Five years ago, Niagara Falls police fielded numerous calls about people selling phony Nikes at deep discounts from makeshift stands.
It turned out the shoes were being sold as part of an international, multimillion-dollar counterfeit ring.
Tuesday, a Chinese couple who live in New York City pleaded guilty in federal court in Buffalo for their role in the importing ring.
Ling Zhen Hu, 51, and her husband, Xiao Cheng Lin, 50, each pleaded to a single count of conspiracy to import mislabeled items.
As part of their plea agreements, prosecutors let Hu and Lin plead to importing "mislabeled" rather than "counterfeit" goods, a more serious offense that would almost guaranteed they'd be deported after serving their sentences in the U.S.
Hu is believed to have been employed by an importer to distribute goods that were labeled as raincoats but she knew to be "mislabeled" or counterfeit Nikes, according to Assistant U.S. Attorney John E. Rogowski. Her husband delivered the sneakers for her.
The break in the 2007 case came when local Drug Enforcement Agency officers intercepted wiretapped calls about sneakers, which at first they believed was being used as a code word for drugs. But they soon realized that the people involved were indeed talking about knock-off Nikes, Rogowski said.
The case was referred to U.S. Immigration and Customs Enforcement. In September 2007, law enforcement rounded up 23 people, including three in Buffalo and one in Niagara Falls. A few days later, investigators uncovered more than $7 million worth of illegal sneakers stored in two New York City warehouses.
During the investigation, authorities searched the home of Hu and Lin in Flushing and discovered $252,000 in cash, almost $200,000 in money orders, $46,000 in checks, 310 pairs of counterfeit Nike socks and 24 pairs of counterfeit Adidas socks.
Court records showed that investigators had evidence that on one occasion, Hu sold 100 boxes of sneakers to one distributor at a price of $8 a pair. Investigators also said they could prove in court she had distributed 7,500 pairs of "misclassified" sneakers.
Hu and Lin appeared together Tuesday before U.S. District Judge Richard Arcara to enter their pleas.
Hu, represented by attorney Mark J. Mahoney, is expected to be sentenced to between 37 and 46 months behind bars, fined between $7,000 and $75,000 and given supervised release of one to three years.
Lin, represented by Todd D. Greenberg of Queens, is expected to be sentenced to 30 to 37 months, fined between $6,000 and $60,000 and given supervised release of one to three years.
Mahoney said Hu and Lin - who are both legal residents of the U.S., but not U.S. citizens - likely won't be deported after their sentencing in January.
Monday, a Brooklyn warehouse worker who prosecutors said played a limited role in the scam, pleaded guilty to conspiracy to engage in trafficking in counterfeit goods.
Hussein Sara, 30, entered his plea before District Judge Richard J. Arcara.
Assistant U.S. Attorney John E. Rogowski said that, given Sara's minimal role in the conspiracy and his cooperation with investigators, he could be sentenced to 10 to 16 months in prison and ordered to pay restitution of $15,000 to Nike when sentenced Jan. 11.