Category Archives: Blogs

The 2017 Notorious Markets List

2017 Notorious Markets List 1.11.18
The Office of the United States Trade Representative (USTR) published the 2017 List of Notorious Markets. This was the first review under the Trump Administration. The List identifies physical and online marketplaces believed to facilitate the sale of pirated goods.

Two of the most interesting selections were the PirateBay and Alibaba’s Taobao.

Pirate Bay is of symbolic importance as one of the longest-running and most vocal torrent sites of illegal downloads of movies, television, music, and other copyrighted content.

Alibaba blamed politics for Taobao’s listing and cited its impressive anti-counterfeiting record, which was cited in the USTR’s report. The USTR acknowledged that Alibaba has taken steps to improve the situation, but it noted that “important unresolved concerns remained.” Taobao was reinstated on the list under the Obaba administration a year ago.

Canadian Pharmacy Storefronts Operating in Florida

The USDA’s Office of Criminal Investigations raided 9 storefronts in Florida in early December that helped customers, mostly senior citizens, purchase prescription drugs from unlicensed online sources. Search warrants allowed agents to access computers, paperwork about foreign drugs sales and any drugs.

Although none of the stores were closed, FDA-OCI warned store owners that importing drugs from foreign countries is illegal and that helping to “administer” such medicines puts them in danger of being fined or receiving a jail sentence.

Sentenced for distribution of Counterfeit Human Growth Hormone (HGH)

George Patino, 57, of Houston, Texas, was convicted by a jury on Oct. 18th for conspiracy in the distribution of Human Growth Hormone (“HGH”) for unauthorized medical purposes, and smuggling. [Note: Counterfeit medicine is fake medicine that includes a wide spectrum including misbranded, contaminated, mislabeled, misbranded, unauthorized, and other fraudulent use or misrepresentation.]

Under federal law, doctors can lawfully prescribe HGH for several narrow medical uses, for example to patients with wasting diseases associated with AIDS or Prader-Willi syndrome. HGH cannot be prescribed to help patients with body-building, anti-aging, or weight loss treatments. From April 2014 through June 2015, the evidence showed at trial that Mr. Patino sent numerous packages of HGH to a local St. Louis, Missouri doctor and many local patients.

The HGH smuggled by Mr. Patino was misbranded in that the drugs’ dosage and use instructions were in Spanish not English, and the drugs came from a Korean drug manufacturer that had not been approved by the U.S. Government to sell this drug in the United States.

Mr. Patino now faces a maximum penalty of five years in prison for his conspiracy conviction, ten years in prison for his HGH distribution conviction, and twenty years in prison for the smuggling conviction, and/or fines up to $250,000 for each count. In determining the actual sentences, a judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.

“For drugs that enter the U.S. from outside the FDA-regulated distribution system, there is no guarantee that the drugs are safe and effective for patients to use,” said Special Agent in Charge, Spencer Morrison, FDA Office of Criminal Investigations’ Kansas City Field Office. “We will continue to work to protect the health of patients who rely on prescription drugs and to ensure the safety and effectiveness of those drugs.”

Patient Rick Roberts Describes The Effects Of Counterfeit HGH Medication He Received From An Unscrupulous Drug Supplier.

10th Annual Operation Pangea Targets Hundreds of Fake Pharmacies

The tenth annual Operation Pangea, an international week-long action organized by Interpol to tackle the sale of counterfeit and illicit medicines online, targeted hundreds of fake pharmacies. 197 police, customs and health regulatory authorities from a record 123 countries were involved. A record number of 25 million illicit and counterfeit medicines were seized worldwide. The action resulted in the launch of 1,058 investigations, 3,584 websites taken offline and the suspension of more than 3,000 online advertisizements for illicit pharmaceuticals. There were 400 arrests worldwide and the seizure of more than $51 million worth of potentially dangerous medicines.

Among the websites taken down was GlavMed, which used infected computers to send pharmaceutical spam directed to so-called “Canadian” pharmacies, and was selling oral chloramphenicol, a drug that was pulled from the U.S. market due to serious and potentially life-threatening side effects.

