How Counterfeit Rolexes Actually Work | How Crime Works | Insider

My name is Rob Holmes. I am a private investigator. I have prevented millions of dollars of

counterfeit

watches from entering the US market. This is how

crime

work

s. It is estimated that 23.3 million

counterfeit

watches are currently circulating in the United States. There have been many stories about the counterfeit watch industry being linked to child labor, sweatshops, and even human trafficking. There will be organized criminals who will do this type of thing. When I

work

undercover as a distributor, I have to be very credible. Doing what I do doesn't come without a little fear. Many of the fakes today come with a box and authentication certificates.

You used to see watches that maybe only had one of the trademarks, like just the crown on the dial but no crown on the dial. Now, manufacturing has improved so much that even the cheapest knockoffs have it all. There are people who buy counterfeit watches worth $1,000, Patek, Rolex, Louis Vuitton, all the big brands. And they buy these watches for $1,000 because they are almost clones. And in that world, the current term is "epic." Cannot be differentiated from the original. And especially with some of the brands, especially Rolex, the only way to tell is to open the watch and look at the movement.

Because this is a Rolex movement, you cannot confuse a Rolex movement with a fake. I don't care how good the Chinese factories are. A Swiss movement made by Rolex will always be known once you open the back. If sold in the United States, there is a factory in China that makes an exact copy. It's just a question of how high the quality is. Manufacturing in the counterfeit world replicates manufacturing in the real world. Wherever manufacturing is cheap, that's where manufacturing will happen. These factories can afford the same machines that real companies use and use the same software.

Such software is often stolen through industrial espionage. In these Chinese markets, they have a level for a manufacturer or a seller, a level level where you can get an inspection by the market. They'll have a third-party inspector come in and take pictures and check your location for child labor, all the usual things people would look for, and you can pay for a clean bill of health. But it is not known what these factories are

actually

doing. We know that some Chinese factories use forced labor. It used to be, in the '80s, '90s, even early 2000s, watches would arrive here in containers, and then the logos would be put up in factories here in the United States, in sweatshops in the major cities here. in the U.S.

That kind of stopped, because the Chinese factories have gotten so good that the U.S. factories couldn't keep up with quality. We found that most of the product comes out of the major ports and Guangzhou, within Guangdong. China became very good at logistics. It was much easier for people to sell as affiliates here in the United States and ship them from Chinese factories or from brokers. That's how good these Chinese factories are. QC, which means quality control. They will send you a high resolution photo of your item and the shipping label, so you can check the item, make sure it is the correct model, and also make sure the address on the shipping label is correct.

You say, “Yeah, go ahead,” boom. In about a day, you will receive the tracking number. The watches would be shipped in, say, a watch box, say 1,000 watches or 10,000 watches in a small portion. And the rest of the container would end up being beach balls, you know, cosmetics or whatever, cheap stuff. What they do is they send it to their clearinghouse, a distributor in Pennsylvania. They put a new label on it and send it to you from there, so that it looks more national. And when it looks more domestic, it looks more trustworthy. But most counterfeit watches arrive in the United States via the US Postal Service or DHL, and are shipped individually to the seller.

You could buy one watch, you could buy five watches, you could buy 100 watches. I buy samples from all over the world. They sent me a package once and it was a toy alarm clock. I open it. Inside was a clock. I haven't received a disguised counterfeit in several years and I think it's because of how easy it is to cross the border with just a bit of bubble wrap. Watches bought on the street are usually bought by the seller in the same way. If you buy 100 of them, they cost you $8 each. So you get 100 of those, but the package is only that big.

Shipping will cost $80 or $90. And you know the Postal Service is swamped right now and Customs is swamped right now. So it's really a field day for mailing in counterfeit watches. US Customs cannot inspect each and every package. They used to say they inspected one every thousand, but I don't even know if that's possible anymore now that everyone buys $20 dresses and stuff like that. Distributors of counterfeit products do not worry about obstacles because the profit is very high. So if something stops at Customs, they'll just send you a new one. And that happens very often, even with a container.

Those 10,000 watches are stuck in Customs and that will simply be the cost of business. So those obstacles are quite easy for them to overcome. In my opinion, the demand for fakes, non-deceptive fakes where you know they are fake, is simply because people like to fool men. From the '80s until now, I've found that demand has been pretty consistent over the years. I mean, no matter what the economy is like, people like a bargain and they like to spend less on something that looks good. Let me explain the gray market a little to you. There is a market where people think they are getting a deal.

You'll see, you know, 20% off retail stores and things like that. There is a gray market where things "fall off the truck" and are diverted away from the original supply chain. And once they get here to the United States, they can sell legitimate products, including the watch industry. They can sell legitimate products for 10% or 20% off the original price. And they are real. But these companies have databases with those serial numbers. And you take it to a real repair shop, they put it in the database, because they steal a lot of watches. Then you take it to a real repair shop and say, "Oh, sorry, this watch was a gray market product destined for somewhere else." Therefore, once you buy something on the gray market, you are always working underground.

