Counterfeit Site Execs ArrestedU.S. Customs Service officers arrested two Web site executives last month for allegedly selling counterfeit brand-name items.
Mark DiPadova, also known as Mark Voiers, and Theresa Gayle Ford, operators of Fakegifts.com, were arrested in Lancaster, SC, and are being held on $100,000 bail. The maximum penalty for trademark infringement is $2 million in fines and 10 years in prison.
Fakegifts.com was the largest site dealing in counterfeit goods, according to Swiss watch manufacturer Cartier Inc. The Web site sold counterfeit Rolex, Cartier and other brand watches, along with Montblanc pens, brand sunglasses, handbags and cigarette lighters.
The case stems from an investigation by Cartier and other major luxury goods manufacturers, and an indictment by a South Carolina grand jury. The jury found that DiPadova and Ford trafficked in counterfeit goods and "knowingly used counterfeit marks that were identical with ... genuine marks in use."
A California court ruled that DiPadova and his associates are permanently restrained from manufacturing, distributing, selling or advertising the registered trademarks. The court order also enables Cartier and Montblanc to "take any action technologically feasible to remotely shut down or interfere with the unlawful operation of [DiPadova's] infringing Web site."
Although a disclaimer on Fakegifts.com states that the products are only replicas and do not represent the genuine brand name, DiPadova stated in a CnnFn report: "I'm my own Internet service provider. They can't serve me if they can't find me. And even if they do shut down one site, I'll put up another. I'm very much aware of what I'm doing, but the money is so good, I'm going to keep doing it."
DiPadova said he was earning as much as $500,000 a month. However, during a recent court hearing, he claimed to make only $10,000 a year.
DiPadova had multiple servers in the United States and other countries and about 20 Web sites operated by or associated with him, said Bharat Dube, inhouse counsel for the Richemont Group, which owns Cartier, Montblanc and other brands.
"This case exemplifies the problem of tracking down counterfeiters who hide behind their Web sites and whole companies have no known address," Cartier said in a statement. Rolex and other watch companies filed civil lawsuits against DiPadova but were unable to enforce judgments against him.
The Fakegifts Web site is still up, but the phone number on its site is not in service.
Until now, U.S. law enforcement agencies have been unwilling to prosecute Internet trademark infringement cases because they said it was the brand owners' responsibility, Dube said. However, in this case, Richemont counsel told enforcement agencies that counterfeiting is a crime and it is unfair to place the responsibility solely on brand owners.
Marc Frisanco, inhouse legal counsel for Cartier and Montblanc, said the federal involvement is encouraging.
"We greatly appreciate the support rendered in this case by enforcement agencies in the U.S.," he said. "We have together sent a strong message to counterfeiters: 'The Internet is not outlaw territory.' "
Simon Critchell, chairman of Cartier, said, "We remain committed to protecting the reputation of our brand name and merchandise and will continue to pursue others who fraudulently use our brand name. We will spare no efforts in tracking down and putting counterfeiters like DiPadova out of business."
The U.S. Custom's Cybersmuggling Center -- created three years ago to investigate Internet crimes, including violations of trademark infringement -- obtained evidence on the case.
"This case underscores the importance of cooperation between federal and local law enforcement, the shipping industry and product manufacturers in fighting trademark infringement and cybercrime on the Internet," said Charles Winwood, U.S. Customs acting commissioner.