Here’s how potentially dangerous fake Apple products can reach you

A three-story brick building in a low-crime Brooklyn neighborhood in New York City was the first U.S. stop on an international route used to ship thousands of potentially dangerous counterfeit Apple electronics to America’s consumer market.

The knockoff power adapters and chargers, which Apple says could cause electrical shocks, allegedly traveled from a manufacturer in Hong Kong to, with stopping points at the Brooklyn location and New Jersey electronics companies.

U.S. investigators said they have seized multiple imports of suspected counterfeits that had been routed to the Brooklyn location.

From outward appearances, the Apple-like products seemed genuine.

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However, the chargers and adapters lacked adequate insulation and had improper spacing between the high voltage and low voltage circuits, creating risks of overheating, fire or electrical shocks, Apple charged in a 2016 federal court lawsuit. The case ended with confidential settlements in late May.

Apple’s lawsuit provides an inside look at the circuitous shipment routes that bring some overseas-manufactured counterfeits through multiple companies before they reach domestic retail markets and are offered for sale to U.S. consumers.

USA TODAY researched the U.S. companies and route, examining one example in a sprawling counterfeit and piracy industry that affects many companies beyond just Apple and siphons billions of dollars from the national economy.

Counterfeit electronics that reach consumers often come with safety risks.

Twelve of 400 fake iPhone adapters tested in a study unrelated to those in Apple’s lawsuit were so badly constructed that they posed “a risk of lethal electrocution to the user,” U.S.-based safety standards leader UL warned.

The study found a 99 percent failure rate on basic tests that check whether the amount of electricity flowing remains within safety limits. The findings alarmed Paul Brown, UL’s acting general counsel.

“You might think it’s harmless to buy a $3 or $4 fake iPhone charger. But clearly that’s not the case,” Brown said.

Apple said it decided to sue after the company bought a number of its power adapters and charging and syncing cables “that were directly sold by – not a third-party seller – and determined that they were counterfeit.”

After Amazon identified the company that had provided the electronics to the e-commerce giant, Apple said it tested the remaining inventory and “determined that the vast majority of these producers were counterfeit, as well.”

Not named as a defendant in the lawsuit, Amazon instead was characterized as a witness. Amazon declined to comment. However, the company flagged information about its anti-counterfeiting efforts on its website.

Apple declined an interview about the lawsuit and instead issued a statement: “The safety of our customers is our first priority, and our teams are constantly working with law enforcement, resellers and e-commerce sites around the world to remove counterfeit products from the market.”

Along with the safety hazards they pose, knockoffs also inflict economic damage. Counterfeit products, software piracy and theft of trade secrets take as much as a $600 billion annual bite out of the U.S. economy, according to a 2017 report by the Commission on the Theft of American Intellectual Property, a private watchdog group.

Using records supplied by Amazon, Apple traced the origin of the counterfeit electronics identified in the lawsuit to Hong Kong. The company declined to identify the manufacturer based there.

More than 90 percent of all counterfeit products offered for sale in the U.S. originate in China or Hong Kong, said Craig Crosby, publisher of The Counterfeit Report, an industry- and corporate-backed website that alerts consumers to fake products.

China and Hong Kong ranked first and second, respectively, as the origin for all annual product seizures by federal investigators since 2009 because the items infringed on U.S. trademarks or copyrights, or were subject to exclusion orders.

The first U.S. stop for the Apple counterfeits was Brooklyn’s Borough Park neighborhood, a quiet section of single and multifamily homes near the elevated D Train subway above New Utrecht Avenue.

The area is home to approximately 200,000 people. Many are part of the area’s strictly Orthodox Jewish community, families who come and go to work, school, shopping, yeshivas and synagogues.

There’s no outward sign of an import company – or any business – at an attached residential building on 59th Street. Two of the neatly kept structure’s floors have front balconies. A brick planter box that holds shrubs sits alongside the sidewalk.

The location is a short walk from 14th Avenue, where Renaissance Ballroom, a catering hall that specializes in kosher celebrations, sits on the corner. In 2011, this stretch of 59th Street was renamed in memory of Zachary Sansone, a renowned New York City social organizer.

Starkeys Corp. and SATK Corp., importing companies that business and court records show are managed by Aron Kohn, their sole employee, are based here, Apple alleged.

U.S. Customs and Border Protection investigators alerted Apple to at least 58 seizures during a roughly one-year time frame for suspected counterfeit products imported to the companies’ shared Brooklyn address, court records show.

The equipment included more than 19,000 fake Apple EarPods, MagSafe power adapters, USB power adapters and Lightning cables. Customs and Border Protection declined to discuss seizures of products that copied specific companies’ electronics, citing legal restrictions.

