COUNTERFEIT TOYS NO FUN FOR TRUE MAKERS.

Byline: Brent Hopkins Staff Writer

The sloe eyes look almost right, the floral print halter and silver capri pants seem familiar and the bright package seems to herald a Bratz doll.

The evidence number and seizure date inked over the diminutive fashion diva say otherwise. Joining the realm of fake purses, imitation watches and pirated compact discs, toys have become a huge commodity for counterfeiters, costing the toy industry millions of dollars in revenue every year. Los Angeles holds the dubious distinction of being the second-hottest market in the country, trailing only New York's Canal Street for illegal trade.

In one recent sweep, Los Angeles Police Department vice officers raided two downtown warehouses full of knockoff Bratz, Spider-Man and Disney toys, netting more than $1 million in illicit playthings. The seizure at Focus Century (USA) Inc.'s Fourth Street facilities uncovered so many fake toys, cops had to call for a 40-foot truck to haul them away.

Officers were unable to nab Focus' owner, identified as William Kam, but believe he's operating from his Hong Kong headquarters. They filed papers with the District Attorney's Office on Friday, seeking his arrest upon his return to the U.S.

``Unfortunately, counterfeit toys are a huge industry,'' said Sgt. R.J. Acosta, vice supervisor for the LAPD's Central Division, which encompasses the city's Toy District. ``It's all over and this is just the beginning. We find Yu-gi-oh! cards, Spider-Man stuff, Mattel toys - all fake.''

Compared with the drug trade, the counterfeit business is relatively safe and profitable for criminals. A small shop can easily sell $300,000 a month and even felony busts often merely result in fines instead of jail time.

Though counterfeiting is thought of as a victimless crime, authorities note that it often coincides with more sinister criminal activities, ranging from tax evasion to terrorism. The fake products also don't have to meet any safety standards, potentially placing hazardous materials such as lead-based paint or other toxic substances into the hands of children.

The industry's major players don't suffer the attempts to poach their brands lightly, watching them from Los Angeles to Hong Kong. The ideal defense is to shut down production at overseas factories, rather than tracking their wares once they filter into retail channels.

``Mattel aggressively protects its brands by pursuing and prosecuting those involved in the production, distribution and sale of counterfeit Mattel and licensed goods,'' said Jules Andres, a spokeswoman for the El Segundo-based toy giant. ``We work very closely with law enforcement wherever we're looking at and we've got an internal security department, as well.''

MGA Entertainment Inc., the North Hills toy company that shook up the industry with its sassy Bratz fashion dolls, got word from the United States Customs Department that Focus Century's shipments had illegal knockoffs, then passed the information along to the LAPD.

The seizure prompted an angry response from Isaac Larian, MGA's chief executive, who modeled the provocative dolls after his family members. In addition to the criminal charges sought by the LAPD, Larian pledged to pursue civil action against Focus Century, both domestically and against its Hong Kong operations.

``It (feels) like someone abducted your child,'' he said. ``It's a horrible, horrible feeling. Toys are very personal, especially when you have them named after your kids.''

To protect Larian's dolls' family name, MGA employs attorneys to threaten intellectual-property lawsuits and spies who troll retailers across the world. He estimates that the company spends $1 million annually to protect the brands, which sell billions of dollars worth of legitimate merchandise each year.

The fake Bratz dolls appeared destined for swap meets and the transient merchants of the Toy District. But even major retailers end up carrying knockoffs, according to Susan Spiegel, vice president of marketing for Woodland Hills-based Funrise Toy Corp.

Funrise recently filed suit against Hong Kong-based Wing Hing, accusing it of selling near-duplicate copies of its Gazillion bubbles line. The copies turned up on the shelves of Wal-Mart, one of Funrise's own customers.

``There's companies who put out their own brands that aren't a complete rip-off, but they're a 99.99 percent rip-off,'' Spiegel said. ``You'll find that if a company has a hot brand, someone's going to try to fake it and make some money.''

While larger companies like MGA, Mattel and Funrise can afford to wage war on the counterfeiters through legal action, smaller manufacturers often find themselves powerless to respond. Many can't even gauge how much revenue they lose to the fake trade.

``We see our stuff get knocked off when we're in China all the time,'' said Jordan Kort, co-founder of Northridge-based What Kids Want Inc. ``We attack it where we can, but often we have no idea when it happens. It's all over the place.''

U.S. Immigration and Customs Enforcement catches bogus shipments at the Port of Los Angeles, but only has limited resources to inspect the vast numbers of containers that enter each day. Two weeks ago, agents knocked down a shipment of 350 cases of fake Yu-gi-oh! cards valued at $3 million.

The knockoffs were bound for downtown Los Angeles, said supervisory special agent Steven Lovett, likely to end up in the crowded warrens of ever-changing retail booths.

``If you stroll down a place like Santee Alley, where the LAPD hits all the time, there's no question (some of) the things are counterfeit,'' said Lovett, who supervises ICE's trade fraud unit in Long Beach. ``Some of the higher-end stuff, purses and high-end counterfeits are passed off as legitimate, but the average person is going to know it's not the real thing.''

The LAPD's Acosta knows it's not legit, either, and he's got a powerful new tool to help combat the shady trade. The department recently installed two $10,000 cameras so powerful they can read license plates from four blocks away to watch the bustling Fashion and Toy Districts, with eight more on the way. From the fortress-like Central Division station, they can identify and record illicit transactions before dispatching officers to arrest the vendors.

``This is going to change what we do,'' said Acosta, observing an illegal vendor peddling fakes on a street corner three blocks down. ``I know exactly what she's doing right there. You watch long enough, you'll see her make a hand-to-hand sale and that's all you need.''

Brent Hopkins, [phone]

brent.hopkins(at)dailynews.com

MISFIT TOYS

Business groups estimate that 5 percent to 7 percent of global trade deals are in illegal knockoffs, accounting for $350 billion in illicit sales each year. American businesses lose between $200 billion and $250 billion annually to the fakes.

-- In 2004, U.S. Immigration and Customs Enforcement and U.S. Customs & Border Protection seized 7,255 counterfeited goods worth $138 million, up from 6,500 fakes worth $94 million the previous year.

-- ICE agents brought 140 indictments against 218 people last year for intellectual-property crimes, up from 70 indictments against 132 individuals in 2003.

-- In the past two years, the Los Angeles Police Department's Central Area Vice Unit has recovered $37 million in counterfeit material.

-- The most popular items for counterfeiters to rip off include handbags, clothes, music and movies, jewelry and cigarettes, but toys are becoming increasingly prevalent. The Toy Industry Association estimates losses of tens of millions of dollars annually.

CAPTION(S):

photo, box

Photo:

(color) One counterfeit doll that resembles the Bratz product line actually uses the Bratz name and logo in its packaging.

Evan Yee/Staff Photographer

Box:

MISFITS TOYS (see text)