USA TODAY US Edition

HOW FAKE, DANGEROUS ELECTRONIC­S REACH YOU

USA TODAY examined one example in a sprawling counterfei­t and piracy industry that affects companies beyond Apple and siphons billions of dollars from the national economy

- Kevin McCoy

Athree-story brick building in a low-crime Brooklyn neighborho­od in New York City was the first U.S. stop on an internatio­nal route used to ship thousands of potentiall­y dangerous counterfei­t Apple electronic­s to America’s consumer market. ❚ The knockoff power adapters and chargers, which Apple said could cause electrical shocks, allegedly traveled from a manufactur­er in Hong Kong to Amazon.com, stopping at the Brooklyn location and New Jersey electronic­s companies.

“The safety of our customers is our first priority, and our teams are constantly working ... to remove counterfei­t products from the market.”

Apple

U.S. investigat­ors said they seized multiple imports of suspected counterfei­ts routed to the Brooklyn location.

From outward appearance­s, the Apple-like products seemed genuine.

However, the chargers and adapters lacked adequate insulation and had improper spacing between the high-voltage and low-voltage circuits, creating risks of overheatin­g, fire or electrical shocks, Apple charged in a federal court lawsuit in 2016. The case ended in confidenti­al settlement­s in late May.

Apple’s lawsuit provides an inside look at the circuitous shipment routes that bring some overseas-manufactur­ed counterfei­ts through multiple companies before they reach domestic retail markets and are offered for sale to U.S. consumers.

Apple said it decided to sue after the company bought a number of its power adapters and charging and syncing cables “that were directly sold by Amazon.com – not a third-party seller – and determined that they were counterfei­t.”

Apple declined an interview about the lawsuit and instead issued a statement: “The safety of our customers is our first priority, and our teams are constantly working with law enforcemen­t, resellers and e-commerce sites around the world to remove counterfei­t products from the market.”

Along with the safety hazards they pose, knockoffs inflict economic damage. Counterfei­t products, software piracy and theft of trade secrets take as much as a $600 billion annual bite out of the U.S. economy, according to a report in 2017 by the Commission on the Theft of American Intellectu­al Property, a private watchdog group.

Using records supplied by Amazon, Apple traced the origin of the counterfei­t electronic­s identified in the lawsuit to Hong Kong. The company declined to identify the manufactur­er based there.

First stop: Brooklyn

The first U.S. stop for the Apple counterfei­ts was Brooklyn’s Borough Park neighborho­od.

Starkeys and SATK, importing companies that business and court records show are managed by Aron Kohn, their sole employee, are based there, Apple alleged. U.S. Customs and Border Protection investigat­ors alerted Apple to at least 58 seizures during a roughly oneyear time frame for suspected counterfei­t products imported to the companies’ shared Brooklyn address, court records show.

The equipment included more than 19,000 fake Apple EarPods, MagSafe power adapters, USB power adapters and Lightning cables.

Starkeys and SATK share a mailing address on 53rd Street, roughly six blocks away.

In court responses to the lawsuit, the companies denied “having sold counterfei­t or infringing Apple products” but acknowledg­ed that Kohn is their owner. Naomi Gray, an attorney for the companies, did not respond to emailed questions.

A New Jersey electronic­s firm

Starkeys and SATK imports of alleged Apple counterfei­ts that were not seized by customs made it into the USA and went to the Edison, New Jersey, warehouse of DGL Group, the companies’ “sole customer” for the products, Apple alleged.

DGL has offices in Edison and Shenzhen, China, the company website says. The company is headed by Ezra Zaafarani, a resident of Brooklyn’s Sheepshead Bay neighborho­od, business records show.

Apple alleged that DGL was “a repeat infringer” of its intellectu­al property. The company sold unauthoriz­ed copies of Apple power adapters and cables in 2014 and subsequent­ly agreed to avoid subsequent infringeme­nt after the tech giant discovered the counterfei­ts, Apple said.

DGL and the company’s attorney, Andrew Levine, did not respond to messages seeking comment.

Mobile Star – Apple and Groupon

DGL sold counterfei­t Apple products to Mobile Star, an electronic equipment company based in Metuchen, New Jersey, Apple alleged.

Along with being part of the import trail that brought counterfei­ts to Amazon, Mobile Star sold Apple knockoffs to Groupon, an e-commerce marketplac­e, and to an Apple investigat­or, the tech giant charged.

Referring to the preceding stops in the counterfei­t trail, Apple said legal discovery in the lawsuit “revealed that Mobile Star’s supply chain includes entities that are known counterfei­ters and infringers of Apple’s intellectu­al property and source large quantities of Applebrand­ed products directly from entities based in China.”

Mobile Star is headed by Brooklyn businessma­n Jack Braha and focuses on buying and reselling excess and outdated inventory of accessorie­s for smartphone­s, many of which transactio­ns are carried out via Amazon, Braha said in a court filing in November.

The company inspects the products it buys and has not found any irregulari­ties or safety problems in its sampling of Apple iPhone accessorie­s, Braha said.

Moreover, Braha said, Amazon mixes together similar products from several sales vendors, placing them in the same bin for distributi­on.

That practice would make it impossible for Amazon to identify and accuse the company responsibl­e for marketing and selling the alleged Apple counterfei­ts.

“Any suggestion that Amazon’s counterfei­t inventory necessaril­y came from Mobile Star is belied by Amazon’s admitted practice of comminglin­g products from all of its suppliers,” Braha said in his court declaratio­n.

Contributi­ng: Elizabeth Weise, Eli Blumenthal

Most of the counterfei­t Apple accessorie­s imported to the U.S. came from Hong Kong and China.

 ?? ROBERT DEUTSCH/USA TODAY ILLUSTRATI­ON: DAVID ANESTA/USA TODAY NETWORK, AND GETTY IMAGES ?? Apple alleges that companies in Brooklyn imported counterfei­ts of the tech giant’s power adapters and charging cords.
ROBERT DEUTSCH/USA TODAY ILLUSTRATI­ON: DAVID ANESTA/USA TODAY NETWORK, AND GETTY IMAGES Apple alleges that companies in Brooklyn imported counterfei­ts of the tech giant’s power adapters and charging cords.
 ??  ??
 ??  ??
 ?? ROBERT DEUTSCH/USA TODAY ?? Apple says DGL in New Jersey received counterfei­ts.
ROBERT DEUTSCH/USA TODAY Apple says DGL in New Jersey received counterfei­ts.
 ??  ??

Newspapers in English

Newspapers from United States