Imitation Nation

In this episode, we explore the latest developments in counterfeit pill presses, vinyl records, and counterfeit products, highlighting law enforcement efforts, legislative updates, and the importance of industry collaboration.

 

Transcript:

 

00:00:00:03 - 00:00:23:03
Speaker 1
So in South Carolina, this guy walks into a Dollar General with counterfeit bills like bleached tens that they printed 50s on, and he tries to give them to the cashier to load them on to like an app for like a card. And the cashier looks at them, realizes they're fake, and says, I cannot accept these. And so guess what?

00:00:23:05 - 00:00:25:07
Speaker 1
Guess what? The guy says to the cashier.

00:00:25:08 - 00:00:26:22
Speaker 2
I don't know.

00:00:27:00 - 00:00:30:14
Speaker 1
Can I have those back?

00:00:30:16 - 00:00:43:19
Speaker 1
And the Dollar General cashier, who's probably seen everything because they're a Dollar General cashier, is like, no. And the guy goes to his car and and he's driving to Audie. One of the other employees walks out and takes a picture of the car and the license plate as he.

00:00:43:19 - 00:00:50:14
Speaker 2
Drives away. Yeah, it's not always the brightest bulbs that that do this. That's funny.

00:00:50:15 - 00:00:58:11
Unknown
The Imitation Nation podcast covers all things counterfeit, hosted by Shabbir Amber Schaffner of the partnership for Safe Medicines and Sven Bergmann of Venture Global.

00:00:58:16 - 00:01:06:15
Speaker 1
All right, Sven, welcome back to Imitation Nation number 38. And one of my favorite topics is the first story. Guess what that is?

00:01:06:17 - 00:01:13:05
Speaker 2
Well, it's normally counterfeit money, but I don't think that's our first story. So peel presses.

00:01:13:07 - 00:01:14:14
Speaker 1
Is all Bill presents.

00:01:14:18 - 00:01:15:20
Speaker 2
So I thought.

00:01:15:22 - 00:01:46:10
Speaker 1
So often when you see someone who a law enforcement agency that has raided and playing this in drug lab, there's often a pill press in that drug lab, right? And sometimes it's made by a company called Elephant Machines. And LFA machines is one of the biggest, well, most well-known makers of pill presses in the world. And three of their longtime employees and executives just got indicted for six counts.

00:01:46:12 - 00:02:07:07
Speaker 1
Wow. As well as the company itself. They haven't been tried yet. They've just been indicted and I think arrested. So all of this, all of these accusations by the Department of Justice are alleged. But basically they said that they were knowingly selling pill presses to people that they knew were going to make counterfeit, controlled substance pills.

00:02:07:08 - 00:02:10:16
Speaker 2
Wow. That is incredible.

00:02:10:18 - 00:02:32:18
Speaker 1
This investigation has been going since 2019, and it was led by DEA Tucson in Arizona, which is also where the current administrator of the DEA, Shari Oz, was. She was a special agent in charge in Arizona of one of the officers. So that is. Yeah, good friend of ours. Good, good friend of of protecting Americans from fake pills.

00:02:32:18 - 00:02:50:18
Speaker 1
She has seen everything. Yeah. So they were due in court last week on the 23rd. I don't remember what I was doing that day, but I was not paying attention to it. And the DOJ has been very clear that they have recovered their machines from clandestine drug labs all over the world.

00:02:50:23 - 00:03:16:06
Speaker 2
Wow. And okay, that's you don't have any speechless often, but because you and I have talked about pill presses a lot. Right. And so normally it's the like, oh, yeah, those are some makers in China. And, you know, they're hard to get. That's the first like executives, which I believe are U.S. executives. So what exactly is the government alleging they did that led to this indictment and arrest?

00:03:16:07 - 00:03:38:15
Speaker 1
So there's not a lot of detail in the complaint. But if you look at it, they talk about that LFA had a do not sell to list and that somehow they can even though they discussed people that should not be sold to, they still sold the machines. They also site. And I'm not sure that this is as on on his easy legal ground.

