In the summer of 2011, a brilliantly bright red Birkin bag was being crafted in a workshop in France. Despite lingering economic woes in the United States following the depths of the Great Recession two years prior, and volatility in the eurozone, the United Kingdom, and China, all of which had “spooked investors and economists, alike,” the demand for Hermès’ most expensive – and recognizable – bags remained unwavering. This particular blood-hued bag was among the tens of millions of dollars’ worth of handbags that were being manufactured in little-known workshops on the outskirts of Paris in order to meet the incessant demand of deep-pocketed devotees.
Finished with a small gold stamp on the front that read “Hermès Paris Made in France” and packaged in one of Hermès’ signature orange boxes, the ones that the 183-year old brand has been using for more than a half-a-century, the Shiny Porosus Crocodile Birkin – a bag that would sell for upwards of $75,000 at retail – was destined for a blissful consumer, an individual almost certainly unaffected by the financial turmoil that was permeating markets across the globe. The problem: the bag that was being assembled that day was anything but the real thing. Despite its lookalike packaging and seemingly high quality materials, this bag was the product of a sophisticated $22 million-plus counterfeit operation that was being carried out in France, right under the nose of the Hermès, the closely-guarded stalwart luxury brand known for its meticulously-crafted leather goods, silk scarves, and saddlery.
While Hermès was working to carefully balance its own supply against the intense and unwavering yearning for its most coveted bags among well to-do consumers from women in sunny Southern California to their counterparts some 6,500 miles away in Shanghai and trying to keep takeover bids by aggressive fashion conglomerates at bay, more than a dozen people were laboring diligently to build and maintain a small-but-mighty counterfeiting ring. In clandestine workshops not far from Hermès’ own workshops, they were producing bags that to even some of the more discerning Hermès collectors looked – and felt – real.
Unlike the cheaply-made, obviously-counterfeit bags – with their plastic-y “leather” bodies, imprecise stitching, and off-kilter Hermès stamps – that are regularly churned out in factories in China and other far-flung locales and sold for cheap on Amazon and in stalls that populate seedy flea markets, these bags were different. In fact, these bags were made in France and as the story goes, at least a portion of the materials being used to craft them were coming directly from bona fide Hermès workshops.
Maybe most critically, as Hermès would later learn, several of its own employees were intimately involved in the budding criminal enterprise, providing those authentic materials and overseeing the manufacturing of the eye-poppingly expensive handbags. The result came in the form of counterfeit Hermès bags of almost unprecedented quality.
This specific ring fit neatly into a much larger pattern of counterfeiting, a sizable and long-standing business in France, with roots that date back to the days of the earliest-operating couture houses in Paris. As the heart of the global fashion market, France’s well-established luxury industry has routinely been plagued by intellectual property crime, and Hermès – which is the name found on some of the most famous and in-demand handbags in the entire world – has routinely been among those hit the hardest.
“It’s an absolute disgrace,” Hermès’ longtime former CEO Patrick Thomas said in 2012, revealing that some “80 percent of objects sold on the Internet under the Hermès names are counterfeit.”
As of that same year, the shadowy trade in infringing goods was costing the French economy as a whole a whopping $7.5 billion in lost revenue per annum (that the government knew of), a number that had been growing steadily over the years, and which was only expected to increase as time went on. However, not only has the dollar-figure associated with the fake trade been escalating, the sophistication of the players and their global counterfeiting operations has been advancing significantly, as well. With that in mind, industry insiders, trade organizations, and law enforcement officials have been paying attention for decades – watching the risks to their own interests rise.
“When counterfeiting was artisanal, it didn’t bother us much,” Adrian de Flers, the head of Comité Colbert, the French luxury goods association, said in back in the 1980s. With the broadening scope of counterfeiting, facilitated in large part by widespread technological advances, and the unending demand for less bank-breaking alternatives, “it’s become an industrial practice, and we’re frankly very worried.”
So, beginning in the mid-2000s, Comité Colbert joined brands in working overtime to stomp out the latest wave of counterfeiting, which was negatively impacting 8 out of 10 European businesses, according to its research. This included educating consumers about the dangers associated with fakes. The summer of 2012, for example, brought the introduction of a new effort by the Comité. In furtherance of a collaboration with Cartier, Chanel, Christian Dior, and Louis Vuitton, among other brands, the Comité plastered France’s 18 airports with 10,000 posters aimed at raising awareness about counterfeiting.
