How counterfeit Rolexes are produced and distributed, according to an investigator

My name is Rob Holmes. I’m a private investigator. I’ve stopped millions of dollars of counterfeit watches entering the US market. This is how crime works. It’s estimated that 23.3 million counterfeit watches are circulating the US right now. There have been plenty of stories of the counterfeit watch industry being tied to child labor, sweatshops, and even human trafficking. You’re going to have organized criminals who are doing this kind of stuff. When I work undercover as a distributor, I have to be very credible. Doing what I do doesn’t come without a little bit of fear. Many of the fakes nowadays come with the box and the authentication certificates. You used to see watches that would just have maybe one of the trademarks like just the crown on the face but not the crown on the dial. Now manufacturing has gotten so good that even the cheaper knockoffs have everything. There are people who buy $1000 counterfeit watches, Patek, Rolex, Louis Vuitton, all the all the big brand names and they they buy these watches for 1000 bucks because they are near clones. And in that world the the current term is epic. You can’t tell it from the the original, and especially with with some of the brands, especially Rolex, the only way you can tell is by opening up the watch and looking at the movement. Because the Rolex movement, there’s no mistaking A Rolex movement from a counterfeit. I don’t care how good the Chinese factories are, a Swiss movement made by Rolex is always going to be known once you open the back. If it is sold in America, there’s a factory in China that makes an exact copy of it. It’s just a matter of how high the quality is. Manufacturing in the counterfeiting world replicates the manufacturing in the real world. Wherever manufacturing is cheap, that’s where manufacturing is going to happen. These factories can afford the same machines that the real companies use, and they use the same software. Often that software is stolen through industrial espionage on these Chinese marketplaces. They have a tier for a manufacturer or a seller, a tier level where you can obtain an inspection by the marketplace. They’ll have a third party inspector come in and take photos and check and check your your location for child labor, all the regular things that people would look for. And you can pay for a clean bill of health, but there’s no telling what these factories are really doing. We know that China, you know China, Some Chinese factories use forced labor. It used to be the 80s, nineties, even into the early 2000s. The watches would come here by container and then the logos would be put on in factories here in the United States, in sweatshops, right in the major cities here in the US That’s kind of stopped because the Chinese factories have become so, so good that the American factories couldn’t keep up with the quality. We find that most of the product comes out of major ports and you know Guangzhou inside Guangdong, China became so good at logistics, it was much easier for people to sell as affiliates here in the United States and have them shipped from the Chinese factories or the middle men. This is how good these Chinese factories are. QC, which means quality control. They’ll send you a high res photo of your item and the shipping label so you can check the item, make sure it’s the right model and also make sure that the address is correct on your shipping label. You say yes, go ahead, boom. Within a day or so you’ll get the tracking number. Watches would be shipped in, say, one case of watches, say 1000 watches or 10,000 watches in a small portion. And the rest of the container would end up being beach balls, you know, cosmetics or anything cheap stuff. What they do is they ship it to their clearinghouse, the distributor in Pennsylvania. They slap a new label on it and ship it to you from there so it looks more domestic. And when it looks more domestic, it looks more trusted. But most counterfeit watches reach the United States through the US Postal Service or DHL, shipped individually to the seller. You could buy one watch. You could buy 5 watches. You could buy 100 watches. I’d buy samples from all over the world. One time I had a package sent to me and it was a toy alarm clock. I opened it up. There was a watch inside. I haven’t received a disguised counterfeit in several years, and I think it’s because of how easy it is to get across the border with just a little bubble wrap. The watches you buy on the streets, they’re usually bought the same way by the seller. If you buy a hundred of them, they’re 8 bucks apiece. So you get a hundred of those packages. Only this big shipping is going to cost 8090 bucks. And they know the Postal Service is flooded right now and customs is flooded right now. So it’s really kind of a field day for the mailing of counterfeit watches. the US Customs can’t inspect every single package they used to say they could. They inspected one every thousand, you