Sunday, November 19, 2017
Underground Economy Endangers Public, Cheats Consumers, Robs California
By Francis Taylor (Contributing Writer)
Published June 18, 2012

Jerome Horton
Jerome E. Horton, Chair of the California Board of Equalization (center), greets two investigators responsible for identifying counterfeit products that are illegally brought into this country that deprive California of over $8 billion in annual tax related revenue.

Underground Economy Endangers Public, Cheats Consumers, Robs California

By Francis Taylor
Sentinel Contributing Writer

Every year California loses billions of dollars to smugglers, counterfeiters and illegal operators who make up the underground economy. From the sale of bootleg CD’s, fake Gucci handbags, and a plethora of other knock-offs, criminals are depriving California, a state drowning in red ink, of an estimated $8 billion annually in corporate, sales, use and personal income taxes that could be spent on schools, public safety, hospitals and other essential services.

Jerome E. Horton, Chair of the California Board of Equalization (BOE), along with fellow board member Michelle Steel, Vice Chair; Ronald Boyd, Chief, Los Angeles Port Police; and Todd Rogers, Los Angeles County Sheriff’s Department, recently hosted a press briefing at the Port of Los Angeles Fire Department, where they explained how the BOE is fighting back by working closely with law enforcement and other agencies to investigate and prosecute criminals and to sound the alarm about the damage the underground economy is doing to California.

“Not since the days of Al Capone have so many criminals brazenly violated the law. These modern day mobsters engage in human trafficking, selling illegal drugs and smuggling cigarettes and other products. They endanger lives, deceive consumers and cheat us out of the money we need for public safety, schools, parks and other services,” said Horton.

The underground economy includes a variety of illegal activities such as selling counterfeit drugs (including Viagra), and other knock-off designer items, offering and paying for services under the table, manufacturing and distributing products without paying taxes or following health, safety, and employment laws.

Last year the BOE seized smuggled cigarette and tobacco products that deprived the state of $276,000 in taxes. Earlier this year, two North Hollywood storeowners pleaded guilty to smuggling cigarettes, which cheated the state out of $2.5 million. In 2011, more than $10 million in counterfeit electronics, stolen merchandise, and bank receipts were recovered by the Los Angeles Port Police in a cargo theft investigation.

Steel and the law enforcement spokespersons offered several steps individuals may take to help solve the state’s underground economy problem including; do not buy counterfeit products, do not pay for work under the table,’ pay your taxes, recognize signs of human trafficking, and ask questions. “One easy to recognize counterfeit products is to look at the price of the merchandise.” Chief Boyd noted. “If the price of a Rolex watch or a Gucci handbag, for example, is several hundred dollars less than the usual retail price, you are probably being offered a fake.”

Consumers were informed that they may anonymously report tax evasion, fraud, and counterfeit products by telephone at 888/334-3300 or via the Internet at

Categories: Economy

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