US embassy cable - 04BRASILIA2835

UNCLAS SECTION 01 OF 02 BRASILIA 002835 
 
SIPDIS 
 
STATE FOR WHA/BSC, EB/TPP/MTA/IPC SWILSON, AND CA/VO 
STATE PASS TO USTR FOR SCRONIN, LYANG AND BPECK 
USDOC FOR 
4322/ITA/MAC/WH/OLAC/WBASTIAN/JANDERSEN/DMCDO UGALL/DRISCOLL 
USDOC FOR 3134/USFCS/OIO/EOLSON/DDEVITO 
TREASURY FOR OASIA/SEGAL 
NCS FOR DEMPSEY 
 
E.O. 12958: N/A 
TAGS: KIPR, KCRM, PGOV, ECON, BR, IPR & Biotech 
SUBJECT: "O ESTADO DE SAO PAULO" ARTICLE ON POLICE ACTION 
AGAINST TRAFFICKER IN PIRATED GOODS 
 
REF: A) SAO PAULO 1611, B) BRASILIA 1384 
 
1.  The article set forth in paragraph 2 (below) describing 
Federal Police action against the notorious pirated goods 
trafficker Law Kin Chong, appeared in the Saturday, 
November 6 "O Estado de Sao Paulo".  Post thought it might 
be of interest to those in Washington who follow the IPR 
developments in Brazil. 
 
2.  (Begin Unofficial Embassy Translation) 
 
Headline: Federal Police Seize R$30 Million in Contraband 
 
More than R$30 million in merchandise suspected of being 
contraband, a factory of pirated watches, and emeralds 
valued at between 1.5 and 6 million Reais were seized 
yesterday by the Federal Police (FP) in Sao Paulo.  It was 
the largest operation against interests allegedly belonging 
to businessman Law Kin Chong since he went to jail in June 
accused of bribing Deputy Luiz Antonio Medeiros (PL-SP), 
who headed the Piracy CPI.  Six people were caught red 
handed, among them two of Law's nieces. 
 
The 200 federal agents who participated in Operation 
"Capela" served 18 warrants of search and seizure at 9 
addresses.  They had an ambitious objective:  end the 
network of contraband and sale of pirated products 
maintained by Law in Sao Paulo.  It was 08h00 when the 
teams arrived at the five warehouses, three offices and ten 
stores located around Rua 25 de Marco and Bras. 
 
At Rua Bucolismo the agents had to wait until 10h00 to 
enter.  The location had more than 30 leased boxes of which 
10 were opened by the investigators.  There was so much 
material found that the feds had to set up an on-site 
registry to catalog everything.  There were ceramics, 
electronics and toys. 
 
"The investigation revealed that these locations were 
controlled by or are the property of Law Kin Chong", 
affirmed Delegado Jose Ivan Guimaraes Lobato, regional 
superintendent of the Federal Police in Sao Paulo.  "We 
don't know if he was operating out of prison in Brasilia, 
but this operation proves that he continues with his 
criminal activity." 
 
The emeralds were found in Law's office on Rua 25 de Marco. 
The FP is investigating the possibility that they served to 
finance the contraband dealings he is accused of, that's 
why they decided to seize them.  "Their origin is being 
determined", he said. 
 
On 25 de Marco, the police found expired cosmetics and 
health products being sold.  Because of this, they decided 
to charge the detainees under the Heinous Crimes law. 
According to Det. Lobato, the prisoners will also be 
charged with contraband, forming a gang, fraud, and tax 
evasion.  Intercepted phone records and correspondence 
showed the link between Law and his family with the people 
who, according to the FP, acted as front men in the control 
of the import and export companies and warehouses. 
 
The federal agents even brought a specialist in safe 
cracking so they could get what was kept in Law's office on 
the 7th floor of Shopping 25 de Marco.  With a hammer and 
crowbar, the agent took about 15 minutes to do his work. 
The result was seizure of check books, commercial contracts 
and documents from Law's companies. 
 
The operation received the name "Capela" after the quartz 
blocks sold by a company investigated by the FP, controlled 
by Law's wife. 
 
The FP's objective was to "desperately" create a story to 
maintain Law Kin Chong in prison.  That's how Law's 
attorney characterized Operation "Capela". 
 
He denied any relationship between Law and the warehouses 
of merchandise, allegedly contraband, examined by the 
police.  He also said his client is not connected to the 
factory of pirated watches discovered by FP. 
 
"FP knows that the Supreme Court will rule shortly on 
habeas-corpus in favor of Law, that's why they're trying to 
make up a story", he affirmed.  According to him, the 
emeralds seized by the feds are legal jewels declared by 
Law.  They are guarantee of payment in a suit brought by 
INSS (National Social Security) against one of Law's 
companies.  "The judge accepted them as guarantee of 
payment of the debt and left them in the care of another 
attorney of Law's, while the case is being heard", he 
stated. 
 
According to him, the lot is not worth R$6 million as 
divulged by FP, but R$1.5 million.  Pacheco also affirmed 
that Law has had no contact with his brother Julio Law for 
over ten years, nor therefore, with his nieces who FP 
arrested at the Rua 25 de Marco office.  "So far, the 
police have failed to show any evidence that Law is, in 
fact, the biggest trafficker of pirated goods in the 
country." 
 
End unofficial Embassy translation. 
 
CHICOLA