Counterfeit Goods: Who Gets Prosecuted and Why

You see the purse. It looks right. The stitching is clean, the hardware has weight to it, the logo is in exactly the right place. But the price makes you stop. A new bag like this should cost many times more. So you wonder: is it good enough to pass on the street? Is this one of those super fakes you’ve heard about? Perhaps it’s a superclone watch your looking at with the same question. And then the bigger question creeps in: will the decision to look good while saving a few hundred dollars cost you something far more expensive in the long run? Will the purchase land you in hot water? If not, could reselling it in the future create a problem?

For anyone selling, importing, or distributing counterfeit goods in Texas, the answer can be years in prison and a felony record. Under both Texas and federal law, trafficking in goods bearing a counterfeit trademark is a serious crime, and the penalty is tied to the retail price of the real thing, not what you sold the fake for. A box of counterfeit handbags that you moved for $50 each can be valued by prosecutors at $3,000 each. The math on that is not friendly.

Facing Counterfeit Goods Charges? Experience Matters.

Counterfeit goods prosecutions move fast. Law enforcement agencies, including Homeland Security Investigations, the FBI, and local task forces, frequently work together on these cases, and both state and federal charges can be filed from the same underlying conduct. That means you may be looking at two separate systems, two sets of prosecutors, and two potential sentences.

Varghese Summersett has more than 100 years of combined legal experience across our team of 70-plus attorneys, investigators, and legal professionals. Our attorneys include Board Certified Criminal Law Specialists, former prosecutors, and lawyers who have tried more than 100 cases before Texas juries. We handle fraud and white collar cases at both the state and federal level, and we know how these investigations are built, and how to challenge them.

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Where Do Counterfeit Goods Come From?

Understanding the supply chain matters in these cases, both for context and for defense. The counterfeit goods trade is enormous. The OECD estimates global trade in fake goods reached $467 billion in 2021, and that figure has almost certainly grown since. U.S. Customs and Border Protection conducted more than 32,000 seizures in fiscal year 2024 alone, with a combined estimated retail value exceeding $5.4 billion.

The overwhelming majority of counterfeit goods entering the United States originate from China and Hong Kong. CBP reported that those two sources accounted for roughly 90 percent of all counterfeit seizures by value in fiscal year 2024. Manufacturing hubs in cities like Guangzhou and Shenzhen produce goods ranging from obvious fakes to near-perfect replicas, often in the same industrial districts, and sometimes in the same facilities, that produce legitimate merchandise. Turkish, Vietnamese, and other Southeast Asian manufacturing operations also contribute, particularly in apparel and footwear.

Getting the goods into the United States has evolved significantly. Counterfeiters have largely abandoned large container shipments in favor of small parcels sent through international mail and express courier services. More than 90 percent of CBP counterfeit seizures now occur in these channels. A single operation may involve hundreds of individual packages shipped to different addresses, each small enough to avoid triggering automated screening. Some operations now ship unassembled components separately, assembling the final product closer to the end customer to reduce interdiction risk.

How Good Are the Fakes?

Quality varies enormously, and that range has real legal implications for everyone in the distribution chain, including people who may not have known exactly what they were handling.

At the low end are obvious fakes: cheap materials, visible misspellings, crooked stitching, hardware that tarnishes within days. These are easy to identify and relatively easy to prosecute because the counterfeit nature is apparent. At the mid-tier are what the market calls “AAA” or “AAAA” replicas, goods that get the external appearance mostly right but use inferior internal components, cheaper leathers, and non-genuine movement parts in watches. They pass a casual look but fail any real scrutiny.

At the top end are what authentication experts call “super fakes” or “1:1” replicas, products so close to genuine that even trained brand authenticators can struggle to identify them without detailed examination. These items are manufactured with premium materials, correct hardware weight and finish, accurate serial numbers, and matching documentation. They can sell for hundreds of dollars, blurring the line between a genuine pre-owned item and a counterfeit. One industry grading system uses labels like “AAA,” “AAAA,” and “1:1 mirror” to describe ascending quality tiers. The last represents a product that claims to be an exact copy down to microscopic engravings.

