Newcastle Trading Standards and Falchi fake chargers The fake temptation One of the biggest counterfeit product hauls Newcastle Trading Standards has uncovered online to date probably wont be the last, says paul leighton W hat started as a supposedly well-intentioned business has ended up being prosecuted for selling counterfeit goods, after its director, Gianni Falchi, got his head turned by the temptations to make a quick buck from selling dodgy chargers online. When Newcastle Trading Standards raided the premises of Ireplace, we found 42,159 mobile phone accessories, most of which were identified as fakes. Dealing with the rise in e-crime is a constant battle for trading standards services across the nation. Here, in the north-east of England, trading standards teams have found that one of the best ways to tackle such crime is to work together to share intelligence and resources. As with other services, we very much rely on the expertise and skills of the investigation teams funded by National Trading Standards to assist us in our work. The Ireplace case In March 2015, a consumer complained to Newcastle Trading Standards about a Griffin charger they had bought on eBay. The charger proved to be fake, and Ireplace was confirmed as the supplier of the product. When we were satisfied we had enough evidence against the firm, we applied for a search warrant. In May 2015, we executed our search warrant and raided Ireplaces Newcastle business premises, which were located in a self-storage unit. Our officers were stunned by the quantity of stock they found. Weseized 42,159 items that day mostly Apple and Samsung branded samples of which were subsequently sent off to the various brand representatives to establish whether or not they were counterfeit. Most items were confirmed as fakes, and so contravened the Trade Marks Act 1994. The value of the goods seized, calculated on the basis of the price by which they were offered for sale by Ireplace, was 212,473. If the items had been genuine and sold through authorised traders, they would have been worth more than 1m. We quickly realised that the scale of investigation was such that it was best placed with the National Trading Standards Scambuster North East Team (see panel at the bottom of this article), hosted by Redcar and Cleveland Council. Through regional tasking, this was agreed with our colleagues, who decided to continue the investigation under the name Operation Cupertino. The team collected the goods from us to put into secure storage, from where they could be catalogued and used as evidence. Falchi had set up 133 eBay accounts, often using fake identities, to allow him to sell more products KEY LEarNINgS The illegal businesses that trading standards services target are and need to remain those that start up and hide away from our routine enforcement activities on the web When dealing with cases of this magnitude, seek assistance through regional tasking from your regional investigation team (see panel at the bottom of this article). They are there to assist with responding to level 2 (cross-border regional) and level 3 (national and international) crime Be aware of the overall risk to the local authority and partners if the legal case goes against you, especially when you consider the costs that you may be left to pay The investigation identified that most of the goods had been sourced from China. Enquiries were initiated with all the internet-based businesses involved, including Amazon and eBay, which greatly assisted quite a complex investigation. We discovered that through Ireplace, Falchi had set up 133 eBay accounts often using fake identities to allow him to sell more products. The money that Ireplace and Falchi received went through 47 accounts and into four master accounts, identified with assistance from the businesses and financial institutions involved. Falchis turnover during a four-year period was 809,783.05, more than 600,000 of which was through his eBay and Amazon sales. Following a comprehensive investigation of the business activities carried out by Ireplace, and the formal interviews conducted with Falchi, the decision was taken that Newcastle City Council would prosecute both Ireplace and Falchi as the sole director for a specimen nine offences under Section 92 of the Trade Marks Act 1994, plus one charge of money laundering. Because of the seriousness of the charges, the matters were referred to Newcastle Crown Court. Subsequently, Ireplace admitted the nine offences of possessing and selling counterfeit goods and money laundering, and we agreed to withdraw the separate charges against Falchi as sole director. Falchi was sentenced to 16 months in prison, and we have ongoing matters against both him and Ireplace under the Proceeds of Crime Act. In his defence, Falchi said he had set up the business in 2011 as a legitimate mobile repair business; he always paid his taxes, and his actions were the result of naivety. He claimed he had originally bought parts in good faith, believing them to be genuine. However, the methods he used to process the money, and the fact that he was well aware items were counterfeit and still sold them at great profit to himself made it clear to us that criminal gangs are not the only ones causing huge safety issues and dangers to the public. Falchi was a first-time offender a university-educated businessman who succumbed to the easy access offered by the internet to make money from counterfeit goods. Trading standards teams are likely to come across many more Falchis keeping up with them will be a growing challenge. From 1 April 2017, the National Trading Standards Scambuster Teams will be known as the National Trading Standards Regional Investigation Teams in this case the Scambuster North East Team will become the Regional Investigation Team North East Credits Paul Leighton is a trading standards enforcement officer at Newcastle City Council. Images: iStock.com/kf4851 To share this page, in the toolbar click on You might also like The true cost of a bargain December 2016