Bargain Hunters

Last November, a task force of state and local police, the FBI and the U.S. Customs Service assembled near Mile High Flea Market for an operation called Flea Powder IV. It was the latest in a twice-yearly sweep to identify counterfeit merchandise and arrest vendors who sell it.

The day before, representatives from manufacturers such as Tommy Hilfiger and Nike had accompanied agents through the huge market to spot phony clothes. Having compared notes and identified fifteen vendors, agents entered the market. They had to move quickly.

One of their targets was Suki Brow. Brow had already been busted once, in 1996, for selling knock-off purses at the market. Back then she'd been given probation, since federal agents often don't arrest first-time offenders -- they just take the vendors' stuff and warn them not to sell it again.

Second-time offenders aren't so lucky.

Brow's "booth" was a large parking space on the asphalt, covered by a tent. Underneath, rows of tables contained sports jerseys, shirts and pants with "Tommy" labels and other sports apparel. A Customs agent entered her selling space and picked up a poor-quality Broncos jersey: The tag in back bore a reflective sticker instead of a hologram, indicating the jersey was fake. He told Brow she was under arrest.

Through her broken English, Brow insisted the clothes were good.

The agent asked her about a blue denim shirt with the word "Tommy" embroidered on the front.

"That shirt's no good," she said. (She would later explain that she meant the shirt was not really a Hilfiger shirt but that it was still legal.) Before long, law-enforcement officials were searching her booth and several others. In Brow's space alone, Customs agents found more than 100 items of clothing, including hats, T-shirts, knit shirts and sweatshirts, with counterfeit trademarks and logos belonging to Disney, Warner Bros., Tommy Hilfiger, Nike, Adidas, NFL, NBA, MLBA and other manufacturers.

Brow and two other vendors were arrested and hauled off to the Federal Detention Center in Littleton. Brow's attorney, Craig Skinner, recalls that his client was a "mess," crying, pleading with him, "Please, please, please, get me out of jail." The next day, she was charged with trafficking in counterfeit goods -- a federal crime -- and released.

Brow, who is 48, came to the United States from Korea in 1977 after she married an Army officer. They eventually divorced, and Brow moved to Denver from Colorado Springs in 1995. She started working the flea market the next year, after friends told her it was a good way to make money. She bought her clothes on credit from wholesalers -- one in Denver and one in Los Angeles -- and paid them back out of the sales. On a good weekend, she could earn about $1,000. She had worked for half a year before her first arrest.

She went on to open a laundromat in the northern suburbs, but when the venture failed, she once again decided to try her hand selling clothes at the market. At the time, she was still on probation. She says she called her probation officer and Customs to tell them about her return to vending; she wanted to make sure she wasn't selling counterfeit items again. "I wanted to make sure, protect myself," she says. But neither her probation officer nor anyone from Customs ever inspected her wares, she says. And when she was busted the second time, Brow claimed she didn't know the products were counterfeit.

"The second time they say 'I didn't know,' it's a harder pill to swallow," says Lisa Euriguen, administrator for the Coalition to Advance the Protection of Sports Logos (CAPS), an organization that represents the major American sports leagues and their merchandise.

But Skinner believes his client. "I think what she had been told by the people she bought them from was that they were not counterfeit," he says. "If someone has a problem with her choice to believe that, I would understand. I think she was sincere in doing what she thought she had to.

"As far as criminals go, she is very unsophisticated," Skinner adds. In his opinion, the case is small potatoes and should be "working through municipal court in Aurora." But since it involves copyright and trademark violations, he says, "it automatically gets kicked into federal court."

Brow has opted to plead guilty in exchange for leniency. Under the federal judicial system, defendants are scored on a variety of factors, and cooperating with law enforcement can help a person's case. Skinner says he has managed to get Brow into a category in which she may not have to serve any prison time, but on November 19, U.S. District Judge Richard Matsch will have the final word.

And that might be the end of an insignificant case, if it weren't for Wal-Mart. Over the last five years, the world's number-one retailer has repeatedly been busted for the same crime: selling counterfeit clothes -- specifically, those manufactured by fancy-pants designer Tommy Hilfiger.