The existence of super fakes creates a real legal question in these cases: at what point did someone know they were dealing in counterfeits? That question is central to the “knowledge” element both Texas and federal law require, and it is one of the most important battlegrounds in a counterfeit goods defense.

What Is Trademark Counterfeiting Under Texas Law?

Texas criminalizes trademark counterfeiting under Texas Penal Code § 32.23. The statute targets intentional deception, not honest mistakes about a product’s origin.

To convict someone of trademark counterfeiting, the State must prove beyond a reasonable doubt that the defendant:

• Intentionally manufactured, displayed, advertised, distributed, offered for sale, sold, or possessed with intent to sell
• An item or service bearing a counterfeit mark
• Knowing the mark was counterfeit

The burden of proof rests entirely on the State. A defendant has no obligation to prove their own innocence. A “counterfeit mark” under the statute means a mark that is identical to or substantially indistinguishable from a mark registered with the U.S. Patent and Trademark Office or the Texas Secretary of State, used without the mark owner’s consent.

The reach of the statute is broad. It covers not just the manufacturer or seller of fake goods, but anyone in the distribution chain who knows what they’re handling. A warehouse worker, a flea market vendor, or an online reseller can all face prosecution under § 32.23 if the State can prove they knew the goods were counterfeit.

Penalties for Trademark Counterfeiting in Texas

Texas punishes trademark counterfeiting on a sliding scale tied to the total retail value of the counterfeit goods, calculated at the price of the genuine article, not what the fake actually sold for. That valuation method is one of the most aggressively contested issues in these cases.

Value of Counterfeit Goods	Offense Level	Potential Punishment
Under $100 (or under $750 with prior conviction)	Class C Misdemeanor	Fine up to $500
$100 to $749	Class B Misdemeanor	Up to 180 days jail, fine up to $2,000
$750 to $2,499	Class A Misdemeanor	Up to 1 year jail, fine up to $4,000
$2,500 to $29,999	State Jail Felony	180 days to 2 years state jail, fine up to $10,000
$30,000 to $149,999	Third Degree Felony	2 to 10 years prison, fine up to $10,000
$150,000 to $299,999	Second Degree Felony	2 to 20 years prison, fine up to $10,000
$300,000 or more	First Degree Felony	5 to 99 years or life in prison, fine up to $10,000

A single calculation can shift a misdemeanor into a second-degree felony. Defense attorneys challenge those valuations routinely, and successfully.

Bond Amounts for Trademark Counterfeiting in Texas

Bond amounts vary by county and by the alleged value of the goods involved. Here is what our analysis of actual bond data shows across multiple Texas counties.

Tarrant County

Based on an analysis Varghese Summersett completed of over 52,000 bonds set in Tarrant County:

Charge	Cases Reviewed	Average Bond	Most Common Bond
§ 32.23(e)(2) Counterfeiting $100–$749	14	$961	$500
§ 32.23(e)(3) Counterfeiting $750–$2,499	3	$1,250	$750
§ 32.23(e)(4) Counterfeiting $2,500–$29,999	4	$2,625	$1,000
§ 32.23(e)(7) Counterfeiting $300,000+	2	$12,500	$10,000

Denton County

Based on an analysis Varghese Summersett completed of over 12,900 bonds set in Denton County:

Charge	Cases Reviewed	Bond Set
§ 32.23(e)(2) Counterfeiting $100–$749	1	$500
§ 32.23(e)(4) Counterfeiting $2,500–$29,999	1	$100,000

Collin County

Based on an analysis Varghese Summersett completed of over 11,300 bonds set in Collin County:

Charge	Cases Reviewed	Bond Set
§ 32.23(e)(5) Counterfeiting $30,000–$149,999	1	$40,000

Dallas County

Our analysis of over 64,000 bonds set in Dallas County did not return any trademark counterfeiting entries under § 32.23 during the period studied. This may reflect that Dallas County counterfeiting cases during that window were predominantly charged at the federal level, or that state charges were filed under related statutes. If you are facing counterfeiting charges in Dallas County, bond amounts will vary depending on the specific charge level and circumstances. Contact us to discuss your situation directly.

