Federal prosecutors filed suit last week to take control of a four-story Chelsea building, seven months after a co-owner of the property pleaded guilty to selling counterfeit Tory Burch merchandise from the location.
The Manhattan office of the U.S. Attorney for the Southern District of New York filed the suit September 20, seeking the forfeiture of 115 West 28th Street, a 9,884-square-foot commercial and residential building located between Sixth and Seventh avenues; there is an additional 11,376 square feet of development rights, data from PropertyShark.com shows. The block is popular with flower and plant shops, and three hotels have opened there during the past six years. A person staying in the building told The Real Deal that there were both residential and commercial tenants on the upper floors.
The New York Police Department raided the building Nov. 9, 2011, and found an estimated $18.7 million in counterfeit goods on the ground floor and in the basement, the court filing says, although news reports at the time said the alleged contraband was valued at $3.5 million.
Chong Da “Jeff” Xia, 49, a co-owner of the property and the owner of the alleged counterfeit business La La Fashion, and others, were using the basement and ground floor for their handbag operation. Investigators seized more than 10,000 handbags with the Tory Burch logo, along with more than 1,600 wallets and $40,000 in suspected gambling proceeds. Following the raid, law enforcement also recovered some $900,000 in cash from two safety deposit boxes, court papers reveal.
Xia could not be reached for comment.
The U.S. Department of Homeland Security, the U.S. Immigration & Customs Enforcement and the NYPD had been investigating counterfeiting at the property since at least August 2011, prosecutors say.
Federal law allows for the government to seize property used in connection with certain crimes, including drug dealing and counterfeiting.
Xia was arrested during the raid, and pleaded guilty Feb. 15 this year in state court in Manhattan to trademark counterfeiting, a felony. The Manhattan District Attorney’s office did not have the plea terms immediately available or how long he was held in custody.
Xia’s company bought the building in 2003 for $1.93 million. He can fight the forfeiture action. But if the action is upheld, an auction will generally be held between six months and a year later, Darren Oved, a partner with the law firm Oved & Oved, said.
“The purpose of the law is to strip the felon of the ill-gotten gains allegedly generated by the criminal enterprise for which the forfeited property was used,” Oved, who was not involved in this case, said.