Posts Tagged: "organized crime"

Crocs, Inc. (NASDAQ: CROX) announced earlier today that Chinese courts have sentenced 18 individuals to a total of more than 46 years in prison for producing and selling counterfeit Crocs goods. Seventeen individuals were convicted of counterfeiting, and two of the 17 also were convicted of offering bribes. Another individual also was convicted on bribery charges in connection with production of counterfeit Crocs™ shoes. In addition to prison sentences, the above men together face fines totaling RMB 2,832,500 (approximately $450,896).

Criminals on all levels — from opportunistic, small-time thieves to major drug cartels — are finding that the penalties for intellectual property crimes pale in comparison to the penalties they would receive for trafficking drugs and engaging in other illicit activities. At the same time, the profit margin for counterfeit software, as well as for other counterfeit goods, is extremely high. So the combination of great riches, relatively low penalties and a low likelihood of being caught and you can see why criminal enterprises, including terrorist networks, are becoming major players in the counterfeit software black-market.

Counterfeiting is a far bigger story than loses to big companies and the associated loss of downstream economic activity. Those that support counterfeiters by buying knock-off goods are also increasingly supporting organized crime, including drug cartels, who are increasingly looking to the generous profits that can be earned and exceptionally low jail terms even if they do get caught. In fact, the largest Italian organized crime group is estimated to receive 10% of its annual $25 billion from counterfeited and pirated goods.