00:03:38:15 - 00:04:01:11
Speaker 1
But they talk about how the firm a press powder that they sell, which is what you use. You mix in your active ingredient with the powder. And the powder, when it's in, a machine binds together and holds together to make a pill. They talk about how it comes in these colors that just mysteriously and perfectly mimic the counterfeit controlled substances and criminals like to make.

00:04:01:12 - 00:04:28:21
Speaker 1
And we don't know a lot of the details, but the agent who who signed the complaint said that he saw multiple covert, controlled purchases of tablet machines and powder being sold to people that the defendants had talked about or placed on the do not sell to list. So there's clearly more story there, and LFA has not had a chance to respond obviously to this, which they're going to want to do, and they have the right to.

00:04:28:21 - 00:04:31:21
Speaker 1
But that's that's what they accused him of.

00:04:31:23 - 00:04:52:22
Speaker 2
Okay. That that's that's that's really bad. You know, we often talk about that people should do a good know your customer. And that's step one. When you then do know your customer and you put people on a those are not good people do not sell to and then you still sell to them. You're creating your own evidence against yourself.

00:04:52:22 - 00:05:08:12
Speaker 2
So what's really interesting apparently with this, this evidence, the government also what I read has filed a post indictment restraining order. Never heard of that before. What is that? So it turns out.

00:05:08:14 - 00:05:34:17
Speaker 1
That the LFA is owned by a larger conglomerate of companies that are all in this space, and apparently the parent company is having some cash flow issues. They own a lot of other companies like LFA. LFA is just the biggest one, but the government has asserted that they are struggling financially and that they have defaulted on some loans in the range of millions of dollars.

00:05:34:17 - 00:05:50:07
Speaker 1
And I think the government is worried that will sell the assets of LFA, and there will be nothing left to pay the the penalties, forfeiture and restitution that the government thinks they're going to get out of this, out of this case.

00:05:50:09 - 00:06:07:04
Speaker 2
That is that is interesting. Yeah. And, you know, it'll be God, I can't wait to see all the court documents and where it goes. But Deb might have been part of it, where if you're in financial straits and you're like, I need to make money. These people are technically do not sell this. But, you know, money is always green.

00:06:07:04 - 00:06:17:02
Speaker 2
And obviously the powder seller's blue. But okay, so what's your what's your what's your take on the case and who do we who do we think for this. Like who was involved.

00:06:17:04 - 00:06:34:15
Speaker 1
So and I just want to say again that this is just an indictment. And I think there were arrests. But LFA has not had a chance to respond. And they may have a very different take on this, but I don't think that the government would have assembled seven years of evidence and then brought an indictment unless they thought it was pretty solid.

00:06:34:16 - 00:07:03:06
Speaker 1
That's that's not how the feds operate. They like to go in with overwhelming proof of what they have to say. I can't believe that we won't. I don't have any exact proof that that DEA administrator Oz Shari Oz worked on this, but this is the kind of passionate work that I think she would have done. The DOJ specifically cited Homeland Security Task Force in the state called HSF Arizona, which is not an acronym I heard.

00:07:03:07 - 00:07:22:20
Speaker 1
But they did also thank the High Intensity Drug Trafficking Area group hideout, which is which is something we're familiar with. And all this comes out of DEA Tucson. So if you are listening and you're an agent and DEA Tucson and you worked on this case, we're not ever going to name you, but we're going to thank you. So so we'll give you our thank you.

00:07:22:20 - 00:07:44:02
Speaker 1
And then the list of agencies that contribute to this is insane. It's the IRS, the ATF, Customs and Border Protection, the FBI, sheriffs and local police. Hilariously, of course, not surprisingly, the Postal Service inspectors. You never want to get on the wrong side of leave it or not, the Bureau of Land Management, which I wasn't expecting to see.

00:07:44:02 - 00:08:00:20
Speaker 1
And of course, finally, the Secret Service and that one I haven't figured out for sure the Secret Service currency and presidential protection. There must be something else here. I'm not aware of that they that they cover, but the Secret Service apparently was thanked as one of the entities.

