by Dana Thomas
CHAPTER NINE
FAUX AMIS
“Being copied is the ransom of success.”
—COCO CHANEL
KRIS BUCKNER pulled his gold Toyota Camry into the parking lot of a strip mall in the Little Tokyo section of eastern Los Angeles and walked up to the Starbucks for our appointed noontime rendezvous. We were going to tour Santee Alley, the street market in downtown L.A. where fakes are sold at wholesale and retail. Buckner is the founder, owner, and head of Investigative Consultants (IC), a private investigation firm that chases down manufacturers and distributors of counterfeit luxury goods. Medium height, the thirty-seven-year-old native Southern Californian was fit and tan like a surfer, his copper blond hair slicked straight back. He was dressed neatly and discreetly in a plain white polo shirt, newish jeans, and a pair of well-worn sneakers—nothing to draw attention. He’s wise and quick, a real gumshoe, with a taut confidence that tells you he’s seen it all.
Buckner grew up in Torrance, California, a charmless American urban sprawl just south of Los Angeles, and spent his teen years surfing the Pacific coastline and working part-time at Becker Surfboards in Hermosa Beach. At twenty-one, he entered the police academy and went on to become a deputy sheriff who walked the beat in Lennox and worked in L.A. County jails, keeping inmates in line. While he was a deputy Buckner qualified for his private investigator’s license, so in 1994, at the age of twenty-six, he decided to go into business on his own. He set up his office in his home basement, and with his wife and mother helping out—answering phones, handling the books, even doing some undercover work—he took on basic assignments: witness interviews, litigation investigations, husband-and-wife matters. By the time we met in November 2004, he had ten PIs on staff and four administrative assistants who occasionally do investigative work, too.
The Los Angeles–based designer jeans company Guess was the first client to ask Buckner to go after counterfeiters. Today Buckner represents more than eighty clients, from toner products manufacturers to the Motion Picture Association of America. But his specialty is luxury goods: he handles more than thirty-five brands. Buckner’s method is straightforward: he gets leads from the brands themselves, from informants, and from law enforcement officers who have seen something suspect. He also hears a lot from angry women who take a Gucci purse or a Rolex watch they received as a gift into the boutique for repairs or an exchange and are told it’s fake. Buckner and his team gather the evidence through surveillance, serve “cease and desist” letters, and, if that fails, turn over the case to the LAPD or another law enforcement agency to execute search warrants and make arrests. “It’s like the drug business—dirty like that,” he told me in his raspy tenor. “A lot of people will drop dimes on the counterfeiters.”
We met a few miles away because, as Buckner told me in his car on the drive over to Santee Alley, everyone knows him and if we wanted to see anything, we’d have to arrive quickly and discreetly. With us was Buckner’s associate, Hector Moya, a burlier and quieter sort, also in a casual shirt, jeans, and sneaks. We parked in a lot just off Los Angeles Street and hit the sidewalk at a good clip, heading toward Santee Alley, one and a half blocks up. The ambiance was like an outdoor bazaar in a developing nation: stalls selling everything from T-shirts to confirmation dresses, with designer handbags, jackets, and jeans hanging from the sun-bleached awnings. The banter and the bargaining were in Spanish and Korean. The heavy, pungent aroma of spicy sausages and onions grilling on beat-up carts filled the air; mango skins and watermelon rinds littered the gutter.
I sensed a bit of scurrying. “See that guy running ahead of us?” Buckner asked. A scrawny Hispanic in a white guayabera darted through the crowd a few steps in front, constantly looking over his shoulder. “He’s going to warn them,” Buckner said knowingly. Sure enough, when the kid got to the corner of Santee Alley, he let out a birdlike whistle. “They have spotters on rooftops, two-way radios,” Buckner explained, “to keep a lookout for us.”
When we turned the corner into the alley, the kid had disappeared into the crowd and the first stall we visited was empty. Minutes before, Buckner said, the place had been open for business. Though the front gate was still up, there was no shopkeeper and most of the merchandise had been stashed in duffel bags or big black plastic trash bags. As we walked down the concrete alley, Buckner pointed out a vendor named Ruben. “He was arrested two weeks ago for sales of counterfeit merchandise,” Buckner said. “He was doing a deal in a parking lot nearby.”
We headed toward another stall. A fellow in the street gave the shopkeeper a sign—whistled, then waved his hand. “She’ll throw everything in bags and run it out of here,” Buckner said. Sure enough, when we got to the stall, there were only a few Vuitton watches and handbags still on display. On the floor sat a couple of overstuffed trash bags and big cardboard cartons, sealed. The vendor, a small Asian woman well past fifty, stood at the counter, her hands resting nervously on a scrunched black plastic bag. Buckner’s alert turquoise eyes zeroed in on it. “What’s that?” he asked, and gently slid the sack from under her arm. Inside he found a well-worn Louis Vuitton catalog in Japanese. “They get this from Japanese tourism agencies,” Buckner explained. “Chances are they have the merchandise hidden in the back.”
