STIFFER PENALTIES FOR PREMIUM CIGAR COUNTERFEITERS
April 19, 2006
Premium cigar counterfeiters now face stiff penalties rivaling that of major felons. Five Miami men accused of counterfeiting cigars face federal charges that carry sentences of up to 10 years in prison and $2 million in fines.
The five defendants have essentially been arrested twice on the same charge with drastically altered penalties. The defendants were first arrested in December 2005 as the result of a sting operation involving the Fort Lauderdale, Florida based premium cigar giant Altadis U.S.A. Inc., Miami-Dade police, the U.S. Secret Service and the U.S. postal inspectors office. Officials raided the homes and businesses of Juan Penton, Miguel Guerra, Filiberto Marimon, Hugo Endemano-Portal and Lauro Perez, reportedly seizing more than $100,000 worth of counterfeit Cuban and non-Cuban cigars. The authorities also seized enough bands and boxes, according to Altadis U.S.A., that could have been used in the sale of hundreds of millions of dollars of fake premium cigars annually.
The defendants were allegedly involved in the trafficking of counterfeit Cohiba, Hoyo de Monterrey, Montecristo, Partagas, Romeo y Julieta, Trinidad, Saint Luis Rey, Bolivar, San Cristobal and H. Upmann cigar brands. Altadis U.S.A. owns the U.S. rights to many of those brands. General Cigar Co. owns the U.S. rights to Cohiba, Partagas and Bolivar. At the time, the punishment would have come under Florida state law, which would have been considerably less severe. According to the U.S. Department of Justice, the defendants were originally arrested under state law because the state issued the search and arrest warrants. "The fine would have been inconsequential," said Charles Grimes, of Grimes & Battersby LLP., lead counsel for Altadis U.S.A. "The worst penalty would be the loss of the merchandise."
"There has always been in the past a perception among those in the counterfeiting community that there are no risks - prosecution under state law was viewed as merely the cost of doing business." Following the arrests, the defendants were let free on bail and their case at the state level is still running through the normal proceedings. After the arrests, authorities aiming for federal charges collected evidence, analyzed it and submitted it to the U.S. attorney in Miami.
On March 17, U.S. Immigration and Customs Enforcement (ICE) announced that a Miami federal grand jury had indicted the five accused counterfeiters on charges of trafficking and conspiracy to traffic counterfeit products. "A lot of people thought that this [the December arrest] was not a big deal and would amount to a slap on the wrist," said Janelle Rosenfeld, vice president of advertising for Altadis U.S.A. "But now that it's federal, it carries a significantly stiffer sentence."
In a statement, Altadis said it would take action against any importer, distributor, retailer or other entity that deals in counterfeits. In a separate case in January, the company helped to bring about the arrest of two retailers accused of selling counterfeit premium cigars, one of which was also a legitimate customer of the company.
"Once again, this operation is part of an ongoing, determined effort by Altadis to protect its interests and those of its distributors and consumers, as well as the entire industry," wrote Theo Folz, president and CEO of Altadis U.S.A. "No one who is now dealing in counterfeits can claim that they are doing so innocently. We are moving forward with an aggressive enforcement program that will go after anyone not respecting our rights." Grimes said that the federal prosecution was made possible because of the investigations spearheaded by Altadis U.S.A. over several years, which netted important information in building a case for federal charges. Added to this, the Stop Counterfeiting in manufactured Goods Act, an amendment to the federal anticounterfeiting law signed by President Bush on March 16, will make it easier for prosecutors to invoke federal charges in future counterfeiting cases.
Under the former federal law, those convicted of dealing in fraudulent merchandise of any kind, whether it be DVDs, handbags, pharmaceuticals or premium cigars, were looking at a maximum of five years in prison and fines of up to $2 million for conspiracy to traffic in counterfeit goods, and 10 years and a $2 million fine for actually trafficking counterfeit goods. Under the new law, the penalties are the same, but the trafficking in the packaging and labels of counterfeit products also becomes a crime.
"The bill strengthens our laws against trading counterfeit labels and packaging," said Bush at the signing. "In the past, the law prohibited the manufacturing, shipping and/or selling of counterfeit goods, but it did not make it a crime to ship falsified labels or packaging, which counterfeiters could then attach to fake products." " Counterfeiters," said Grimes, "would send the labels separate from the premium cigars; what happens now is we can go more aggressively after counterfeiters."
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