00:08:00:22 - 00:08:24:22
Speaker 2
Wow. No, that's that's that's fantastic. That was a huge task force. To your point, seven years in the in the making. I think, you know, whenever I talk to folks that that one faster enforcement and go like, oh, you know can can't the government or cops basically just work faster and for folks to really understand. No, it takes a really long time to build a good case, especially a case like this.

00:08:24:22 - 00:08:51:07
Speaker 2
When you go after a US company, you go after top executives. You got to be sure you build in a way, and for them to build it with all the parts in their postal service, making sure we're seeing our shift. IRS obviously money movements put the locals in. Yeah, Secret Service would be interesting, I wonder I wonder what that's about, but kind of pull everybody in, make sure everybody is there with all the all working together, everybody pulling, pulling their authority together.

00:08:51:07 - 00:08:59:18
Speaker 2
So I'm sure we have a trove of documents. Right? We have them on our website or where do we have to and what can people where can people see those documents.

00:08:59:20 - 00:09:09:13
Speaker 1
So we'll they'll be in the show notes, the press release, the indictment, the restraining order and the affidavit from the agent involved will all be linked in our show notes.

00:09:09:19 - 00:09:20:06
Speaker 2
Very good. Well, and the last thing is, I know from my team, I was told this is not the only big thing that happened in process. There's something else that is happening on process right now, right?

00:09:20:07 - 00:09:46:00
Speaker 1
Yes. And indeed it is your team. Your team is monitoring congressional legislation on pill presses and told me that the the Stop Pills That Kill Act, which are 8005, passed the house. It requires all pill presses and many of the parts to carry serial numbers and creates a new crime of removing those numbers. PSM my my organization that you and I both work for endorsed it.

00:09:46:00 - 00:10:00:23
Speaker 1
And you know, I'm hoping to see what we can do to see if we can get it passed through the Senate. It is a little late in the year. Basically, at this point it's going to have to get passed in lame duck, or it's going to have to wait for the next Congress to take to take their seats.

00:10:00:23 - 00:10:10:05
Speaker 1
But this is more progress than I think we've seen than in the pill press legislation, than at any other time in the history that I've been watching it for seven years.

00:10:10:06 - 00:10:30:07
Speaker 2
Yeah, 100%. And the nice thing about this bill is it has bipartisan support. It was it was broadly passed through through the House. A separate version, very similar, was previously passed through the Senate. I'm sure they'll find a way to reconcile it to make sure that it passes. So lame duck will be will be a nice nice clean up to to hopefully for them to to get to it.

00:10:30:07 - 00:10:32:23
Speaker 2
So good news on pill presses I like it.

00:10:33:04 - 00:10:42:00
Speaker 1
And my kudos to your federal affairs team staff. They they they know I love them, but I love that they watch they watch stuff like this.

00:10:42:02 - 00:10:49:13
Speaker 2
Yeah, there's there's a lot to watch. All right.

00:10:49:15 - 00:10:52:17
Speaker 1
So tell me about what's what's happening in LA.

00:10:52:19 - 00:11:20:17
Speaker 2
So I got a really interesting story. It's a it's a massive seizure that happened in California. Let me set it up a little bit. So the Los Angeles County Sheriff's Department worked together with the Department of Homeland Security and Homeland Security Investigations, many other partners, federal and local, and they announced the seizure of nearly 26,000 counterfeit products with an estimated retail value of $10 million from a warehouse.

00:11:20:17 - 00:11:21:03
Speaker 1
And a lot.

00:11:21:03 - 00:11:40:15
Speaker 2
Of shoes. That's that's a lot of items from a warehouse in Arcadia, California. And the products, as you said, included counterfeit Nike's Adidas Fear of God essentials, which I don't know what their brand is, but it sounds like a really cool apparel brand and other luxury streetwear and footwear. So a massive seizure.

00:11:40:17 - 00:11:48:15
Speaker 1
So what is different about this raid? I don't want to. I don't want to minimize it. I think these things probably happen all the time. But why did this one catch your eye?

00:11:48:17 - 00:12:15:06
Speaker 2
It caught my eye. Not because it was just a raid. It did two things for me a the sheer size, like $10 million in a single raid in a warehouse in the United States, again, this big. But when you look into the case and it's how investigators got there, right? So it started out when CBP started to intercept some shipments that were destined for California Port of entries, and when they started to seize them, they started to.