That leaves you susceptible to buying epic fakes, the ones that cost $1,000. But you're paying six or seven, because you think, wink, wink, you know, it falls off the truck. And many of these companies that operate in the gray market also do what is called blending. And what they will do is have a genuine gray market and some that are counterfeit, and they will just mix them all together. Or they'll sell, "You look like a fool. I'll sell you the fake one and I'll sell this guy the genuine one." It is a very interesting world, the second-hand market, because it is in a certain way self-regulated.

Obviously they also regulate themselves thanks to demands. You know, if I make a test purchase on one of these sites and it turns out to be counterfeit, I can get sued. So yes, there is also a lot of responsibility at stake there. So the legitimate ones don't do that. But then again, you will get the shady ones, especially the ones you find in tourist areas that sell genuine second-hand watches, but maybe the one you have is fake. I tell people that if you are going to buy a product or if you are going to repair it, go to an authorized dealer.

But yes, these repair markets are very shady. There was a case in the '90s that my father and stepmother worked on called the Fort Worth Gold and Jewelry Exchange. And this guy's name was Ronnie Cooper. He advertised in all the national magazines and had ads that said, "We buy gold, we buy watches, we sell Rolex watches." And even he would make repairs. What he would do when he bought the watches was replace the gold with a gold plated one. And he would be doing that constantly. Then you would be buying a genuine watch, but most of the gold was exchanged.

And so he did for many years. And jewelers still do that. They are often called Frankenwatches in the replica world. The guy got five years. He was sentenced to five years for mail fraud. They succeeded in that, because all of this went through shipping and the Postal Service and things like that. Brands don't like the secondary market because they take away the possibility of buying a new product. My father was the guy on Canal Street who in the 1980s and 1990s caught people selling counterfeit watches. I grew up in the '80s participating in raids with my father and doing undercover shopping.

Canal Street was the epicenter of watch counterfeiting throughout the United States. They had the city center. That's where all the guys with the briefcases showed up, okay? Those guys would walk around and, you know, say, "Psst. Hey, buddy, wanna buy a watch?" That kind of things. Or they would assemble a briefcase with legs and have a lot of mobility. In Chinatown, they would be free-standing stores with large metal roll-up doors. On raid days, they rode in a van or U-Haul truck with off-duty police and firefighters in the back of the trucks. And they would have spotters along the way who would go to local restaurants and tell them the addresses where they saw those watches that day.

Then people would fly out of the trucks, and if they didn't get there in time and the guys would come down and lock the doors, we had industrial saws that we could cut those locks with. It wouldn't be unusual for my father to come home with a U-Haul truck full of bags, heavy bags full of counterfeit watches. I was

actually

the only 14-year-old in my high school who walked around with a Rolex watch. Everyone knew it was fake, but you already know. During my father's years on Canal Street, he hired unemployed actors in New York to dress up and conduct undercover investigations.

Those people dressed up as homeless people, pregnant people, anything you can think of, so that they go through one day at a time and don't look like the same person. Enforcing the law on Canal Street was no walk in the park. He had bodyguards and also received constant threats. There were people with guns shooting at them. There were many times when people would come immediately after my father. I have been investigating counterfeit watches professionally since 1995. So when I started my company, all the luxury brands knew who I was and knew that I had founded my own company.

And then I started receiving cases from luxury brands. During my covert shopping process, we have covert identities set up all over the United States, so I could shop on the same website five times and they would think they were five different people. I have every counterintelligence method you can imagine. We do our best to ensure that these identities are not traced back to us. Brands often work directly with authorities if they can, because it is expensive to hire an investigator. My cases are usually cases that could become civil or cases that the authorities do not have time for.

And then once my case is done, completed, they will put it on what I call a silver platter, and then they will pass it on to the authorities. There are various terminologies in the world of fakes. In the watch industry, a replica is a nearly perfect, or at least close, version with the trademarks of a real product. But then there are the lower-level fakes. You have, let's say, fakes between $300 and $500, and they are mid-level. And then you have anything under $300, they call it s**t. The funny thing is those cheap watches, they are the ones you buy on the street.

The keywords to find these fakes evolve due to law enforcement mechanisms. You can't just Google "counterfeit Rolex" or "counterfeit Louis Vuitton" or even "replica." The word "replica" for the last 10 or 12 years has been practically blacklisted everywhere along with brands. Then they came up with different words. They would also use letter exchanges. As with Rolex, they could use R-O-I-E-X-X. If you see words like replica, clone, duplicate or 1:1, one to one, you are probably looking at a fake. If you are trying to find out if a watch is fake, you first need a magnifying glass and then look at the details on the watch face.

If there is any imperfection, it is not real. One of the big myths about counterfeit watches is that the genuine one has a wide hand and the fake one has a ticking hand. Well, that was resolved in the mid-90s. That's why most counterfeits now have a wide reach. So don't be fooled into thinking this is a way to tell a fake from the real thing. So, I was just given a watch to film, and I can tell this one is genuine, because, look, there's a crown logo at the 12 o'clock mark. And the crown logo has an oval on the top of the crown, and it is engraved perfectly.