IN THE TIMES of ancient Rome, Greece, and Egypt; the Mayans and the Incas; the American Indians and imperialist China, hallmarks and seals served as marks of origin: you knew who made your goods. In the Middle Ages, craftsmen joined professional guilds that provided marked goods with a seal of quality approval in addition to the craftsmen’s personal stamps or signatures. When the Industrial Revolution arrived in the mid-nineteenth century, goods could no longer be traced back to a single craftsman—they were mass-produced in assembly lines. To distinguish as well as protect their products from the competition, companies trademarked their work and their logos, and trademarks became a guarantee of consistent quality. Since the 1950s, trademarks and logos have been increasingly used as marketing and advertising tools and have evolved into brand symbols.
Today logos brand people: by wearing or carrying an item emblazoned with a logo, you declare that you are a member of a tribe that subscribes to that particular brand’s message and its ethics—essentially the dreams conjured up for you by the marketing department. Luxury-brand logos convey wealth, status, and chic, even if the bearer of the logo-ed product is a middle-market suburban housewife who bought it on credit. “I think it’s completely impossible [to eliminate the logo] today,” Miuccia Prada told me. “The recognition of the brand is too important. The more you want to enlarge your business, the more you have to use your logo.”
By putting an emphasis on the logo and spending more than $100 million a year to advertise it, luxury companies made their brands, rather than the actual products, the objects of public desire. Unfortunately, they also created a demand they couldn’t meet, and a product that average consumers craved but couldn’t always afford. How many secretaries, teachers, or sales executives could really buy a new $500 Prada or $700 Louis Vuitton handbag every season? Counterfeiters stepped in, providing an endless supply of copies at 5 to 10 percent of the genuine product’s retail price. And luxury’s new hungry target audience started buying and buying and buying.
Counterfeiting is about as old as civilization itself. During the last century of the Roman Republic (100 BC), Romans grew rich and socially mobile, and one of the ways the upwardly mobile could gain acceptance by the patrician upper classes was to possess what old-moneyed Romans possessed. “Wealth itself didn’t confer status,” explains Jonathan Stamp, a classical historian and documentary filmmaker. “You needed wealth plus something else, like objects.” The politician and philosopher Cicero, for example, was an outsider who wanted desperately to be accepted by the establishment, so he spent a staggering one million sestertii on a citron wood table at a time when the average annual salary was a thousand sestertii. Suddenly Rome’s nouveaux riches had to have tables just like it, and since they couldn
’t afford the real thing, they had carpenters copy it in lower-quality wood. Sculptors reproduced the great statues of the period in cheaper materials for the new moderately rich masses to use in decorating their homes and gardens. “People were spending money like never before and cared about superficial things,” Stamp said. “All the old social structures had dissolved, and it was bemoaned by the patrician rich: ‘People used to know their place.’”
Counterfeiting has long been a problem for modern luxury, too. Cheap knockoffs of checked and striped canvas Louis Vuitton trunks prompted Vuitton’s son Georges in 1896 to design with the company’s signature logo print of interlocking LVs and Japanese floral symbols. In 1948, a woman who had paid a small fortune to exclusively own one of Christian Dior’s designs arrived at a nightclub only to find another woman wearing an exact copy. “This is no joke,” the woman wept, “but a tragedy.” The French gendarmes launched an investigation that led six years later to the arrest of a counterfeiting gang. The thieves bribed seamstresses for patterns and models to borrow outfits that they would then copy.
Through much of the 1970s and 80s, counterfeiting was a small-time business. The luxury brand watches, sunglasses, and T-shirts sold by merchants on the street were obviously fake; the quality was lousy, the prices cheap. Luxury brands generally didn’t get too worked up over it.
Two things changed the game: the democratization of luxury and the rise of China. When luxury brands went democratic, they thought they could satisfy the middle market with lower-priced handbags and perfume. What executives didn’t count on was middle-market consumers satisfying their craving for higher-end items by buying fake versions that they could pass off as real. At the same time China evolved into a capitalist market economy and the world’s manufacturing center, with a new class of entrepreneurs who saw counterfeiting as a viable business. The convergence of the two—big demand and big supply—was cataclysmic. And it took luxury executives—and executives in most other industries—by surprise.
Since 1993, the counterfeiting of all goods—from DVDs to pharmaceuticals—has increased by 1,700 percent, reports Indicam, an anticounterfeiting coalition based in Italy. The International AntiCounterfeiting Coalition (IACC) in Washington estimates that up to 7 percent of today’s global trade—$600 billion worth—is counterfeit. In 1982, the International Trade Commission estimated global losses from counterfeiting and piracy to be $5.5 billion; in 1988, it was $60 billion; and in 1996, it was $200 billion. In 2004, the U.S. Department of Commerce estimated that American companies alone lost between $20 billion and $24 billion annually. The loss of tax revenue due to counterfeiting is substantial, too: New York City police commissioner Raymond Kelly estimates that the city loses up to $1 billion in taxes annually.
While everything from Ferraris to mineral water is counterfeited today, fashion is one of the most popular sectors, because it is easy and cheap to copy and even easier to sell. In 2000, the Global Anti-Counterfeiting Group reported that 11 percent of the world’s clothing and footwear was fake, and the World Customs Organization believes the fashion industry loses up to $9.2 billion (€7.5 billion) per year to counterfeiting. In 2002, the European Commission reported that trade in counterfeit clothing, footwear, perfume and toiletries reduces the European Union’s gross domestic product by more than $6 billion (€5 billion) each year and costs 10,800 jobs.