Across all counties, bond amounts increase significantly as the alleged value of the goods climbs into felony territory. At the higher felony levels, judges also weigh flight risk, prior criminal history, and the scope of the alleged operation. If federal charges are also pending or anticipated, bond in federal court is set separately under a different standard entirely.

Federal Counterfeit Goods Charges: 18 U.S.C. § 2320

State charges and federal charges are not mutually exclusive. The same conduct of selling counterfeit goods can be prosecuted in both systems because state and federal governments are considered separate sovereigns under U.S. law. This is not double jeopardy. In practice, one jurisdiction usually takes the lead, but there is no legal rule requiring the other to stand down. Anyone facing counterfeit goods allegations needs an attorney who practices in both arenas.

The primary federal statute is 18 U.S.C. § 2320, the Trademark Counterfeiting Act. Federal prosecutors typically get involved when:

• Goods crossed state lines or were imported into the United States
• The operation involved online sales with interstate shipping
• The scale or dollar value suggests an organized scheme
• Homeland Security Investigations (HSI) was the investigating agency from the start
• The conduct involved organized criminal networks or transnational supply chains

What the Government Must Prove

Under 18 U.S.C. § 2320, the government must prove beyond a reasonable doubt, with the burden falling entirely on the prosecution and never the defendant, that the defendant:

• Intentionally trafficked or attempted to traffic in goods or services
• Knowingly used a counterfeit mark on or in connection with those goods or services
• The mark in question was registered on the federal principal register and was in use in commerce at the time of the offense

“Trafficking” is defined broadly. It covers selling, transporting, transferring, manufacturing, importing, exporting, or otherwise disposing of goods bearing a counterfeit mark. A person who received a shipment and simply stored it is a potential target. So is a person who processed payments. The federal statute is designed to reach every knowing participant in the chain.

Federal Penalties

Scenario	Maximum Prison	Maximum Fine
First offense, individual	10 years	$2 million
Second or subsequent offense, individual	20 years	$5 million
Organization (first offense)	N/A	$5 million
Organization (subsequent offense)	N/A	$15 million
Goods endangering health or safety (first offense)	20 years	Varies
Goods endangering health or safety, death results	Life	Varies

Courts also routinely impose forfeiture of the counterfeit goods, the equipment used to produce them, and the proceeds of the offense. Restitution to the trademark holder is common. And a federal conviction can expose the defendant to separate civil liability under the Lanham Act, where trademark owners can seek statutory damages of up to $2 million per counterfeit mark per type of goods, on top of any criminal sentence. There is no parole in the federal system, and sentences are served at a mandatory minimum of 85 percent.

How Federal Sentences Are Actually Calculated: U.S.S.G. § 2B5.3

Federal judges don’t simply look at the statutory maximum and pick a number. They are guided by the United States Sentencing Guidelines, and for trademark counterfeiting cases, the controlling provision is U.S.S.G. § 2B5.3. Understanding how the guidelines work is essential to understanding real federal exposure. The statutory maximum and the actual guideline range are often very different numbers, and the guidelines are where the real fight happens.

The calculation starts at a base offense level of 8. From there, the offense level climbs based on the “infringement amount,” defined as the retail value of the genuine infringed item multiplied by the number of counterfeit items. That number is run through the same loss table used in federal fraud and theft cases under § 2B1.1. The higher the infringement amount, the more levels are added, and the longer the recommended sentencing range.