As part of Operation Pangea, the FDA and other federal agencies worked together at the International Mail Facilities in Chicago, Miami and New York to detain 500 packages of suspected illicit pharmaceuticals. Commissioner Gottlieb said that the FDA has “recently tripled the staff we have in the IMFs to improve our ability to inspect packages that are suspected of containing illegal drugs.”

Section 301 Investigation of China — Are Trade Sanctions Likely?

FRN China 301

On August 14th, pursuant to a Memorandum sent by President Trump, USTR Robert Lighthizer initiated a Section a Section 301 investigation of China under the 1974 Trade Act.

The investigation will seek to determine whether acts, policies and practices of the government of China relating to technology transfer, intellectual property, and innovation are unreasonable or discriminatory and burden or restrict U.S. commerce.

The USTR posted a notice in the Federal Register seeking written comments from companies having difficulties in China regarding the above (see attached notice) to be submitted by September 28, 2017. The Section 301 Committee will convene a public hearing at the US International Trade Commission on October 10, 2017. The deadline for submission of post-hearing rebuttal comments is October 20, 2017.

The importance of using the Section 301 is that the President can impose sanctions without consulting Congress or the World Trade Organization. In short, he can act independently through the USTR who is authorized by law to impose trade sanctions. It’s happened before. In 1995 and 1996 when USTR Mickey Kantor imposed $1.8 billion in trade sanctions. China imposed trade sanctions in retaliation. The sanctions never went into effect because of agreements signed just hours before the sanctions were to take effect in both years.

I covered the 1995 and 1996 trade disputes in great detail in by book Trademark Counterfeiting, Product Piracy and the Billion Dollar Threat to the U.S. Economy.

Let’s see what happens this time. We won’t have long to wait.

$1.2 Billion in Counterfeit Fentanyl Pills Seized in Mexico

140 pounds of fentanyl and almost 30,000 counterfeit pills containing fentanyl were seized in a search of a tractor-trailer at a checkpoint in San Luis Rio Colorado in Mexico’s Sonora state on August 19th. The drugs are believed to have been headed to the United States. The street value is estimated at over $1.2 billion dollars.

A few days earlier 30,000 counterfeit pills made with fentanyl were discovered during a traffic stop by the Tempe Arizona Police Department in connection with an investigation into the Sinaloa Cartel. The pills were designed to look like oxycodone.

Sale of Counterfeits Funding Terrorist Activities

Sale of Counterfeits Funding Terrorist Activities is hardly a surprise anymore. For example, the 2015 Charlie Hebdo terrorist attack in Paris was financed by the sale of counterfeit apparel sold on the street corner. An ABC news article that came out on September 7th points to the sale of counterfeit sneakers as a source for terrorist activities (see link below).

Authorities say sale of counterfeit sneakers can lead to terrorist financing

In Vino Duplicitas

In Vino Duplicitas by Peter Hellman is a book about Rudy Kurniawan whom I’ve covered in an earlier blog (7/30/15) and whose crime has also been made into a documentary.

Its the story of the biggest wine hoax in history. Kurniawan was a world class swindler who first established himself as one of the world’s foremost collectors and experts in evaluating wine. He then mixed wine in his kitchen and passed them off as rare wines to some of the county’s wealthiest people and wine enthusiasts.

Fake Shoes worth $87.3 million seized in China

What may be the largest seizure of fake shoes took place recently in China. A tip from Nike Sports China led the police in Bengbu to an investigation and eventual seizure of $87 million in shoes, mostly sneakers. Bengbu is located in the northern province of Anhui Province. The shoes were going to be exported to the Middle East and Africa and had a total value in excess of 600 million yuan or $87.3 million dollars. Using the Nike tip, the police identified Jinfeng Factory and its director who had served a suspended sentence of two years for manufacturing counterfeit shoes in 2008. Ten other suspects were arrested.

This seizure of shoes topped another notable seizure of shoes that involved $32 million of Adidas and Nike sneakers and took place in Chile on November 2015. The total shipment was 16,454 divided up into 474 boxes. Customs officials discovered the sneakers when they saw a discrepancy in the declared value of the shipment. The documentation declared the total value at $24,209, but the actual value was over $31,000.