A handful of individuals appeared in court this week for a trial over the manufacture and sale of high-quality counterfeit Hermès bags by an organized crime ring with direct ties to the famed French brand known for its $10,000-plus Birkin and Kelly bags. Prosecutors set the stage in a court in Paris on Wednesday, detailing the workings of a small-but-mighty operation, eight years after local law enforcement first arrested more than a dozen people and dismantled the internationally-reaching crime ring that was peddling counterfeit handbags branded with the Hermès name and the legally-protected design of some of its most iconic and world-famous handbags, and using at least some authentic materials to do so.
Among the ten defendants being tried in the counterfeiting-centric case are seven former Hermès employees, who are not only embroiled in intellectual property infringement charges but are 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 provide 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,” according to local news outlets, steal authentic packaging, raw materials, and tools – from orange Hermès-branded boxes to Hermès leather and hardware – from the 183-year old luxury stalwart’s factories in order to produce and sell high-quality fakes of their own, which bore price tags of upwards of 23,500 euros ($26,351 at current exchange rates).
“Prosecutors stated in court this week that three friends” were at the center of the scheme to manufacture and sell the fake 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 on Wednesday. “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.”
The Making of a Criminal Enterprise
The case got its start back in 2011 when Hermès began to suspect that things were awry under its own roof in light of evidence of “abnormal behavior identified through [its] internal monitoring systems.” Armed with such “clues,” Hermès took its findings to French law enforcement and filed a complaint, thereby, prompting what would ultimately spawn a year-long investigative partnership between the fabled brand and French law enforcement.
In the spring of 2012, after months of following leads, engaging in surveillance, and tracing Hermès materials to clandestine workshops not far from Hermès’ own workshops, French authorities busted a sophisticated counterfeit ring being run in Paris. Unlike the cheaply-made, obviously-fake 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 locates, and sold for cheap on Amazon and in stalls that populate seedy flea markets, this one was different.
Maybe most critically, as Hermès would later learn, a number of its own employees were intimately involved in the budding criminal enterprise, not only providing authentic materials but also overseeing the manufacturing of high-quality counterfeit bags in furtherance of an effort that authorities suspected generated tens of millions of dollars in revenues and upwards of 2 million euros ($2.24 million) in profit.
Speaking about the bust in 2012, which saw the arrest of two Hermès employees and an ongoing internal probe by the brand to determine what other employees could be involved, a representative for Hermès said that the company was “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.”
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 are facing up to seven years’ imprisonment and fines of up to 750,000 euro each.
The trial is expected to run through Friday.
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