"Trusted Influencers but It Was a Fake"... Corporate Design Crime Ring Caught

A corporate design crime ring, including a company CEO who has been manufacturing and selling counterfeit products of famous domestic and international brands by leveraging influencer recognition, has been caught.

Influencer A was caught manufacturing and selling counterfeit products of domestic and international brands by abusing their own influence. Photo by the Korean Intellectual Property Office

The Korea Intellectual Property Office's Special Judicial Police for Technology and Design (hereinafter referred to as the Technology Police) and the Daejeon District Prosecutors' Office announced on the 14th that they have arrested CEO A (34) on charges of violating the Design Protection Act and the Unfair Competition Prevention Act, while six employees were granted prosecutorial discretion.

According to the Technology Police, Mr. A is an influencer with a cumulative blog visitor count of 14 million on an internet portal. He is accused of using his recognition to promote products, attract buyers, and sell counterfeit goods through a membership system. It was also confirmed that Mr. A has two prior convictions for similar offenses.

In December 2021, Mr. A established a corporation for the purpose of selling and distributing counterfeit products, hired employees to divide roles, and formed a corporate structure. The manufacturing of counterfeit products was organized by outsourcing to domestic clothing, footwear, and jewelry manufacturers and wholesalers, as well as overseas local companies.

Investigations revealed that Mr. A and others manufactured and distributed approximately 20,000 counterfeit items of clothing, shoes, and jewelry bearing the brands of 58 domestic and international companies, including Chanel, Time, and Ink, using these methods.

During this process, Mr. A and his associates produced and distributed counterfeit goods worth approximately 34.4 billion KRW in genuine product value over three years, and the criminal proceeds obtained are estimated to be about 2.43 billion KRW.

Organizational chart of the corporation operated by Mr. A. Provided by the Korean Intellectual Property Office

In particular, Mr. A enjoyed a luxurious lifestyle by residing in a high-end villa in Gangnam-gu, Seoul, and owning multiple expensive supercars with the criminal proceeds, which he flaunted to the public through social media.

The Technology Police began investigating in December 2022 after receiving a report from one victim company and identified the corporate design crime involving Mr. A and others in February this year.

Subsequently, upon discovering that the number of victim companies reached 58, the investigation was upgraded to a planned operation. Searches were conducted at Mr. A’s residence and corporate office, where evidence of the crimes was seized, and seven corporate executives and employees were additionally booked.

Furthermore, in cooperation with the Daejeon District Prosecutors' Office’s Patent Crime Investigation Division and the Crime Proceeds Recovery Team, Mr. A’s financial accounts were frozen, and real estate and bonds were seized to recover and preserve the full amount of criminal proceeds, according to the Technology Police.

Kim Si-hyung, Director of the Industrial Property Protection Cooperation Bureau at the Korea Intellectual Property Office, emphasized, “Mr. A is the first case to be arrested for violating the Design Protection Act and the Unfair Competition Prevention Act,” adding, “The amount recovered and preserved is the largest since the establishment of the Special Judicial Police for the Korea Intellectual Property Office.”

He also stated, “The Korea Intellectual Property Office will continue to respond firmly to increasingly sophisticated intellectual property crimes, track criminal proceeds to the end to recover them to the national treasury, and focus its capabilities on cutting off the motives and incentives for crimes.”