The most popular and lucrative fashion knockoffs are those bearing luxury brand logos. You can buy fake Louis Vuitton handbags, Gucci sunglasses, and Burberry knapsacks in shops on Canal Street in New York and Santee Alley in L.A., in the souks of Marrakech and Istanbul, on the beaches of the Côte d’Azur, in flea markets, on the Internet, even in the living rooms of suburban America, where housewives host “purse parties” to make some extra cash. And people do buy. As a result, counterfeiting has ballooned from the small-potatoes local business of twenty years ago to a global racket today, one that is run by violent crime syndicates that also deal in narcotics, weapons, child prostitution, human trafficking, and terrorism. The FBI believes that terrorists financed the World Trade Center bombing in 1993 with sales of counterfeit T-shirts in a store on Broadway in New York City, according to the IACC. Interpol secretary general Ronald K. Noble told the U.S. House Committee on International Relations in 2003 that profits from counterfeit goods sales have gone to groups associated with the anti-Israel Shi’ite terrorist group Hezbollah, paramilitary groups in Northern Ireland, and Colombia’s main rebel army, FARC. One of the suspects in the March 2004 Madrid train bombings is a known counterfeiter, according the United Kingdom–based AntiCounterfeiting Group.
Investigators even believe that there may be a link between counterfeiting and the September 11, 2001, attacks on New York and Washington. The week after the attacks, fifteen hundred counterfeit vendor stalls—some purportedly owned and operated by al-Qaeda—at the Tri-Border Market in South America, where $70 million of business is done in cash every day, closed shop. And during a raid in early 2002 on a midtown Manhattan luggage store that was run by a man of Middle Eastern descent and sold fake luxury handbags and watches, New York security expert Andrew Oberfeldt and intellectual property rights lawyer Heather McDonald found a flight manual and simulator program and copies of technical schematics of a bridge. They immediately called the Joint Terrorist Task Force, which took over the case. “Profits from counterfeiting are one of the three main sources of income supporting international terrorism,” says Magnus Ranstorp, former director for the Centre for the Study of Terrorism and Political Violence at the University of St. Andrews in Scotland.
Surprisingly, most companies didn’t see this coming and didn’t do much about it until the late 1990s. Some players still shrug. Louis Vuitton designer Marc Jacobs told me that he thinks counterfeiting is “fantastic,” adding, “as long as I’ve been here, everything that we have done has been copied…We hope to create a product that is desirable.” Prada CEO Patrizio Bertelli calls it part of “the game of fashion,” and said, “I would be more worried if my product wasn’t copied.” They’re not the ones who need to worry: today, most luxury companies have extensive legal departments that focus only on intellectual property theft, as it is called. They also have investigators on the ground, working the markets, chasing down leads on illegal factories, in China as well as in London, New York, Los Angeles, and other distribution centers. Louis Vuitton, one of the world’s most copied brands, has forty lawyers in-house and 250 outside private investigators like Kris Buckner, and spends approximately €15 million ($18.1 million) each year fighting counterfeiting, despite Marc Jacobs’s view. In 2004, Vuitton conducted twenty raids a day worldwide and put about thousand counterfeiters in jail. Companies that are active in raids, that seize merchandise and sue, definitely see a drop in their brand’s fakes on the market. But the minute they ease up, the fake products, like a red tide, come right back. “This is a cost of business,” McDonald told me. “Advertising is working. You’ll never see something counterfeited of a brand you’ve never heard of.”
BACK IN THE 1970S, before the advent of outlet malls, clothing wholesalers on Santee Street, a main thoroughfare in the garment district of downtown Los Angeles, began to sell leftovers out of the back-alley entrances to their stores. It was such a success that the owners redesigned their showrooms, creating a discount boutique in the back that opened onto the alley, and Santee Alley, as it was dubbed, became a bona fide retail street, several blocks long, open seven days a week.
In the 1980s, a surge of Korean immigrants arrived in Los Angeles and found the bazaar-like atmosphere of Santee Alley similar to the markets in Seoul. They began to take over leases and expand the businesses. Their business approach was the polar opposite of the cost-conscious American model: the Koreans manufactured clothes such as T-shirts and jeans fast, sold them cheap, and didn’t worry about profit-and-loss figures. Profit came in volume. Today many leaseholders on Santee Alley are Korean, and they never quibble about rent, which is now approaching the levels of Ro
deo Drive.
Slowly, counterfeit luxury brand items such as watches and handbags began to appear on the store shelves. At first, the fakes were easy to spot: they were cheaply made and lacked finesse. But as time went on, the quality got better and the demand increased. Soon Santee Alley was not only a cheap bazaar; it was L.A.’s premier counterfeit market. Today, twenty to thirty thousand people descend on Santee Alley daily to buy everything from inexpensive children’s clothes to fake Chanel sunglasses, making it the third most visited destination in Los Angeles after Universal Studios and Venice Beach.