00:12:15:07 - 00:12:41:15
Speaker 2
Now it comes back down to really good investigative work. They looked at all the shipping documents and they said, What is common here? And they started to notice that it's the same consignor. It's the same warehouse in Arcadia. These keep going to and they said, let's start tracking these. And instead of just, you know, seizing one pair of of shoes, they started to build the case and started to track the shipments, develop probable cause.

00:12:41:16 - 00:12:47:03
Speaker 2
And then, when it was big enough, obtained a search warrant and executed the raid.

00:12:47:05 - 00:12:55:12
Speaker 1
So they really this wasn't a warehouse raid. This they basically dismantled a counterfeiting import and distribution operation.

00:12:55:12 - 00:13:15:12
Speaker 2
That's exactly it. And again, this comes down to like when folks sometimes say, oh, you know, just see stuff at the border. And that's the end of an investigation. No, most of the time that's just the beginning. Right. As you and I know, every shipment has paperwork, every shipment has a destination, and every shipment has people that, you know, wait for it on the one side and people that shipped it.

00:13:15:15 - 00:13:46:10
Speaker 2
The more and more that can be put together as a case, the more and more you can get info to identify what it is. Which, by the way, quick plug here for the bill on information sharing, which is also in Congress. And hopefully you make it in the in the lame duck session. And that's exactly it. When you have all of these documents, investigators then can use those data points to identify importers, warehouses, distributors and hopefully ideally the criminal organization behind it really building the case, right.

00:13:46:12 - 00:13:47:03
Speaker 2
Yeah.

00:13:47:04 - 00:13:51:01
Speaker 1
So I'm assuming that this wasn't just LA County sheriff. This was.

00:13:51:02 - 00:14:12:20
Speaker 2
It was it was not just well, it was LA County sheriff, but LA County sheriff's has not a big surprise since since LA, but has a dedicated unit, which is the LA County Sheriff's Department Counterfeit and piracy enforcement team. Plus they work together. Yeah, of course it's Los Angeles. They have to. And they're also worked together with Homeland Security Investigations and Customs.

00:14:12:20 - 00:14:27:21
Speaker 2
And so a nice big a task force and then a specialized unit that Los Angeles County has for counterfeit and piracy, which given that there's a lot of fashion and a lot of movie industry in Los Angeles, a very natural development.

00:14:27:23 - 00:14:35:23
Speaker 1
I don't know of another operation like that. Like what? What is how active is this L.A. County sheriff? Anti-Counterfeiting.

00:14:36:01 - 00:14:58:19
Speaker 2
So they're very active. And to your point, there is not a lot, actually. Phoenix what we just talked about, Phoenix says something similar is called the best team. They do something very similar. Larger metros sometimes have specialized teams. But this team in Los Angeles is is particularly active. They have served over the last year, roughly 25 search warrants and recovered roughly 200,000 counterfeit products.

00:14:58:19 - 00:15:10:00
Speaker 2
So they are very active. It's not isolated and they're clearly doing a really good, good job in in building nice large cases that really can be brought to to justice.

00:15:10:02 - 00:15:15:11
Speaker 1
All right. So if you're a brand owner, what is the takeaway here from this operation.

00:15:15:14 - 00:15:37:12
Speaker 2
It it reinforces a lot of the things we often talk about. Right. Don't just focus on the seizure. Focus on really providing and working with investigators to build really good investigations as seizures. Just the first interception, the paperwork, study and logistics are needed, helping to identify warehouses and ultimately work their way to the people that are running this.

00:15:37:12 - 00:16:01:06
Speaker 2
And so again, I want to quickly put a plug here. Our good friend Travis Johnson, who we have had on a previous part, is, together with many others, working very diligently to pass a bill in Congress that actually would make sure that customs can share exactly all the info we just described about the shipping manifests, the shipping documents, the labels, etc. with brand owners.

