NEW YORK — Private investigators working for The North Face have uncovered a ring allegedly responsible for making an estimated 100,000 counterfeit jackets that brought in more than $8 million since 2002, according to the company.
The North Face, a division of VF Corp., said the jackets were seized during raids on warehouse facilities in California, New Jersey and New York.
In documents filed in U.S. District Court in California that have been unsealed, The North Face stated that one of its retailers in Utah was approached by an individual identified as Michael Stoof about buying 13,000 jackets. The North Face hired the private investigation firm Vaudra Ltd. The investigators contacted Stoof by posing as potential buyers and requested a sample be mailed to them. The sample was found to be a counterfeit, the company said.
“After a series of phone calls to Mr. Stoof, he informed me of his suspicion that the subject jackets were counterfeit,” the investigator said in a court filing on May 16.
Stoof referred the investigator to an man identified as Steven Niman, the court papers said. When contacted, Niman confirmed that he had more than 13,000 jackets for sale and requested a $5,000 deposit to hold them.
Stoof could not be reached for comment. Niman did not return a call.
According to the investigator’s court filing, after wiring the $5,000 to an account registered in the name of Niman’s wife, Niman and the investigator met at a CXN Freight Systems Inc. warehouse in City of Industry, Calif., on May 12. A warehouse clerk told the investigator that CXN was holding more than 18,000 North Face jackets. The goods were seized and uncovered a document trail that led to several other local warehouses where thousands of jackets were discovered.
Days later, The North Face filed its complaint, naming Niman and others and alleging violations on eight counts, including federal trademark counterfeiting and infringement, false designation of origin and unjust enrichment. Stoof was named in a subsequent filing.
The scope of the case quickly expanded after seized documents revealed several East Coast warehouses had received shipments.
On June 6, Randall Rabenold, president of Vaudra, filed a declaration with the court stating that the seizure of documents from one of the raids indicated that seven full truckloads of counterfeit North Face goods had come through California. The raids had recovered the equivalent of only two truckloads of goods. The documents, said Rabenold, indicated that 200 boxes of counterfeit goods were shipped to a warehouse in Passaic, N.J.
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Meanwhile, a raid of a New York warehouse on June 10 turned up another 1,422 jackets, Rabenold said in the court papers. Seized documents showed that goods had come from China as early as November 2002 and made their way to New York.
So far, The North Face said it has recovered a total of 28,122 jackets and restrained 24 bank accounts.
“I’ve been doing this for 15 years and this is one of the largest busts we’ve done,” said Roxanne Elings, an intellectual property lawyer with Greenberg Traurig, who is representing The North Face. “The sheer number of goods from a single product line, seizing more than 20 bank accounts — this is big.”
Elings alleged that the counterfeit ring was run by Michael Chu. He conducts business out of an office on West 38th Street in Manhattan, the court papers said.
David Singer, a lawyer representing Chu, denied that his client had knowledge of the counterfeiting.
“He thought he was selling overruns and irregulars,” said Singer. “He has a letter from the supplier that says they’re authorized to sell overruns for North Face. Our client thought they were legitimate.”
Singer said it was not yet clear that the goods were actually counterfeit.
The complaint filed by The North Face has expanded to include more than 15 companies and individuals. Preliminary injunctions have been issued against most of the defendants, said Elings.