Fake Cohiba Majestuosos. A $20 Million Dollar Scam?

[Arabian]

On 12/15/2023 at 6:02 PM, MrBirdman said:

I think this would be a valid argument to undermine justifiable reliance. Habanos says you should only buy their products from licensed shops (even though tons of people buy elsewhere), and has a serial code verifier online. Yeah, it’s easily faked, but that hardly matters - buying a box with no number at all is a calculated risk on the buyer’s part.

What’s more, this guy holds himself out as something of an expert - he runs a YT channel called Habano News for crying out loud. Think a court wouldn’t take that into account when determining reliance? Trust me, they would. Not to mention his failure to pick up on spelling mistakes on the insert suggests he didn’t inspect the box very closely (his English seems good enough to make that argument).

True, I believe he mentioned that he works in finance, therefore he made a risky financial decision by purchasing the cigars. what's more interesting if i remember correctly its not him that discovered the whole thing is a fake but a friend of him who was with him. now imagine if he wasn't there from the beginning. oh boy you'll have some horror stories and scenarios to tell. passing this 'fake' investment to a potential buyer resulting in damaging your reputation or having this 'fake' investment in your humidor for many years just to know later that it's fake after all. 15K isn't bad at all 😁.

 

[El Presidente]

I wish him well! 

Should this end up in a European court, I suspect a key determination will be whether the retailer knew they were fake. 

The "I bought them in good faith" argument. If the retailer can show he was "duped" then it may be a stretch for the claimant to seek compensation above the initial purchase price. 

This has been a consistent stumbling block for prosecuting sellers of Habanos fakes. 

[MrBirdman]

9 hours ago, Fugu said:

C’mon guys, this is not your normal ‘box’ of cigars, and we all know it! The direction of this open debate here in fact is doing the man a disservice

Let me be clear: I don’t find his legal argument for anything beyond a refund compelling. Whether I would feel slighted and want what he wants in that situation is another matter. I totally understand why he is upset and feels betrayed - who wouldn’t? Also, he has at least a colorable legal claim, and if he thinks it’s worth the risk could take them to court to see what discovery turns up. 

Anything is possible. I am just skeptical a shop would knowingly defraud a longtime customer, who obviously has plenty of coin to spend, when they’ve been straight with him until now.

9 hours ago, Fugu said:

How would you react if you gave your broker a buying order for a certain company share that tripled in value, only to learn at hindsight that he got you some rug-pull crypto instead?

There’s an important difference here: we are operating under the assumption that the shop did not knowingly defraud this guy. It’s possible they did, and their behavior regarding the box has been a disappointment. But they could very well have been duped here too (we just don’t know). This is part of the policy rationale behind the limit on consequential damages or specific performance on goods contracts without fraud. Is it really fair to treat a shop that unknowingly bought and sold fakes the same as one that intentionally defrauded a customer? There’s no right answer ethically; the law just makes a policy choice here to answer no.

[ATGroom]

I don't think it has been mentioned in this thread, but selling counterfeit goods is a criminal offence in Switzerland, punishable by a "mandatory fine of millions" and up to five years in prison for a commercial operator, according to this website https://www.stop-piracy.ch/en/what-should-you-do/legal-info/

I guess that probably plays a part in why the store won't just cut their losses and destroy the box as it would be admitting that it is not genuine.

I'll add, I get emails constantly at CCW from people who have bought fakes. When I tell them so, they always say they're going to take it back and try and get a refund.

If you have a letter from an expert (which I am happy to provide), credit card companies will allow a chargeback for counterfeit goods and require that you don't return them. I always encourage people to do this. It's more of a hassle, but it imposes a direct cost on the counterfeiters because they lose the sale, and probably doesn't do them any favours with the credit card companies. Very few ever do, preferring to just get their money back and say "not my problem" for anything that happens after that.

I have a lot of respect for HabanoNews' position, even if he doesn't ultimately get anywhere with it. Although my uneducated personal view is that if he keeps pushing it I think the store will eventually give him what he wants as sooner or later he will be able to impose consequences on them beyond the value of the box.