know. But I don’t even know if that’s possible anymore with everybody buying $20 dresses and things like that. Counterfeit distributors don’t worry about the obstacles because the profit is so high. So if something gets stopped off at customs, they’ll just ship you a new one. And that happens very often, even with a container, Those 10,000 watches, they get caught up in customs, that’ll just be the cost of business. So those obstacles are pretty simple for them to bypass in my perception. The demand for fakes, non deceptive counterfeits, where you know it’s fake is simply because people like getting something over on the man. From the 80s until now, I found that demand has been pretty consistent throughout the years. I mean, no matter what the economy is looking like, people like a bargain and people like to spend less for something that looks nice. Let me explain the Gray market a little. There is a market where people think they’re getting the deal. You’ll see, you know, 20% off retail, things like that. There’s a Gray market where things fall off the truck and things are diverted outside of outside of the original supply chain. And once they get here in the United States, they can sell legitimate products. And this is including the watch industry. They can sell legitimate products at 1020% off the the original price. And they’re real. But these companies have databases with those serial numbers in them and you take it to a real repair shop, they stick it through the database because a lot of watches are stolen. So you take it to a real repair shop. Oh, sorry. This watch was a great market product intended for another place. So that’s why once you buy something on the Gray market, you’re kind of always working underground. So that leaves you susceptible to buying the epic fakes, the ones that are 1000 bucks, but you’re paying six or seven because you think it’s wink, wink, you know, falls off the truck. And a lot of these companies too, that deal in the Gray market do what’s called mixing. And what they’ll do is they’ll have some genuine Gray market and some that are counterfeit and they’ll just mix them all in or they’ll sell you look like a sucker. I’ll sell you the fake and I’ll sell this guy the genuine. It’s a very interesting world, the second hand market because it is kind of self regulated. Obviously they self regulate because of lawsuits too. You know, if, you know, I make a test by from one of these sites and it turns out to be counterfeit, they can get sued. So yeah, so there’s a lot of liability at stake there too. So the legitimate ones don’t do that, you know. But again, you know, you’ll have the shady ones, especially the ones that you walk up in tourist areas and they sell genuine second hand watches. But maybe the one you have, you know, is a fake. I tell people, whether you’re going to buy a product or you’re going to have a product repaired, go to an authorized dealer. But yeah, these repair markets are very shady. There was a case in the 90s that my father and stepmother worked called the Fort Worth Gold and Jewelry Exchange. And this guy, his name was Ronnie Cooper. He advertised in all the national magazines and he would have ads that we buy gold, we buy watches, we sell Rolex watches, and he would even do repairs. What he would do when he bought the watches was he would replace the gold with gold plated, and he would constantly be doing that, so you’d be you’d be buying a a genuine watch. But most of the gold was swapped out, and he did this for many years, and Jewelers still do that. They’re often called Franken watches. In the replica world, he got five years. The guy, he got five years for mail fraud. That’s what they got him on because all this stuff went through, you know, shipping and the Postal Service and things like that. The brands don’t like the secondary market because they take away from you buying a brand new product. My dad was the guy on Canal Street in the 1980s and 1990s who caught the folks that were selling counterfeit watches. I grew up in the 80s going on rage with my father and making undercover buys. Canal Street was the epicenter for counterfeit watches in the entire United States. They had Midtown. That was where all the folks with the briefcases would show up. OK. Those guys would walk around and you know, the old, hey, buddy, want to buy a watch? You know, that kind of thing. Or they would set up a briefcase with legs and they’d be very mobile. In Chinatown they would be standalone stores with big metal roll down roll up doors. On raid days they would go with a van or a U-Haul truck with off duty cops and firemen inside the back back of the trucks. And they would have spotters along the way who would go to local diners and tell them the address is where they’ve spotted those watches that day. Then the people would fly out of the trucks and if they didn’t, if they didn’t get there in time and the guys rolled down and locked the doors, we had industrial industrial strength saws where we could saw through