The quality of the craftsmanship on this watch is impeccable. The name ofthe brand is printed there perfectly. Additionally, many of these watches have a magnifying glass on the date. His name is cyclops. And counterfeiters don't always get it right. And also the quote with the magnifying glass may be a little off. It's not perfect, like if the number is 12, the day is 12, it will be exactly there. It won't be partially there. And many of the fakes simply cannot indicate exactly the correct date. And the cyclops too. Yes, the original brands have a very specific non-reflective material that they put on that cyclops that holds it.the watch.

And that is also very difficult to duplicate. So the clarity of the cyclops is very, very important. Additionally, you will see the brand name on the inside of the band. Now, high-end fakes may have them, but you have to look for them. Also the trademark on the back, you can look it up and see if they've gotten into that great detail. And with this particular watch, because it was made, I would say, probably at least 20 years ago, maybe more, to find the serial number, you would have to take off the bracelet here. And underneath, under the edge of the band here and here, you'll have a serial number and a model number.

Especially on the Submariner and diving watches, the bezel is very difficult to make. So the Swiss engineering of the bezel will be perfect on an authentic watch. Many of the fakes make a jingling sound when you move them. T-t-t-t-t-t-t-t. Many of these things are not something specific. You look at the quality and say, "Wait, this isn't real." Because this is a bit unstable, it should be more solid; It's a little light, it should be heavier. The counterfeit watch industry is a financial

crime

. They deal with all types of fraud in this world, especially here in the United States.

You know, bank fraud, all this kind of stuff. In the 1940s, a law called the Lanham Act was passed that made it illegal to counterfeit trademarked products. And that law was in effect for a long time. However, there were no sanctions. It was kind of symbolic. And then my father, along with a very small community of people who were lobbying the United States government to strengthen the laws, the anti-counterfeiting law of 1984 was passed. And the anti-counterfeiting law of 1984 created penalties for each of these crimes. . Currently, federal laws are on trafficking. So trafficking is illegal at the federal level, and that's where Customs comes in.

But most selling or displaying counterfeit goods is state law. Thus, in New York, New Jersey and California, almost all states contemplate counterfeiting as a penalty, and also the sale of counterfeits in their penal codes. I have seen people face serious prison sentences for selling counterfeits. They are often the most egregious. But the people on the street are the repeaters. As happens with drugs. Someone who buys counterfeit products online probably won't get on the authorities' radar or the brand's radar unless they are named or found to be a supplier to someone else. Often, because buying isn't necessarily illegal, but obviously trafficking is, and you're bringing things across the border.

I have seen civil penalties become very high. When my clients want to sue someone, we often look for assets. If a person owns a home and the mortgage is paid off, these people have the ability to pay $70,000, $100,000 in restitution, and a judge will often comply. I have seen how people's lives are ruined by selling counterfeits. It was in the late 80s when my father encountered BTK, the Born to Kill gang, the Vietnamese mafia. One day, his sister who worked with him saw a wanted poster with a price of $200,000 for my father's head. It turns out that the Born to Kill gang was charging all these vendors for protection, but they couldn't protect them against my father.

So they thought that if they killed my father, they would at least alleviate the problem and justify his own extortion. And that's why we had locks on all the doors and windows. And my father told me one day, I remember, he said, "Rob, I know you don't like to listen to me, but if I ever tell you to duck or jump, you better do it, because it could mean your life." And after that I always took it seriously. I still do it. When my father's work at Canal Street began to take off, I was no longer interested in the family business.

He was 17, 18, 19 years old and he was doing my thing. But my brother was 13 or 14 years old and he was prepared to do this job. He was bred for it. Then my brother would run out to collect license plates and look at the windows, factory windows and things like that. In fact, I rebelled against the family business and went to Bible school. And I decided to drive to Los Angeles to become a comedian. Turns out he wasn't very funny, but in the meantime he needed a day job. But then I started raiding, like my father, on the opposite coast.

And it was amazing. The area of ​​Los Angeles, similar to Canal Street in New York, is called Santee Alley. And it was an area of ​​several blocks, like New York's Chinatown. It's full, full of fakes. In the '90s, Santee Alley, like Canal Street, was the Wild West. Wherever you went, there were clocks everywhere. I mean, people had them up and down their arms. They had them in briefcases. They had them in positions. They had people renting space in front of the booths and paying thousands of dollars for it. Yeah, and then after years and years of doing that, in the '90s, my boss retired.

In 2001, I founded my own company. So, I started my company in 2001 and worked on many similar cases with my father and brother. Then my father passed away in 2004. Yes, after my father died, I thought it was important to continue the family legacy. His company went bankrupt because he had no one in New York to follow in his footsteps. And then after he died, my business was taking off and I needed to double. And I thought, what better way to double myself than to partner with my brother? Since then, I mean, not a day goes by that we don't think about Dad.

I mean, it's hard for me not to look at my brother and see something, you know, one of my father's traits. We grew up watching him work. He was our hero and we emulated him. We both do it. So, yeah, I mean, he's cute. I mean, sometimes I feel like he's in the room.