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Long Island Boutique Owner Arrested in $40M Luxury Counterfeit Bust

A Long Island woman was arrested Friday in connection with an operation producing counterfeit luxury fashion goods that could have fetched $40 million.

Lindsay Castelli, the 31-year-old owner of Linny’s Boutique in Plainview, N.Y., was charged with second-degree trademark counterfeiting for producing fake Gucci, Chanel, Prada, Dior, Ugg and Louis Vuitton goods after an 18-month investigation.

As part of “Operation Rainfall,” Nassau County asset forfeiture detectives removed 22 printing press machines that manufactured “thousands” of synthetic heat-sealed counterfeit labels, as well as boxes of assorted clothing and jewelry. The labels would be attached to the cheap clothing, largely made in China.

“A simple $10 sweatshirt—you put the Chanel brand on it, it sells for $5,300,” Nassau County Police Commissioner Patrick Ryder said at a press conference. “They would take a $3 hat, a 50-cent item on the side. They would heat seal it onto the hat and sell the hat for $300.”

Castelli was the sole owner of the storefront. No one else has been charged in connection with the scam.

The asset forfeiture unit teamed with the U.S. Postal Inspection Service to launch the probe in April 2021. Castelli surrendered to authorities three days after they executed the search warrant at the store.

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Per the company’s Instagram account, @linnys_plainview, Linny’s Boutique is closed until further notice. A message on the Linny’s Boutique website, which sold products nationwide, says it “will be opening soon.”

Castelli also operated a second online fashion site, selling merchandise under the name Christian Salvatore New York, according to Nassau County district attorney Anne Donnelly.

“This was not a mom-and-pop-operation,” Donnelly said.

In retail value, more than $10 million worth of “Chanel” products, roughly $4.5 million of “Gucci” merchandise and more than $25 million of “Louis Vuitton” counterfeits were confiscated, according to police.

A report from WNBC-TV said Nassau County cops described the basement of the boutique as a “sort of sweatshop operation.” Below, a screenshot from WABC-TV footage depicts boxes, clothing and hats scattered throughout the basement, with Gucci heat-sealed labels in view.

Courtesy of WABC-TV

“You can’t put brand labels on clothing and sell them to unsuspecting customers who think they’re buying the real thing,” Donnelly said.

Castelli is due to appear in court Nov. 2. If convicted, she could face up to three years in prison.

AAFA’s counterfeiting crusade

Counterfeiting remains big business in the U.S., particularly when products get imported into the country. U.S. Customs and Border Protection (CBP) and U.S. Immigration and Customs Enforcement (ICE)-Homeland Security Investigation (HSI) seized more than 27,000 shipments containing goods that violated intellectual property rights in 2021.

The total estimated manufacturer’s suggested retail price (MSRP) of the seized goods, had they been genuine, was $3.3 billion, according to the CBP. Apparel and accessories topped the list for number of seizure lines, representing 30 percent of all IP-related seizures.

One national trade association feeling the impact of the counterfeiting problem is calling for policy changes, and pleading its case to add new offenders to a watch list.

The American Apparel & Footwear Association (AAFA) called out the growing volume of counterfeits promoted and sold on major e-commerce and social media platforms, urging the U.S. government to implement policy changes and establish proactive and consistent brand protection solutions.

In particular, the AAFA nominated Facebook parent Meta and Southeast Asian online marketplace Shopee to be listed in this year’s Notorious Markets report. The U.S. Trade Representative (USTR) publishes its Notorious Markets list annually.

This is the third time that AAFA has called on the USTR to list Meta and its associated platforms, including Facebook, Instagram, and WhatsApp, as Notorious Markets due to the alleged proliferation of fraudulent advertisements and abundance of counterfeit products available on the platform. It is the second time the AAFA has nominated Singapore’ Shopee, which has previously been listed as a “notorious market.”

AAFA also raised concerns regarding Alibaba Cloud, subsidiary Lazada and Amazon, but did not nominate the platforms to be included on the list.

Last year, the USTR added two new companies to the Notorius Markets list, including Alibaba’s AliExpress, as well as China’s largest social media platform, WeChat. The 2021 report identified 42 online markets and 35 physical markets that the office says engages in or facilitates substantial trademark counterfeiting or copyright piracy. 

The Notorious Markets report is managed by USTR to identify physical and online marketplaces that engage in and facilitate substantial copyright piracy and trademark counterfeiting at the expense of American companies.

In its submission, the AAFA also detailed the costs counterfeiting has added to its own member retailers and brands. One quoted the legal costs in enforcing against counterfeiters at $2 million per year at a minimum. Another—a small business with about 18 employees—estimated reallocating at least $50,000 towards brand protection efforts yearly.

Lindsay Castelli faces up to three years in prison if convicted of second-degree trademark counterfeiting.

“Apparel and footwear brands are spending millions to identify and police malpractices via e-commerce and social media platforms,” said Steve Lamar, president and CEO of the American Apparel & Footwear Association. “Detection processes include waiting days and months for the removal of the illicit products. Every day it takes to remove a counterfeit product, an illicit seller, a fraudulent ad or a fake website is another day that unsuspecting American consumers are able to be duped into buying unsafe counterfeit products that could bring harm to themselves and their families.”

Lamar called on Congress to pass both the SHOP Safe Act and the INFORM Consumers Act to curb the counterfeiting problem. AAFA has been a supporter of both bipartisan bills since they were introduced in Congress in 2020 and 2021, respectively.

The SHOP Safe Act makes e-commerce platforms liable for infringement of a registered trademark by a third-party seller that violates health and safety rules. This means the platforms would have to establish practices that verify sellers’ legitimacy, delete listings promoting confirmed counterfeits and blacklist repeat offenders.

The INFORM Consumers Act, a proposed bill that has gained traction amid an increase in retail crime nationwide, would require online marketplaces to collect and verify basic seller information and for sellers to provide that information to consumers.

Earlier this year, AAFA revealed in a study conducted with international quality assurance provider Intertek that 36.2 percent of counterfeit products tested failed to comply with U.S. product safety standards, including dangerous levels of arsenic, cadmium, phthalates, lead and more that have been linked to adverse health outcomes.