those locks. It wouldn’t be uncommon for my father to come home with a U-Haul truck full of bags, Hefty bags full of counterfeit watches. Actually, I was the only 14 year old at my high school that was walking around with a Rolex watch. Everybody knew it was fake. But, you know, during my dad’s Canal Street years, he would hire out of work actors in New York to disguise themselves and go conduct undercover investigations. Those people dressed up as homeless people, pregnant people, everything you could think of so that they’re going through one day at a time and they don’t look like the same person doing enforcement on Canal Street. It was no hayride. He had bodyguards, and he also had constant threats. There were people with guns shooting at them. There were very often times where people would come right after my father. I’ve been investigating counterfeit watches professionally since 1995 S when I started my company. All the luxury brands knew who I was, and they knew I started my own firm and then I started getting cases from the luxury brands during my undercover buy process. You know, we have undercover identities set up all over the United States. So, you know, I could buy from the same website five times and they would think it’s five different people. I have every counterintelligence method you can imagine. We do everything we can to make sure that these identities are not traced back to us. The brands usually work directly with law enforcement if they can because it’s expensive to hire an investigator. My cases are typically cases that might go civil or a case that law enforcement doesn’t have the time for and then once my case is finished completed it’s put on what I call a silver platter and then they will pass it on to law enforcement. There’s various terminology in the counterfeit world. In the watch industry, a replica is a near perfect or at least look alike version with the trademarks of an actual product. But then you have a lower level counterfeits. You have say 3 to $500 counterfeits and they’re mid level and then you have anything under 300 they call them. The funny thing is those cheap watches, they’re the ones you buy on the street. The keywords to find these counterfeits evolve because of enforcement mechanisms. You can’t just Google counterfeit Rolex or counterfeit Louis Vuitton or even replica. The word replica for the last 10-12 years has been pretty much blacklisted everywhere along with brand names, so they would come up with different words. They would also use letter swaps like for Rolex. They could use RO i.e. XX If you’re seeing words like replica, clone, dupe, or one colon, one one to one, you’re probably looking at a counterfeit. If you’re trying to figure out if a watch is a counterfeit, first you need a magnifying glass, and then you want to look at the details on the watch face. If there’s any imperfection whatsoever, it’s not real. One of the great myths of counterfeit watches is that the genuine has a sweeping hand and the counterfeit has a ticking hand. Well, that was resolved sometime in the mid 90s. So most counterfeits now have a sweeping hand. So don’t be fooled into thinking that’s a way to tell a counterfeit from a real. So I was just handed a watch for filming purposes. And I can tell this one’s genuine because, see, there’s a crown logo at the 12:00 mark, and the crown logo has an Oval at the headpiece part of the crown, and that’s etched in perfectly. The quality of the craftsmanship of this watch is impeccable. The brand name is printed there perfectly. Also with many of these watches, there’s a magnifier at the date. It’s called the Cyclops, and counterfeiters don’t always get that right. And also, the date with the magnifier can just be a little off. It’s not perfectly like if the number’s 12, the day’s 12, it’s going to be exactly there. It’s not going to be partially there. And a lot of the counterfeits, they just can’t get the date exactly right. And the Cyclops too, there is a the the original brands have a very specific non reflective material they put on that Cyclops that that holds it onto the watch and that’s very hard to duplicate as well. So the clarity of the Cyclops is very, very important. Also you’ll see the brand name on the inside of the band. Now the high end counterfeit may have those, but you do have to look for these things. Also the registered trademark on the back, you can look for that and see if they’ve gone to that great detail. And with this particular watch, because it was made, I’d say probably at least 20 years ago, maybe longer. In order to find the serial number, you would have to actually take off the band here, and you would have underneath, underneath the band edge. Here and here you’ll have a serial number and you’ll have a model number. Especially with the Submariner and the diving watches, the bezel is very difficult to make. So the Swiss engineering of the bezel is going to be perfect with a genuine watch. Many of the counterfeits, it’s kind of jingly as you’re moving it. A