00:16:01:06 - 00:16:22:14
Speaker 2
So de, together with law enforcement can build that case. And that bill also has been passed through through the House. It is sitting on the floor of the Senate again with precious time in the Senate. I know lots of fingers and toes crossed. It would be tremendous to do because as both of our first stories show, it's so hard to build a really, really good case.

00:16:22:14 - 00:16:33:09
Speaker 2
And the more we can share info between law enforcement, private industry that really makes sure we can get to the big players behind the seizure. That for me is really the big the big takeaway.

00:16:33:11 - 00:16:48:17
Speaker 1
Awesome. All right. Well, Travis, we are with you in spirit. And also I endorsed your bill, so I am with you. I am with you. My signatures on your dotted line. That's right.

00:16:48:19 - 00:17:01:15
Speaker 1
All right. So I want to talk about the resurgence of vinyl records, which have had a real, I think, ever since Pearl jam did that album they released as vinyl.

00:17:01:15 - 00:17:33:15
Speaker 1
We've seen a huge explosion in people listening to vinyl, buying vinyl, and, not surprisingly, counterfeit vinyls, of course. So in Britain, there was just a really good article in The Guardian about a gentleman who ran a vinyl record counterfeiting operation. It's been running for nine years, they said, since 2017. Wow. He just pleaded guilty to two charges of breach of copyright and acquiring and using criminal property, which is not in charge.

00:17:33:15 - 00:17:59:09
Speaker 1
I think this is familiar to me in the States. He was guilty, Gilchrist. He pled guilty on both counts, and he got two years and eight months. Okay. And then I think three and a half years for the second charge. So he's going to serve those concurrently. He's going to be in jail for three and a half years for counterfeit vinyl records, which I suppose if you're a collector, you probably think is probably pretty good because you cut off, I guess.

00:17:59:10 - 00:18:02:03
Speaker 1
So this wasn't a by the way.

00:18:02:06 - 00:18:09:08
Speaker 2
Was not. So what did you bootleg? How many, how many, how many LPs has he done? And like which artist like what has he done?

00:18:09:12 - 00:18:31:12
Speaker 1
So when they raided his warehouse and he, he was selling out of his warehouse on eBay and Discogs, if you're if you have a friend who's a vinyl nerd, they've probably talked to you about always looking for new records on Discogs, which is a big vinyl trading marketplace and sale marketplace. When they raided this warehouse, they raided, they picked up 15,000 records.

00:18:31:12 - 00:18:32:16
Speaker 2
Wow.

00:18:32:18 - 00:18:36:11
Speaker 1
Yeah, it is not small.

00:18:36:13 - 00:18:44:03
Speaker 2
So was he was he just faking like. Because last time we talked about, like, how did it do it? Do you just buy and then put fake labels on. How did he. How did he do it.

00:18:44:06 - 00:19:05:08
Speaker 1
So he pretty much did everything I think except print the labels. He was he was pirating first new release records. Right. It's one thing, I suppose. Probably still not legal. There's one thing to, like, find a bootleg recording of. I'm just going to use a Grateful Dead as an example Grateful Dead show, and then turn it into a vinyl record that you release.

00:19:05:09 - 00:19:27:11
Speaker 1
He was pirating first run brand new releases by like, Taylor Swift and other major artists. And it was something where like the, the, the folks say they were very surprised by the whole thing because he wasn't he didn't use like a mastering a piece of equipment. So I don't know how he was making it, but he was not doing it in the traditional way that they were expecting.

00:19:27:11 - 00:19:30:09
Speaker 1
But he made a lot, quite, quite a lot.

00:19:30:12 - 00:19:51:13
Speaker 2
And and you're right, as we talked before. Right. My kids are also, you know, they're they're 17. 19. They're huge into vinyl. And so it's actually funny when you say this. And then when you brought me the story and I looked at it and I looked at the pictures of the seizure, and I saw some of the broken vinyl records that were there that didn't work well in production.

00:19:51:13 - 00:20:11:11
Speaker 2
And when I saw these, like he's doing, as you say, he's doing the first runs and he's doing like special collection kind of pieces. So like, for example, Taylor Swift, my kids, they have a lot of her special vinyls that are like pink or red or certain special colors. And so he then fakes the color and all of that and makes these like special runs.