Starkeys, incorporated in 2012, and SATK, formed four years later, also share a mailing address on 53rd Street, roughly six blocks away. The location is a small first-floor commercial location that houses a bustling Mr. Mailman center with postal supplies and mailboxes.

In court responses to the lawsuit, the companies denied “having sold counterfeit or infringing Apple products” but acknowledged that Kohn is their owner. Naomi Gray, an attorney for the companies, did not respond to emailed questions.

USA TODAY interviews in the area near the companies’ locations found no one who had heard about the firms, or about Apple’s allegations. However, Rico Infantino, a 48-year-old Brooklyn resident, said locations selling counterfeit electronic accessories are “commonplace” across New York City.

“In Manhattan, every street corner you see someone selling, I guess it’s called knockoff Apple equipment or Samsung equipment, or LG,” Infantino said.

Starkeys and SATK imports of alleged Apple counterfeits that were not seized by customs made it into the U.S. and went to the Edison, New Jersey, warehouse of DGL Group, the companies’ “sole customer” for the products, Apple alleged.

Brooklyn-founded in 2001, DGL has offices in Edison, New Jersey, and Shenzhen, China, the company website says. The company is headed by Ezra Zaafarani, a resident of Brooklyn’s Sheepshead Bay neighborhood, business records show.

Apple alleged that DGL was “a repeat infringer” of its intellectual property. The company sold unauthorized copies of Apple power adapters and cables in 2014 and subsequently agreed to avoid subsequent infringement after the tech giant discovered the counterfeits, Apple said.

Starkeys and SATK “exist to facilitate DGL’s acquisition of Apple-branded products from China and/or Hong Kong – products which have every indicia of being counterfeit,” Apple alleged in its amended court complaint.

DGL’s website says the company focuses on consumer electronics and has an import-export division that can “meet retailers’ needs in consumer electronics through our own brands.” DGL also boasts a toy division and lists brand partners that include Disney’s Pixar division, Coca-Cola, and Crayola. Those companies did not respond to messages seeking comment on the business relationships.

DGL and the company’s attorney, Andrew Levine, did not respond to messages seeking comment.

The company has been the target of other infringement lawsuits. In 2015, Florida-based Battery on the Go, a producer of portable battery chargers for smartphones, accused DGL of using its PowerBar trademark “to market and sell their own, albeit low quality, and dangerous, portable battery chargers.”

DGL denied any infringement violations in a counterclaim that asked a federal judge to dismiss the Florida company’s allegations. The legal battle ended with a confidential settlement agreement in June.

Alejandro Brito, the attorney who represented Battery on the Go, did not respond to a phone message asking whether the company continued to see DGL offering suspected knockoffs of its products.

California-based company Cloud B accused DGL of trademark and copyright infringement in 2014 for marketing “Starlight Turtle” toys that were “confusingly similar” to its Twilight Turtle toys. DGL agreed to a permanent injunction that restrained the company from marketing designs “substantially similar” to those owned by Cloud B.

Cloud B did not respond to an email asking whether the company continued to find any DGL-made knockoffs of its products.

DGL sold counterfeit Apple products to Mobile Star, an electronic equipment company based in Metuchen, New Jersey, Apple alleged.

Along with being part of the import trail that brought counterfeits to Amazon, Mobile Star also sold Apple knockoffs to Groupon, an e-commerce marketplace, and to an Apple investigator, the tech giant charged.

Referring to the preceding stops in the counterfeit trail, Apple said legal discovery in the lawsuit “revealed that Mobile Star’s supply chain includes entities that are known counterfeiters and infringers of Apple’s intellectual property and source large quantities of Apple-branded products directly from entities based in China.”

Founded in New York in 2008, Mobile Star is headed by Brooklyn businessman Jack Braha. The company focuses on buying and reselling excess and outdated inventory of accessories for smartphones with much of the transactions carried out via Amazon, Braha said in a November court filing.

The company inspects the products it buys and has not found any irregularities or safety problems in its sampling of Apple iPhone accessories, Braha said.

“Mobile Star does not knowingly resell counterfeit goods,” Braha said in his court declaration. “Indeed, prior to Apple’s claims that are at issue here, Mobile Star has never before been accused of doing so.”

Moreover, Braha said Amazon mixes together similar products from several sales vendors, placing them in the same bin for distribution. That practice would make it impossible for Amazon to identify and accuse the company responsible for marketing and selling the alleged Apple counterfeits.

“Any suggestion that Amazon’s counterfeit inventory necessarily came from Mobile Star is belied by Amazon’s admitted practice of commingling products from all of its suppliers,” Braha said in his court declaration.

Aaron Moss, a Mobile Star attorney, said the company consistently denied any wrongdoing and was pleased with the court settlement.

Contributing: Elizabeth Weise, Eli Blumenthal

Follow USA TODAY reporter Kevin McCoy on Twitter:

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