Ten individuals – including seven former Hermès employees – have been convicted in connection with a sophisticated counterfeiting ring and given prison sentences as a result. On the heels of a trial in June, during which French prosecutors pushed for jail time for the defendants eight years after local law enforcement first arrested more than a dozen people and dismantled an internationally-reaching crime ring 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, the court handed down its sentencing on Thursday.
Among the ten defendants tried and very-recently convicted in the counterfeiting-centric case are seven former Hermès employees, who were not only embroiled in intellectual property infringement charges but 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. According to a report from Agence France-Presse, 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, another key member 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.
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. French authorities initiated a probe on the heels of Hermès filing a formal complaint; the Paris-based brand had begun investigating on its end in 2011 in light of uncovering evidence of “abnormal behavior identified through [its] internal monitoring systems.”
Unlike the many cheaply-made, obviously-fake bags – with their plastic-y “leather” bodies, imprecise stitching, and off-kilter Hermès stamps – that saturate the global market, the counterfeiting ring dealt in high-quality fakes, in large part due to the intimate involvement of then-current Hermès employees, who not only provided authentic materials but also oversaw and engaged in the manufacturing of the counterfeit bags. Specifically, prosecutors argued that the Hermès employees would make the counterfeit Birkin bags “with crocodile skins from an Italian supplier, using zips and other components smuggled out of Hermès workshops.”
Authorities have alleged that from 2011 to 2014, the gang generated millions of dollars in revenues and between €2 million ($2.24 million) and €4 million in profit in connection with their sale of more than one hundred replicas of Hermès’ most highly-coveted handbags, which they sold for between €23,500 ($27,357) and €32,000 ($37,238). While those price tags are only a fraction of what authentic Birkin bags sell for, they represent a striking premium over the price of traditional counterfeits.
In addition to purely counterfeit bags, WWD reports 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.
As for Hermès, while the Paris-based luxury goods brand sought upwards of €2 million in damages, the court awarded it €580,000.