LAPD, US Customs Battle Counterfeit Goods Market, Multi-Billion Dollar Industry More Lucrative Than Drugs


Any cargo item flagged, based on the shipping manifest, goes through the Radiation Portal Monitor (RPM) scanner, a sort of X-ray device. But if a container appears suspicious, U.S. customs officers open it on the spot.

Any goods that are impounded for a secondary inspection end up in a police-controlled warehouse a few blocks from the port. That's where the dozens of boxes of fake Hermes Birken bags ended up.

The real bags retail for $4,000 apiece. If these were real bags, the manufacturer's suggested retail price would be upwards of $200 million. On the black market, the fake bags could fetch almost $300,000.

"When the officers went through our targeting system, what they saw was the importer on record was listed as a home and garden store, but the commodity itself was manifested as handbags, so that didn't add up," Nahodil said.

Whoever they were addressed to is unlikely to complain that the shipment has been seized and slated to be destroyed.

"If they're smart," Nahodil said, "they would just wash their hands completely of it."

The customs officers balk at the notion that the trade in counterfeit goods is a victimless crime and that the U.S. government is helping to prop up the artificially high price of luxury goods targeted by the knock-off artists.

They insist the money from these illegal imports goes right back into organized crime and, in some cases, even funds terrorist groups.

The CBP insists importing counterfeit goods is "the same as importing drugs or people."

"I highly doubt the money that importer or the manufacturer would gain from importing these handbags is going to pay someone's college fund," said Nahodil.

The makers of the real luxury goods are not the only ones taking a hit from the counterfeit market.

"Nightline" also visited the offices of Beachbody, makers of P90X, Insanity and other popular workout videos. Jonathan Gelfand, the chief counsel for Beachbody, told "Nightline" his company loses $75 million a year in fake DVD sales.

"That's 10 percent of our annual revenue," Gelfand said. Money that doesn't go to new making new products, hiring more employees or paying off investors.

Beachbody has several full-time employees whose only job is to search constantly online, looking for deals on Beachbody products that are too good to be true.

"Nightline" tagged along with officers of the LAPD Vice Division and the FBI as they conducted a large raid on a back-alley shop crammed with counterfeit goods. Two big rooms were full, floor to ceiling, with phony handbags, fake watches, and knock-off designer clothes.

The LAPD arrested the 24-year-old shopkeeper. If convicted, he will be deported for a second time.

But LAPD detective Rick Ishitani reckons he'll be back. The counterfeit trade is too lucrative. Ishitani has been on the counterfeit beat for over 12 years and conducts these massive busts several times a month -- 30 to 35 times a year.

He won't say it's a losing battle.

"We're trying to make a difference," he said. "Every step we make it's a gain for us."

ABC News' Kinga Janik contributed to this report

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