Beyond the infringement amount, several specific factors can push the offense level higher:

• Manufacturing or importing: Additional levels apply if the defendant manufactured or imported the infringing items rather than simply selling them
• Counterfeit drugs: A mandatory 2-level increase for any offense involving counterfeit pharmaceuticals
• Risk of serious bodily injury: A significant enhancement when counterfeit goods pose safety hazards such as counterfeit pharmaceuticals, electrical components, vehicle safety parts, or children’s products all trigger this
• Counterfeit military goods: A 2-level increase with a minimum offense level of 14 when the goods could compromise combat operations, classified information, or member safety
• Organized criminal enterprise: An upward departure may apply when the offense was committed in furtherance of a national or international organized criminal enterprise

The critical battlefield in federal sentencing is almost always the infringement amount calculation itself. Defense attorneys who understand § 2B5.3 can challenge the government’s methodology, contest the number of items attributed to the defendant, dispute the retail value assigned to the genuine goods, and argue for downward adjustments based on the defendant’s role in the offense, acceptance of responsibility, and criminal history. A well-executed guidelines argument can translate to years off a sentence.

Additional Federal Charges That Often Stack

Counterfeit goods investigations rarely result in a single charge. Depending on how the operation was conducted, federal prosecutors regularly add charges that carry their own substantial penalties and that multiply both exposure and complexity:

• Wire fraud (18 U.S.C. § 1343): If the defendant used email, online listings, electronic payment systems, or any wire communication to further the scheme, each use of that communication is a separate count carrying up to 20 years
• Mail fraud (18 U.S.C. § 1341): If the U.S. mail was used to ship goods or related communications, each mailing is a separate count carrying up to 20 years
• RICO (18 U.S.C. § 1962): When prosecutors believe the operation constitutes a criminal enterprise with a pattern of racketeering activity, RICO charges can be added, carrying up to 20 years per count and mandatory forfeiture
• Customs fraud / importation violations (19 U.S.C. § 1526): Importing goods bearing a counterfeit trademark violates federal customs law independently of the trademark statute, and can result in civil forfeiture and criminal penalties
• Money laundering (18 U.S.C. § 1956): When proceeds from counterfeit goods sales are reinvested into the operation, transferred, or concealed, money laundering charges frequently follow

A defendant charged with § 2320, wire fraud, and money laundering in the same indictment is not effectively facing one case. They are facing three, all at once, in a system where prosecutors hold significant leverage. The time to engage an experienced federal defense attorney is before the indictment comes down, not after.

Who Can Be Prosecuted?

Both state and federal law cast a wide net. The person who makes the fake goods is the obvious target, but prosecutors routinely charge everyone who knowingly participated in the scheme: importers, wholesale distributors, retail sellers, flea market vendors, online resellers, warehouse operators, and anyone who helped finance or manage the operation. Corporations and their officers are not shielded from individual liability.

What About Buyers?

Generally, no criminal exposure for personal purchases. Texas Penal Code § 32.23 requires intent to sell or distribute. Simply buying a fake item for your own personal use does not meet the elements of the offense. Federal law under 18 U.S.C. § 2320 works the same way, targeting trafficking rather than personal possession. A consumer who knowingly buys a counterfeit watch or handbag for themselves is not committing a crime under either statute.

Where this changes is quantity. One item reads as personal use. Ten of the same item is a much harder argument. Prosecutors look at volume and circumstances, and bulk purchases can support an inference of intent to distribute even without a single confirmed sale.

What About Private Resellers?

Texas Penal Code § 32.23 draws no line between commercial retailers and private individuals. If you knowingly sell an item bearing a counterfeit mark, whether through a flea market, Facebook Marketplace, eBay, or a transaction between friends, you are within reach of the statute. The knowledge element still matters: if you genuinely did not know the item was counterfeit, that is a real defense. But if you knew, a single private resale can technically be charged. In practice, prosecutors focus on volume and commercial scale, but there is no legal safe harbor written into the statute for non-retailers.

Effective Defenses to Counterfeit Goods Charges

Lack of Knowledge

Both § 32.23 and 18 U.S.C. § 2320 require that the defendant knowingly dealt in counterfeit goods. Given the quality spectrum described above, particularly super fakes that even trained experts struggle to identify, genuine ignorance of a product’s counterfeit nature is a real and powerful defense. Defense attorneys build this case through purchase records, supplier representations, pricing data consistent with genuine goods, and evidence the defendant had no meaningful way to distinguish the products. The defense also scrutinizes whether the government stretched “should have known” into a gap where actual knowledge evidence is thin.