Hilfiger first sued Wal-Mart in April 1994, claiming the retailer was selling shirts that too closely resembled Hilfiger designs and its trademark logo. Hilfiger was eager to protect its upscale image and didn't want its real clothes, let alone fakes, in lowbrow Wal-Mart stores. But Wal-Mart had been eager to provide merchandise its customers wanted, even if the manufacturers didn't approve, so -- like Suki Brow -- Wal-Mart buyers purchased the "Hilfiger" stuff through third parties.

As a result of the first suit, Hilfiger won a permanent injunction barring Wal-Mart from selling the fake clothes. But later that spring, U.S. Customs agents seized Hilfiger fakes in Laredo, Texas, right at the Mexican border. The clothes were on their way to Wal-Mart stores. Hilfiger sued again, and in 1996, New York federal judge John Sprizzo ordered a permanent injunction that forbade Wal-Mart from "knowingly and/or intentionally" infringing on any of Hilfiger's trademarks. Wal-Mart officials maintained that they believed the merchandise was authentic.

In June 1998, Hilfiger took the retailer to court for a third time, claiming that Wal-Mart was selling bogus Hilfiger undergarments on its Internet site. Wal-Mart responded that the T-shirts and socks were the real thing. The federal court in New York did not order Wal-Mart to stop selling the goods over the Internet, but the company decided to take them off of its site until the case was resolved.

On their third trip through the courts, Hilfiger lawyers sought a contempt-of-court citation against the retailer for violating the 1996 injunction. In August 1998 they got it, after Wal-Mart lawyers admitted in court that the company's management hadn't told its buyers about the injunction. "That is chutzpah if I ever saw it," Judge Sprizzo said. Then he ordered the retailer to send all of its phony merchandise to Hilfiger within 24 hours.

Instead, Wal-Mart held a fire sale, drastically cutting prices to move as much of the merchandise out of its stores as possible. That brought a second contempt-of-court charge last October.

One of attorney Skinner's investigators, Candle Maulin, who shops regularly at the Wal-Mart at 38th and Youngsfield in Wheat Ridge, says she remembers that clearance sale. Last year around Christmas, she saw a sign posted near the store exit. It apologized to customers if any of them had purchased clothes they believed were made by Tommy Hilfiger, and it promised a full refund if the clothes were returned.

"I was under the impression that they weren't selling it anymore," Maulin says. But the next month, she says, Hilfiger items "were prominently displayed" in the store and were still being sold. (The store manager there declined to speak to Westword and referred calls to the retailer's corporate office in Bentonville, Arkansas, where spokesman Mike Maher said Hilfiger items have been completely removed from stores.) Maulin says that the sign eventually came down and the Hilfiger items disappeared.

Sprizzo reportedly raised the possibility that criminal charges should be filed against Wal-Mart, but the whole matter was finally settled this past July. At the time of the settlement, the company released a statement saying it would pay Hilfiger $6.4 million and "make every reasonable effort to prevent the sale of non-authentic Hilfiger-branded goods in its stores and clubs."

The company claimed it had "made improvements in how local purchases are made, including additional training for our buyers and field operations." Wal-Mart said it had also hired an independent inspector to study clothes for authenticity.

Wal-Mart donated its remaining knockoffs to refugees in Kosovo and other troubled nations. Company officials faced no possibility of prison.

Verlyn Wells remembers the day last fall when Suki Brow was busted. Word spreads fast around the market when federal agents are around.

For three years now, Wells has been working a booth at Mile High Flea Market, selling $10 sunglasses on the weekends during summer. When business is good, as it is at the start of the summer, he may make $1,000 a day. As summer winds down, he'll pull in only around $250, maybe $300.

Over the last thirteen years, the vast market at the corner of Interstate 76 and 88th Avenue has become one of the largest flea markets in the United States. Everything is here: At one booth, Clairol hair color sells for $5; next door, a cathode ray oscilloscope is only $65.