“Buy a fake Cartier, get a genuine criminal record,” read one poster, a reference to the ability of prosecutors to levy fines of up to $300,000 and even jail sentences in connection with the manufacture, sale, and even the purchase of fakes, as under French law it is not only illegal to make and sell counterfeit goods, it is also a criminal offense to buy them. (No such equivalent exists in the United States). Another poster, adorned with a patent Cannage Lady Dior bag, declared, “Real ladies don’t like fake.”
These efforts – which were backed by the Directorate-General of Customs and Indirect Taxes, the French law enforcement agency responsible for investigating counterfeiting – did little to deter those working stealthily to churn out relatively sophisticated, precious-skinned Hermès counterfeits, of course.
Evidence of Abnormal Behavior
Faced with evidence of “abnormal behavior identified through [its] internal monitoring systems,” Hermès had begun to suspect that things were not quite right under its own roof. Armed with such “clues,” Hermès took its findings to French law enforcement and filed a complaint. It was 2011. A year later, inside a police station in Paris, law enforcement officials were trying to get to the heart of what would ultimately reveal to be a very close-to-home scheme that was bringing millions of dollars of counterfeit Hermès bags to market.
In the time that had passed since Hermès had first filed its complaint, a new collaboration had been born: a joint effort between the brand and French law enforcement, one that would ultimately spawn a year-long investigative partnership between the two entities.
After months of following leads, engaging in surveillance, and tracing the orange Hermès-branded boxes – and even some Hermès leather and hardware – back to the brand (by way of at least two rogue Hermès employees), a big break would come in the late spring of 2012. News outlets worldwide were reporting in June that a dozen people had been arrested by French police as part of the dismantling of an international crime ring that was peddling high quality counterfeit Hermès handbags. The expansiveness of the ring’s reach would stretch from Europe to the United States and all the way to East Asia. As far as French authorities knew, the national arm of the counterfeiting operation, alone, had brought in approximately $22 million.
On that same spring day, in another part of town, the two unnamed Hermès employees were simultaneously being let go from their jobs and arrested. The unnamed employees had been integral to the workings of the ring. Despite the two arrests, Hermès harbored suspicions that “several current members of staff could also be involved,” and vowed to continue its own internal probe.
A representative for the traditionally tight-lipped house, said that they were “very satisfied with the efficient and diligent collaboration established with the national gendarmerie in this case and reiterates its relentless commitment to fighting counterfeiting. This action puts an end to the fraudulent project in progress.”
The news of the arrests and the allegedly unparalleled quality of the fake bags made headlines across the globe, prompting luxury handbag resellers, and certain consumers, alike, to question the nature of their own bags. One established resale company told TFL years later that they stopped accepting Birkin bags at the time, a risk management tactic of sorts in light of the sweeping uncertainty about the bags that were currently floating around in the market and in at least some cases, being offered up for resale. At the same time, they simultaneously triple-checked the authenticity of the bags they already had in stock.
Meanwhile, as part of a larger, global – and resource-intensive – effort by Hermès to get a handle on the growing counterfeit market, in which its instantly-identifiable bags are some of the hottest commodities, a federal judge in New York was deciding an unrelated case that Hermès’ legal team had filed against dozens of online sellers, which they accused of hawking fakes. In siding with the Paris-based brand, Judge Denise Cote of the U.S. District Court for the Southern District of New York ordered the operators of 34 different websites to pay $100 million, and asserting that “collectively, they had sold and offered for sale at least nine distinct types of goods” – from Birkin bags to silk scarves – “each bearing numerous counterfeits of the Hermès trademarks and designs.”
In reality, Hermès would see very little – if any – of that $100 million money, as none of the defendants could be identified beyond the domain names they were using to hawk the fakes (such as HermesBagsOutlet.org, HermesBirkin-Bags.org, and HermesOutletStore.com, among others) and none of them responded to the counterfeit-focused suit lodged by Hermès, and certainly did not appear in court to defend themselves against the claims. The only monetary remedy that Hermès would get would be any money in the PayPal accounts that were linked to the defendants’ domains.