Challenging the Valuation

Because penalties are tied to the retail value of genuine goods, the government’s valuation methodology is one of the most important battlegrounds in these cases. Defense attorneys challenge the retail prices used, whether comparable items were fairly selected, and whether the goods were complete and functional enough to command those values. Reducing the government’s infringement amount can shift the charge level significantly, or reduce a federal guideline range by years.

Questioning Whether the Mark Was Registered and in Use

Both Texas and federal law require that the trademark at issue be registered and actively used in commerce at the time of the offense. If the mark was expired, abandoned, not federally registered, or not in commercial use, the legal foundation of the case may collapse. This is a technical but potentially dispositive defense, particularly in cases involving lesser-known brands or marks that changed ownership.

Fourth Amendment: Unlawful Search and Seizure

Many counterfeit goods prosecutions begin with searches of warehouses, storage units, vehicles, or business premises. If law enforcement conducted those searches without a valid warrant, without proper probable cause, or exceeded the scope of the warrant, the evidence can be suppressed. A successful suppression motion can gut the government’s case entirely. No goods, no prosecution.

Entrapment

In undercover operations where agents posed as buyers, distributors, or suppliers, entrapment is sometimes viable. It requires showing the government induced the defendant to commit a crime they were not already predisposed to commit. The defense is not available to someone who was already dealing in fakes, but it is a real argument when undercover agents created the opportunity from scratch.

Contesting Federal Sentence Enhancements

In federal cases that reach sentencing, the battle over the guidelines calculation can be as consequential as the verdict itself. Defense attorneys who understand § 2B5.3 can challenge infringement amount figures, argue against enhancements, and present mitigating evidence that shifts the sentencing range meaningfully downward. This is high-stakes work that requires attorneys who know federal sentencing guidelines as well as they know trial law.

What to Expect From the Legal Process

State and federal counterfeit goods cases follow different tracks, and the choice of venue matters enormously. At the state level in Texas, a case typically begins with an arrest following a search or undercover operation. The case is filed in the district court of the county where the offense allegedly occurred, bond is set at arraignment, and the case moves through discovery and pretrial motions toward resolution by dismissal, plea, or trial.

Federal cases are structurally different and move on a different timeline. After an investigation that can run for months or years before any arrest, prosecutors present the case to a grand jury. If an indictment issues, the defendant is arrested and arraigned in federal district court. Discovery rules differ from state court, the guidelines govern sentencing rather than just the statutory maximum, and sentences are served at no less than 85 percent with no possibility of parole.

If you are under investigation but have not yet been charged, the period before charges are filed may be the most important time to have an attorney. Early intervention can sometimes prevent charges entirely, allow counsel to present mitigating information to prosecutors, and preserve evidence critical to the defense.

What to Expect From Varghese Summersett

When you hire Varghese Summersett on a counterfeit goods case, you get a team that handles both state and federal matters, not a firm that does one and refers the other out. Your case is reviewed by lawyers who have handled federal fraud and white collar cases across state district courts and federal court, including attorneys who previously worked as prosecutors and understand how these investigations are built from the inside.

We start by understanding the full picture: how was the investigation initiated, what does law enforcement actually have, was any search valid, how were the goods valued and is that methodology defensible, who else is implicated and what deals are being offered to them. The answers shape the strategy from day one. We also understand the overlap between state and federal exposure and coordinate the defense to avoid moves in one forum that inadvertently help the other.

Firm-wide, Varghese Summersett has secured more than 1,600 dismissals and 800 charge reductions. Speak with a lawyer who handles these cases at both levels.

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Counterfeit goods charges, state or federal, carry real prison time and lasting consequences. The sooner you have an experienced defense attorney reviewing your case, the more options you preserve. Reach out to Varghese Summersett to speak with a lawyer who handles these cases at both the state and federal level.