lot of this stuff isn’t one specific thing. You look at the quality and you say, wait, this isn’t real because, you know, this is a little shaky. It should be more solid. You know, it’s a little light, should be heavier. The counterfeit watch industry is a financial crime. You deal with all kinds of fraud in this world, especially here in the United States, you know, bank fraud, all this kind of stuff. In the 1940s, there was a law passed called the Lanham Act and it made counterfeiting trademark goods illegal. And that law stood for a very long time. There were no penalties, though it was sort of symbolic. And then my father along with very small community back then of folks lobbying the US government to strengthen the laws, the Anti Counterfeiting Act of 1984 was passed and the any counter effect of 1984 created penalties for each one of these offenses. Currently the federal laws are in trafficking, so trafficking is illegal federally. So that’s where customs comes in. But most of the sale or display of counterfeit goods is state law. So in New York, you know, New Jersey, California, almost every state has a display for counterfeit as a as a penalty. And also in their penal codes, the sale of counterfeits. I’ve seen people face some serious jail time for selling counterfeits. Often they’re the they’re the most egregious. But on the street level, folks, it’s the repeaters. Just like with drugs, someone purchasing counterfeit goods online probably isn’t going to enter law enforcement’s radar or the brand’s radar unless they are named or discovered as a supplier to someone else. Often because purchasing isn’t necessarily it’s not illegal to purchase, but obviously trafficking is and you’re bringing things over across the border. I’ve seen the civil penalties get very steep when my clients want to sue. Someone often will look for assets. If a person owns a house and the mortgage is paid off, you know these people have the ability to pay 70 thousand $100,000 in restitution and a judge will, you know, often comply. So I’ve seen people’s lives get ruined by selling counterfeits. It was in the late 80s when my father came across BTK, the Born to Kill gang, Vietnamese Mafia. One day his brother who worked with him, saw a wanted poster with a $200,000 price on my father’s head. Turns out the Born to Kill gang. They were charging all of these vendors for protection, but they couldn’t protect them against my father. So they figured if they killed my father, they would at least alleviate the problem and they would justify their own extortion racket. And because of that, we had locks on every door, every window. And my father told me one day, I remember he said, Rob, I know you don’t like listening to me, but if I ever say duck or jump, you better do it because it might mean your life. And I always took that seriously. After that, I still do. When my father’s Canal Street work started really taking off, I was uninterested in the family business. I was 1718, nineteen years old, and I was kind of going off doing my own thing. But my brother was like 1314 years old and he was primed to do this work. He was bred for it. So my brother was running out gathering license plates and, you know, looking in windows and factory windows and things like that. I actually rebelled against the family business and I went to Bible college and I decided to drive to LA to become a stand up comic. It turns out I wasn’t very funny, but in the meantime I needed a day job. But then I started going on rage, just like my father on the opposite coast, and it was amazing. Los Angeles’s area, similar to Canal Street, New York, is called Santee Alley and it was a several block area, just like New York’s Chinatown. It is filled, filled with counterfeits. In the 90s, Santee Alley just like Canal Street, it was the Wild West. Everywhere you went there were watches everywhere. I mean, people had them up and down their arms. They had them in briefcases. They had them in at booths. They had people who rented space out in front of booths and paid thousands of dollars for that. Yeah. And then after years and years of doing that in the 90s, my boss retired in 2001 and I started my own company. I started my company in O1 and I was working a lot of the similar cases with my father and my brother. So then my father passed in O four. Yeah. After my father died, I thought it was important to continue the family legacy. His company folded because he had nobody in New York to to follow in his footsteps. And then after he passed, my business was taking off and I needed to duplicate myself. And I figured, what better way to duplicate myself than to partner with my brother ever since then. I mean, there’s there’s not a day that goes by that we don’t think about that. I mean, it’s hard not for me not to look at my brother and see something. You know, one of my dad’s traits. We grew up watching him work. He was our hero and we emulate him. We both do. So yeah, I mean, it’s nice. I mean, sometimes I feel like he’s in the room.