[Fugu]

20 hours ago, MrBirdman said:

Anything is possible. I am just skeptical a shop would knowingly defraud a longtime customer, who obviously has plenty of coin to spend, when they’ve been straight with him until now.

Getting that! Yet, going by my judicial understanding it is irrelevant whether knowingly or not. How to prove that anyway?! You can always get rid of docs and paperwork. No, a businesslike seller has to be able to trace back and verify that he is indeed trading the real deal when bringing goods into market circulation - and not the reverse, that is, the circumstances how and why he himself “accidentally” hadn’t been aware of a counterfeit. The burden of proof of originality sides on the seller’s party. A merchant is taking a high risk if not keeping tight control of that.

[Fugu]

Thanks, Alex @ATGroom, for that additional info! Which is reflecting pretty much my perception of the principles underlying most European law in such regard.

Merchants have to do their due diligence before they bring goods into circulation. It’s not enough to simply shrug and claim they hadn’t known... 

This holding - not only, but - in particular when trading goods from outside the regular channels (thus, even that argumentation is working against the seller’s, not the buyer’s side).

[BrightonCorgi]

On 12/18/2023 at 10:25 AM, ATGroom said:

I don't think it has been mentioned in this thread, but selling counterfeit goods is a criminal offence in Switzerland, punishable by a "mandatory fine of millions" and up to five years in prison for a commercial operator, according to this website https://www.stop-piracy.ch/en/what-should-you-do/legal-info/

A 15 year old relative of mine got bust importing a few fake Goyard's off of Alibaba into CH. Police to the house.

[El Presidente]

9 hours ago, Fugu said:

Merchants have to do their due diligence before they bring goods into circulation. It’s not enough to simply shrug and claim they hadn’t known... 

Some major European retailers have been caught out in the past. Partagas Piramides EL come to mind. 

Where a retailer has a long history of purchase from a supplier without episode, then there is little reason to question authenticity of products supplied.  

I do hope this gets to court. What I would want to know is "who supplied this box" 

That is when this will get interesting (for me).  

[helix]

On 12/19/2023 at 7:27 AM, El Presidente said:

I do hope this gets to court. What I would want to know is "who supplied this box" 

Indeed good to find out as they would be from the elite of the fake industry. 

[MrBirdman]

18 hours ago, El Presidente said:

What I would want to know is "who supplied this box" 

That’s the million dollar question here as it bears a lot on the vendor’s culpability. As you say, if it was a reliable source he’s in the same position as the final buyer - why question unless something is clearly amiss? Let’s not forget, even the Habanos “expert” didn’t catch the irregularities until someone else pointed them out. 

We may find out, though I suspect that if this makes it to court a settlement will quickly follow. Discovery could unveil potentially criminal behavior by the vendor (not to mention the costs of litigating would probably far outstrip his potential losses at trial). Now if the buyer insists that he publicly divulge his source, then things could get interesting. 

[BrightonCorgi]

On 12/19/2023 at 7:27 AM, El Presidente said:

Some major European retailers have been caught out in the past. Partagas Piramides EL come to mind. 

Where a retailer has a long history of purchase from a supplier without episode, then there is little reason to question authenticity of products supplied.  

I do hope this gets to court. What I would want to know is "who supplied this box" 

That is when this will get interesting (for me).  

I believe the seller was directly involved with manufacture/supplying box, knowing it was a fake. If he could pass buck and be legitimately someone who was also defrauded like the buyer; he would've done so. One sentence could clear his name and business.

[MrBirdman]

11 minutes ago, BrightonCorgi said:

One sentence could clear his name and business.

It could also end his business depending on who the source is. The grey market relies on source secrecy - that’s why the serial numbers are removed/covered. 

All we really know about the vendor is that he sold (apparently) legitimate cigars to well-heeled and sophisticated buyers for many years, and at some point sold a fake box of Majestuosos. Could he have had a turn of avarice and conspired to produce a fake? It’s possible. But it seems likely there’s more going on here. The vendor could very well be at fault for buying a fake without due diligence, but that’s much different from knowingly conspiring to produce and sell a fake (which, I would note, is a felony in most countries).