00:20:11:11 - 00:20:37:17
Speaker 2
And it's it's tremendous for the story. So to look at how big it's gotten. And in 2025, according to the data I saw, there's about $1 billion worth of vinyl that's being sold like, that's huge, $1 billion in vinyls being sold. And, you know, as you said, for this guy, he didn't just do the label, he got the actual vinyl pressing machine.

00:20:37:18 - 00:20:59:06
Speaker 2
Don't know to your point how he copied the master, how good the quality was. And it's and it's and it's tremendous. And the other thing that that this let us down, I looked at how often this has happened in the UK alone. They have executed 43 search warrants against fake vinyl and CD bugler operations, with a street value of about 8 million pounds.

00:20:59:06 - 00:21:04:10
Speaker 2
It's about 10 million USD. So it's big business.

00:21:04:12 - 00:21:23:09
Speaker 1
Yeah, he he was so prolific that apparently after the raid, the the the British Phonographic Industry, which is an incredibly great retro name. Yeah. For what's probably the vinyl trade association over there, the rights, the rights organization, they had to contract 100 contact 108 different artists.

00:21:23:10 - 00:21:24:14
Speaker 2
Wow.

00:21:24:16 - 00:21:35:13
Speaker 1
To sort of confirm that he wasn't authorized, you know, to to to press records for them. So he was he was not he would he did not have a niche. He was doing everything.

00:21:35:15 - 00:21:53:19
Speaker 2
And he wasn't messing. He wasn't a messing about, you know, it's what an operation. It reminds me kind of of the what does it catch me, if you can, with, with Leonardo DiCaprio when he has that big printing machine for the fake checks and all that, you know, go big or go home like, he sure went big so well.

00:21:53:19 - 00:22:06:12
Speaker 1
So the BPI said that there are ten other active counterfeiting operations that they're monitoring in the UK right now. So this is probably not the last of these incidences we're going to see.

00:22:06:14 - 00:22:12:01
Speaker 2
I can't wait to see the next nine.

00:22:12:03 - 00:22:29:21
Speaker 1
So I don't have a whole big story on fake money, which you know, along with stamps is one of my favorite topics and pill presses. But I will say that there's a lot of little incidences all over the news, all over the country, in the US this week about people passing fake money in casinos, which I don't know.

00:22:29:23 - 00:22:42:08
Speaker 1
Let me just let me give you some free advice on your crime. Don't pass fake money at a casino. They look at bills all day. It's not going to make it unless you have a super fake you're done.

00:22:42:10 - 00:22:51:21
Speaker 2
Or to or to a judge or obviously or bill or the third one we can add to story you're about to cover. Don't do that either.

00:22:51:23 - 00:23:14:02
Speaker 1
So in New York, in North Manheim Township, some dude was went to a Dollar General to load a chime card, which I guess is a cash value card with money with six fake 20s and two real fives. And and they kept that. So it's, it's it's happening all over. You know, we'll bring you a full story when we get like a really big story about it.

00:23:14:02 - 00:23:23:15
Speaker 1
But, you know, continue as a normal person or as a small business owner to be wary of fake currency, because there's a lot of people out there trying to pass it on to you.

00:23:23:17 - 00:23:34:17
Speaker 2
Very good, very, very good advice. If if you know, don't don't give counterfeit money to judges, bail money. And when somebody discovers his fake money, don't ask back for it. Got it.

00:23:34:18 - 00:23:38:14
Speaker 1
They're not going to give it back to you if they're doing their job. All right. Thank you. Sven,

00:23:38:19 - 00:23:42:21
Speaker 2
All right. Fantastic. Nice talking to you and Shabbir. Read us out.

00:23:42:23 - 00:23:48:05
Unknown
The Imitation Nation podcast is a production of Cost Stories and is the sole owner of this production.

00:23:48:05 - 00:23:51:03
Unknown
All statements are of their own and not the opinions of their employers.

00:23:51:07 - 00:23:56:01
Unknown
Podcast management by Sarah Imber Safdar after theme music written by Jonathan Boyle.