A Push for Jail Time
Fast forward to late June 2020 and nearly a dozen individuals appeared in a French court for a trial in connection with that now-notorious counterfeiting ring. Prosecutors set the stage before Paris’ Criminal Court, detailing the workings of headline-making operation eight years after local law enforcement first arrested more than a dozen people and broke up the internationally-reaching crime ring. Among the ten defendants being tried in the counterfeiting-centric case were seven former Hermès employees, who were not only embroiled in intellectual property infringement charges in connection with the manufacture and sale of fake bags. They were also on the hook for criminal breach of trust (abus de confiance), a French cause of action that arises from the misappropriation/misuse of company funds or property.
The breach of trust claims provided a striking look into the heart of the secretive operation, one that saw then-current Hermès employees, including “leatherworkers, artisan cutters or assemblers at Hermès” steal authentic packaging, raw materials, and tools – from orange Hermès-branded boxes to Hermès leather and hardware – from Hermès’ factories in order to produce and sell high-quality fakes of their own. The result was bags that bore price tags of upwards of 23,500 euros ($26,351 at current exchange rates).
“Prosecutors stated in court that three friends” were at the center of the scheme to manufacture and sell the black market designer bags, “two of whom had worked at Hermès, while the third dealt with the imports of crocodile skins from Lombardy in Italy, from which the [counterfeit bags] were made,” French24 reported in June 2020. “Five other people, who [had also been employed by Hermès] appeared in court, as well: one had provided [hardware] to decorate the bags and the other four were leather workers, who assembled the bags by incorporating hand-stitching saddle-emblematic of the company.”
In connection with the breach of trust charges, alone, which the French penal code states is “committed when a person, to the prejudice of other persons, misappropriates funds, valuables or any property that were handed over to him and that he accepted subject to the condition of returning, redelivering or using them in a specified way,” the defendants faced up to seven years’ imprisonment and fines of up to 750,000 euro each. Prosecutors were pushing for jail time.
According to prosecutors, the small-but-mighty French operation – which “targeted Asian tourists in Paris but also had clients in Hong Kong” – was uncovered after French police wiretapped the home of a man suspected of selling authentic – but stolen – Hermès bags in Asia. In addition to purely counterfeit bags, WWD reported that the ring also resold bags “created under the ‘bon au personnel’ provision, which allows Hermès employees to acquire the elements and make their own bags, identified by a shooting star stamp” – albeit in a strict “for personal use” capacity.
On the final day of the three-day trial, a number of the defendants expressed their apologies to Hermès. They had been proud to work for the company, and expressed regret for “betraying the trust” of their former employer. Meanwhile, their lawyers, arguing in their defense, attempted to chip away at Hermès’ argument about the damage that it was subjected to as a result of the counterfeiting scheme. “Counsels for the defense argued against the validity of the prejudice incurred by the company, both from a financial point of view by questioning the exchange rate and a 70 percent profit margin mentioned by the plaintiffs, as well as in reputation, hinting at a supposed gain in brand equity due to the proceedings,” WWD stated at the time.
Among the other arguments lodged in favor of the defendants? A challenge to the protectability of the Birkin, and thus, the strength of the brand’s counterfeiting charges. Alexandre Lazarègue, a lawyer representing one of the alleged ringleaders, argued that “Hermès could not identify what constituted the originality of the Birkin bag,” a bag that is “based on an early 20th-century model itself inspired by transport satchels used by gauchos.”
Three months after the close of the trial, the court handed down its sentencing. According to a report from Agence France-Presse on September 25, 2020, punishments for the various defendants – all of whom were criminally charged – range from six months of suspended jail time to three-year sentences, with the most severe penalty going to the “ringleader,” who was tried by the French court despite not appearing or responding to the legal proceedings. (There is an active arrest warrant out for him).
“Another ringleader was given an effective one-year sentence, to be served under house arrest, with two more years suspended and a fine of €100,000,” according to the AFP. At the same time, one of the other key members of the group, “a woman who was convicted of selling the bags to Asian buyers, was given a 30-month sentence with 20 months suspended,” all of which will be served under house arrest.
As for Hermès, while the Paris-based luxury goods brand sought upwards of €2 million in damages in connection with the counterfeit scheme, the court awarded it €580,000.
*This article was initially published in April 2018 and has been updated accordingly.