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
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.