Tobacco Journal International

May/June 2000

TRACING THE COUNTERFEITERS

Which areas are hit the most by tobacco imitations? Who are the counterfeiters? Where are they located and how do they operate? TJI has talked to Michael Kessler, president and CEO of New York based investigation bureau Michael G. Kessler & Associates. The company recently testified as an expert at the International. Trade Commission concerning diverted and counterfeit cigarettes and handles various assignments such as special investigations, intellectual property, cyber crime and forensic accounting.

TJI: According to the latest reports, the counterfeiting of popular cigarette and cigar brands has become a major threat to the tobacco industry. Could you tell from your observations where the manufacture of imitated products is concentrating and which markets have been hit the most?

Michael G. Kessler: Counterfeiting virtually has become a global threat. Today no area of the world is exempt from imitated tobacco products. In 1999 for example we have reported counterfeit products in the United States, Europe (Belgium, Greece, Netherlands), mainland China, Russia, Egypt, Cyprus, Hong Kong, Dubai, Panama, and Vietnam. Many of the counterfeit cigarette products we have seen, have been made in clandestine factories in Asia and the former Soviet Union, while our investigations have disclosed that counterfeit cigars are being manufactured in the Caribbean, Mexico, South America and Asia.

TJI: For obvious reasons you may not reveal investigation details, however could you give a brief insight in the practices of counterfeiters. Who are they, how they are organized and what are your agency’s methods of tracing them?

Michael G. Kessler: The individuals involved with counterfeit tobacco are usually organized groups with the ability to produce, ship and distribute the products world-wide. Many are also involved in other illegal activities including narcotics and terrorism.

Our undercover investigators have years of experience in following small dealers to their large-scale suppliers. We have proprietary databases filled with the latest information about the people involved in counterfeit goods, their contacts, and their methods of distribution. In addition, we’re familiar with the signs of product counterfeiting and product diversion. Because of our experience in this field, we are able to pick up the "paper trail" almost immediately. The plants that manufacture the counterfeits are sometimes equipped with very modern material, and have everything needed to produce cigarettes or cigars from start to finish. The counterfeiters are involved in everything from the raw material to the packet seals.

Because someone within the legitimate distribution network is making the counterfeit and diverted products possible, either intentionally or through negligence, we establish informants and/or undercover operators along the channels of distribution to determine exactly how and where a product is distributed.

 TJI: Are there any ways for non-counterfeit experts to detect faked tobacco products?

Michael G. Kessler: Some counterfeit products are imitated so professionally that even experts would have trouble telling the difference from the original. However, various components such as the packaging, spelling, colors of print and quality of paper can give useful hints to detect imitations. As far as cigars are concerned they can be examined for the consistency of the bunch: if there are soft spots or not fully filled it’s probably counterfeit. One should also examine the consistency of length and diameter.