make sure fakes never even make it into the country in the first place. We're looking every single day. Reporter: This is customs and border patrol. They partner with other agencies, the FBI, the D.E.A., sharing Intel on counterfeit shipments. Mainly from China. We got information that it's possibly counterfeit. So we're going to take our time and go through piece by piece. Reporter: Last year cbp seized over $32 million worth of counterfet goods. After you've done this 5,000 times you start to get the feel for what legitimate Nikes might feel like. Chinese. Are you serious? These are not real. Reporter: And Adidas yeezies may be the pinnacle of this exploding illegal industry. Red carpets, runways, all over Instagram. These Kanye west-designed kicks are everything. Knit upper, chunky sole. But buyer, beware. Genuine yeezies retail for around 200 bucks a pop, but they're so rare, sell out so fast that what amount to sneaker speculators are selling them with massive mark-ups. How much are we talking for these? 12. 1200. 700. Maybe 700. 1,000. 1500. 1500 bucks for those? Yep. Reporter: I'll explain the mask in just a minute. It's like the stock market. One day it's worth 500. Next day it's 1,000. And just it all comes down to how many are available. Reporter: These are all real but that shortage now fueling a counterfeiting explosion. And some fakes so good that many consumers are turning to unofficial authenticators online. There are certain things the fakes have that real ones don't. Reporter: Yeezy buster calls out the fakes daily to his hundreds of thousands of followers. He says the mask hiding his identity for fear of being sued. I'm a 19-year-old from los Angeles and I'm a med student. It's not a crime to buy this stuff. So you're going to have the consumer demand. People like nice things. I mean, you walk around L.A., you'll see at least ten people wearing these. Probably eight or nine of them will be fake. Reporter: Mostly made in China, factories churning out thousands of counterfeits. The differences are subtle. Like labels, color variation, and sole thickness. What's the difference? Well, basically, this pair you can get off fake Chinese websites and these ones are authentic. Reporter: He offers a yeezy authentication service. For ten bucks he'll tell you if the yeezies are legitimate or not. The request arrives by e-mail as we're talking. This label looks good to me. You've got to see if the serial numbers match up. Everything looks good. A lot of the fakes the line ends over here. See how it kind of fades out over here? And then I would just send them real and just my initials and send. And that's just how it works. Good little service. Reporter: Some people know their yeezies are fake and don't care, they just want them real or not. But if you do care, how can you tell? Are these both real? No. One of them's fake and one of them's real. I don't know if you can take a look at them. I think these are fake. Those are actually the real ones. This is a decent fake, yeah. If this is on someone's foot it would be pretty difficult to tell. Reporter: There are plenty of how-to tutorials on YouTube. I'm going to be talking about how to spot a fake sneaker site. Reporter: Basically, look at the detail. The suede on the real one is a little nicer and the -- Adidas logo is heat printed on the real one. Whereas on the fake it's like glossy. Reporter: And the sole. You could even feel it with your hands. Like this is like much more squushy. And you can tell this is legit and this isn't. I could not tell the difference. Really? No. Reporter: All of this easier to do if you have them in your hand or on your foot. The fakes aren't nearly as coortable too. I think they're kind of ugly? You think so? Reporter: For the sellers of the fake ones it's a lucrative game. An average distributoror makes anywhere from 80,000 tods 150 thousands a month. Reporter: A month. That's over a million dollars a year. Reporter: And the punishments if caught are a lot more lenient than, say, for narcotics trafficking. At the end of the day this is a property crime so, it's not a big deal. And our judicial system, obviously it's lenient toward property crime. I just work here. Reporter: Back at the raid in Inglewood the store clerk is under arrest. The clerk is cited for selling counterfeit goods. She cooperated. We corroborated what she said and we did some undercover buys. At different stores? At different stores. Specifically the supplier. So you managed from that raid to get to the main supplier? Correct. The store's owner, an alleged supplier, was later arrested. The police tell us they found a storeroom packed with fakes and they will pursue charges. It was a lot. Hundreds. Hundreds. Yeah. The whole back end was covered with sneakers. All of them counterfeit. Every single one. Every single one. Reporter: I'm Nick watt for "Nightline" in Los Angeles.

This transcript has been automatically generated and may not be 100% accurate.

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