The Marketplace Report: Counterfeits and Terrorism There are new warnings from some law enforcement officials that lucrative sales of counterfeit goods are helping pay for terrorist activity. But other experts are skeptical. Alex Chadwick talks to Bob Moon of Marketplace.

The Marketplace Report: Counterfeits and Terrorism

The Marketplace Report: Counterfeits and Terrorism

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There are new warnings from some law enforcement officials that lucrative sales of counterfeit goods are helping pay for terrorist activity. But other experts are skeptical. Alex Chadwick talks to Bob Moon of Marketplace.

ALEX CHADWICK, host:

Back now with DAY TO DAY. I'm Alex Chadwick.

Are counterfeit goods, typically sold on street corners and in flea markets, helping to bankroll terrorist activity? US and international law enforcement officials have been talking about that possibility since soon after the 2001 terror attacks on New York and Washington, and they're warning that the threat has not gone away. Joining us is Bob Moon, New York bureau chief for "Marketplace."

Bob, what's new about the latest reports from law enforcement officials?

BOB MOON reporting:

Well, Alex, as you mentioned, these reports have been circulating for years and getting occasional attention in the media. This latest testimony came on Capitol Hill, and this time, it wasn't so much al-Qaeda that was mentioned, but the Islamic militant groups Hezbollah and Hamas. One of those who spoke was Los Angeles County sheriff's Lieutenant John Stedman. He told the Senate Homeland Security Committee that alleged Hezbollah operatives had been caught dealing in counterfeit merchandise, which suggested that Hezbollah and other groups have raised as much as $30 million a year here in the US. Now that figure wasn't limited to pirated merchandise. It also included other criminal enterprises.

CHADWICK: I must say I'm surprised that they would be using--you know, it would seem that sticking up banks or something would be easier than going about pirated merchandise. What kind of evidence do these officials have to support these charges?

MOON: Yeah. You might think that. This evidence is somewhat tenuous, and officials candidly concede that it's largely anecdotal. For instance, one suspect had a large and colorful tattoo on his arm that turned out to be a symbol of allegiance to Hezbollah. Another suspect had small flags from the group displayed in his bedroom. All of these reports, going back several years, have been short on specifics. And Stanford University law Professor Mark Lemley, who deals with intellectual property rights, is skeptical about just how much of a link there is.

Professor MARK LEMLEY (Stanford University): There's no way for me or maybe for any of us kind of outside the intelligence community to know for sure what's going on. It is fair to say we haven't seen public evidence of this kind of thing going on. That doesn't mean counterfeiting isn't going on. There's no question counterfeiting is a very real problem. I just think that it may be that the copyright owners have emphasized or perhaps exaggerated a connection to terrorism because it's such a great story.

MOON: And, indeed, the software, movie and music industries have all seized upon these reports to make their case to consumers that buying counterfeit merchandise doesn't really hurt anyone.

CHADWICK: Bob, let me apologize to the banking industry for suggesting that it might be a good way to pick up some loose change by--don't most of these goods come out of Asia?

MOON: Yeah. Professor Lemley pointed that out, that most counterfeit goods do come from China and other points in Asia, and he says they aren't exactly known as hotbeds of terrorist activity.

And today in the "Marketplace" newsroom, we're continuing to explore illegal immigration with a look at some of the people who smuggle migrants across the border.

CHADWICK: Thank you, Bob.

Bob Moon of public radio's daily business show "Marketplace," produced by American Public Media.

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