Who knows how many of these goods are counterfeit. "We have a standing invitation for all law-enforcement agencies to come out announced or unannounced and check anything they want," says Jim Hurrell, Mile High's marketing director. "We don't want it any more than anyone else."

Hurrell says he doesn't know how many vendors at the market have been arrested. "We have had a couple of little busts, but we never hear of the outcome," he adds.

Agents did raid Mile High in 1994; they carted off two truck-loads of counterfeit goods and charged three people with trafficking in counterfeit items. The value of the recovered merchandise was more than $300,000. The bust in 1996 -- when Brow was first arrested -- netted one truckload of goods.

There are no reliable numbers for determining how much counterfeiting costs American industries. Tim Trainer, president of the International Anti-Counterfeiting Coalition in Washington, D.C., says that $1.4 billion in pirated apparel and footwear was sold in 1995 alone -- but, he says, he's not sure how these numbers were derived.

Most of the counterfeit clothing sold in America comes from countries in Asia. The goods typically arrive in California and then spread east. Vendors like Brow -- and Wal-Mart -- purchase counterfeit items through wholesalers. "When we find a retailer, we attempt to identify the wholesaler," says Customs agent Jim Roth, but he would not comment about whether Customs had located a counterfeit wholesaler operating in the Denver area.

"My impression is they [Customs] are not pursuing whatever wholesalers are active out here," says attorney Ed Harris, who represented Brow in her first arrest and now represents one of the other vendors who was busted last fall. "You take the street-level players and you roll them up the chain. I don't know exactly why they haven't done that."

"The counterfeiting problem in the U.S. is extremely serious," says Lisa Euriguen of CAPS. "There's no way for us to determine on an individual basis how much is lost. It's serious because what we're concerned about is, the consumer is getting ripped off."

That happens when shirts shrink to pieces or colors bleed away after one wash. The problem, Euriguen says, occurs when people experience a fake's poor quality but think they've bought the real thing, then refuse to buy the real brand in the future. "Some consumers don't know that counterfeiting exists," she says. But counterfeiting, she adds, is more than buying a "shoddy" T-shirt. "Most often, manufacturers do not pay their taxes. Everything is done in cash; manufacturing plants are not up to code. Often times they hire undocumented workers who work in unsafe conditions."

But in claiming that consumers are easily ripped off by counterfeit vendors, Euriguen may be underestimating the savvy of flea-market shoppers.

At the bottom of Verlyn Wells's display of sunglasses is a sign with the names of various brands in large letters: Revo, Gargoyles, Harley-Davidson. You have to look closely for the fine print, which tells you that these glasses are not to be confused with those brand names.

A kid comes by and looks at some fake Oakleys. "Are those real Oakleys?" the kid asks.

"Nah," Wells says.

The kid exhales sadly, and he and his father amble off.

Wells admits he probably shouldn't have the Oakleys out, since the glasses themselves actually have an "O" logo. Customs agents were around the market a few weeks earlier warning the many sunglasses vendors to ditch that brand. But Wells says he wasn't warned personally, and the Oakleys account for only a small part of his business.

"Customs has a job to do," Wells says, with utter sincerity. "If it comes in illegally and no one pays taxes and it impinges on a company, they have a duty to protect the company." Better hide those Oakleys.

That Wal-Mart should have run afoul of the same laws as Brow and her fellow vendors shouldn't be much of a surprise. At its roots, the company is a kind of spruced-up, pared-down flea market.

And attorney Harris says Wal-Mart's argument in its own defense was exactly the same as Brow's. "Their argument is, 'We didn't know. How could we have known?' So where's the difference?"

New York attorney Steve Gursky represented Hilfiger against Wal-Mart and says the $6.4 million settlement was fair. He estimates that Wal-Mart earned only about $5 million on the tens of thousands of Hilfiger fakes it sold. But it couldn't have been too painful for Wal-Mart, considering that the company has earned $137 billion in sales so far this year.

Brow, meanwhile, is still paying off a $5,000 fine for her first arrest. Now working as a janitor, she knows that even if she escapes prison time, she will likely be fined thousands more. It will take years to pay off.


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