In short, I think the vendor’s silence doesn’t automatically implicated him in a conspiracy.

[BrightonCorgi]

5 hours ago, MrBirdman said:

In short, I think the vendor’s silence doesn’t automatically implicated him in a conspiracy.

It's not helping him either. 

His silence brings into question every significant transaction he's ever done now. His due diligence could be simply be "buying from a known/well regarded source for authentic goods". It's not a big thing to substantiate. 

Costco buys plenty from grey markets. That alone (grey market source) is no big deal.

[MrBirdman]

12 minutes ago, BrightonCorgi said:

It's not helping him either. 

No question there, but for now the public doesn’t know his identity. But his suppliers do, or will if he finks on them. 

It’s not a good position to be in, which is why I’m surprised he won’t pay the guy and destroy the box in exchange for a confidentiality agreement.

[Fugu]

19 hours ago, El Presidente said:

I do hope this gets to court. What I would want to know is "who supplied this box"

Absolutely! And ideally, the supplier behind their supplier... 🍿

[Arabian]

54 minutes ago, BrightonCorgi said:

I believe the seller was directly involved with manufacture/supplying box, knowing it was a fake.  If he could pass buck and be legitimately someone who was also defrauded like the buyer; he would've done so.  One sentence could clear his name and business.

If a long standing shop can’t spot a spelling mistake then I guess they are in the wrong business, this might open the door for other buyers who might check their boxes looking for fakes and ask for refunds. My Habanos specialist sold boxes with missing sticks, they blamed customs and started to open and check every box before selling. 

[helix]

33 minutes ago, Fugu said:

Absolutely! And ideally, the supplier behind their supplier.

Big money and danger.

[Corylax18]

26 minutes ago, Arabian said:

If a long standing shop can’t spot a spelling mistake then I guess they are in the wrong business, this might open the door for other buyers who might check their boxes looking for fakes and ask for refunds. My Habanos specialist sold boxes with missing sticks, they blamed customs and started to open and check every box before selling. 

Everybody seems to be forgetting that this vendor didn't just sell this box, they sold a second fake box as well.(the second box was the first one identified as fake) With all the same flaws. For someone who has supposedly been selling Cuban cigars for decades, there is no good way to spin this. 

Either the seller knew they where both fake (which is the way I'm leaning) or they are very, very bad at what they do. The amount of basic product and market ignorance the vendor would be required to prove to get away with the "ignorance defense" would crush his reputation, nearly as much as getting caught knowingly selling the fakes. 

There is no reason to believe that any Habanos distributor wouldn't want even one of these very limited humidors, which would have been required for a legit box to hit the grey market. The fact that two of them popped up on the grey market should have been a huge red flag, in and of itself. Every Vendor (and the shops they sell to) have lists of Buyers that get notified about stuff like this long before it ever hits store shelves. I am certain there was more than 1,966 people on the planet with the ability and desire to purchase every one of the legitimate boxes before they even left Cuba. 

The clearly misaligned heads on the bands is another huge red flag. I dont know why fakers haven't figured out how to solve this problem yet, but be thankful that they haven't. Then we get to the misspellings on the internal literature. This isn't something you would necessarily catch at first glance and wouldn't necessarily be a disqualifier on its own, but added to the other two items any educated vendor or buyer should have been extremely skeptical about these boxes. 

I don't see any good way out of this for the Vendor, especially with the pressure Habanos News is putting on them. All that being said, it also doesn't reflect well on Habanos News for getting duped by the box. What he's doing is great for the cigar community and I do appreciate it. Even if he gets everything he wants from litigation ($30k and destruction of the box) he will almost certainly have to spend more money than that to get there. If he hasn't already. 

[BrightonCorgi]

1 hour ago, Arabian said:

If a long standing shop can’t spot a spelling mistake then I guess they are in the wrong business, this might open the door for other buyers who might check their boxes looking for fakes and ask for refunds. My Habanos specialist sold boxes with missing sticks, they blamed customs and started to open and check every box before selling. 

I would not expect any cigar shop to review pamphlets included in their merchandise to check for authenticity if they believe it's already authentic.