NORFOLK (AP) — An area merchant has pleaded guilty on behalf of his corporation, N-Zone Sportswear Inc., to trafficking in imitation Nike shoes, the most recent event related to problems with counterfeit products in the Hampton Roads area.
Lawrence Pettaway pleaded guilty Monday in U.S. District Court that his store — N-Zone, at the Gallery at Military Circle — had for sale 617 pairs and 47 single fake Nike shoes worth an estimated $92,500. His lawyer, Andrew A. Protogyrou, said his client’s company likely will be fined $10,000, though the penalty could be as much as $5 million.
Four retail stores in the area have been caught in recent months selling phony merchandise, including Nike knockoffs and counterfeit NFL and NBA jerseys.
In August, federal customs agents found more than 1,000 boxes of counterfeit Nike shoes worth $1 million when they raided a refrigerated shipping container at a Norfolk port. The faux Nikes were stashed behind boxes of salt kelp and jellyfish.
Nikes are second only to Louis Vuitton products in the amount of counterfeit apparel that enters the United States. They are part of a $1 billion-a-year worldwide black market in counterfeit goods.
Nike targeted Pettaway and his cousin, Russell Pettaway, who operates a similar store in Hampton, after learning through private investigators that the stores were selling Nike knockoffs in violation of federal trademark laws, according to the Virginian-Pilot newspaper.
Russell Pettaway is scheduled to plead guilty on behalf of his store next month, according to court records.
Authorities determined that the counterfeit Nikes were purchased for $37.50 a pair from Singapore and Chinese suppliers, well below the wholesale price.
The knockoffs are typically sold at flea markets, by small retailers and in consignment stores.
In Portsmouth last month, authorities seized 1,100 pairs of counterfeit shoes, including Nike and Timberland brands, and 192 knockoff NFL and NBA jerseys.
Private investigators hired by the manufacturers led to the busts.
Telling the difference between a real item and a fake one can be difficult. Investigators sometime must send a serial number to the manufacturer.
Federal authorities have become more concerned with the problem in recent years after learning that black-market profits have been funneled to terrorists. A Lebanese native living in North Carolina, for example, was convicted of sending proceeds to Hezbollah from the sale of cigarettes with counterfeit tax stamps.
Authorities in the Philippines this summer uncovered a terrorist plot that was to be financed through the sale of counterfeit CDs, according to the International Chamber of Commerce, which tracks counterfeiting worldwide.
The Department of Homeland Security seized more than twice as many counterfeit goods last year as it did in 2001. The seizures were worth an estimated $93 million, with one-third of the total consisting of apparel, handbags, wallets and backpacks.
The department’s Customs and Border Protection branch and Immigration and Customs Enforcement branch handle cases from ports to the retail stores. Officials wouldn’t comment on the investigation involving the Nike seizures at the Norfolk port.
Mike Netherland, resident agent in charge of the Norfolk Immigration and Customs Enforcement office, said although most seized counterfeit merchandise is destroyed, some goes to worthy causes, such as Hurricane Katrina victims.
“It may not be the real thing,” he said, “but it’s wearable.”
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