Trafficking investigation in the bag

Marisa O’Neil

Anyone who bought a discounted Prada bag out of Terry Smith’s kitchen

may not have gotten the deal they hoped for.

U.S. Immigration and Customs officials on Thursday arrested the

56-year-old Newport Coast resident on suspicion that he sold millions

of dollars in faux designer purses from his home on Bargemon, Special

Agent Ed Troy said.

Agents found hundreds of high-quality fakes displayed on kitchen

counters and shelves in his home, spokeswoman Virginia Kice said.

Smith advertised the bags for sale in local community fliers and

claimed he was selling genuine merchandise at discounted prices, Troy

said.

“They were fairly good quality,” he said. “But some of them -- you

can see they’re not up to the standards of an authentic handbag.”

The ads for “designer goods sales,” ran in local, free newspapers,

and Smith told prospective buyers the bags were factory seconds,

irregulars and overruns, Troy said.

He sold the goods from his home in an upscale Newport Coast

neighborhood and catered to an upscale clientele, Troy said. He also

sold them at some local horse shows, Troy said.

The labels counterfeited included Prada, Louis Vuitton and Gucci,

he said.

“One example would be a handbag we believe sold for $195,” he

said. “If we had actually gone to a store like Nordstrom or

Neiman-Marcus for an authentic one, it would cost $700 to $800 for

these bags. It’s not like going to the streets in [Los Angeles] and

getting one for five or ten bucks. These weren’t cheap.”

An agent with U.S. Immigration and Customs Enforcement saw one of

the ads earlier this year, and the office began an investigation,

Troy said. An agent later purchased a bag that officials determined

was fake.

Agents raided the home this spring and seized nearly 500 bags and

wallets, Troy said. Lawyers with the U.S. Attorney’s office were

trying to negotiate a plea with Smith, while calls continued to come

in about his activities, he said.

“We got a call from someone in July indicating there was a

delivery of purses being made [to his home] and believed they were

counterfeit,” Newport Beach Police Sgt. Steve Shulman said.

A customs agent made another buy, and another raid was conducted

Thursday morning, Troy said. Agents seized about 250 bags in the

second raid, he said.

Smith, born in Australia but legally living in the United States

for more than 20 years, spoke candidly with investigators, saying he

made thousands of dollars a week selling the bags, Troy said.

He has been charged with trafficking in trademarked goods and

could face up to 10 years in prison and a $2 million fine, according

to customs officials.

He is free on bond.

People looking for a good bargain on designer goods need to use

their smarts, Troy said.

“I’d use the buyer-beware caveat,” he said. “If it seems like a

deal that’s too good to be true, it probably is.”