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Counterfeit Cigars Anger Manufacturers

MIAMI - Cigar aficionados beware: those handmade Montecristos, Cohibas and Romeo y Julietas may not be the premium smokes they seem.

"The person that's hurt the most is the consumer," said Theo Folz, president and chief executive officer of Fort Lauderdale-based Altadis USA, the world's largest maker and distributor of cigars. "We have developed products and built up on image and built up an expectation among the consumers. Guys put their money down. They want the real thing."

"We're getting into the bigger targets and the ones who try to conceal it better," said a U.S. Immigration and Customs Enforcement undercover agent who agreed to be identified only as Ramon to protect his identity. "I think there's a lot more. We have only gotten the lower-level guys."

"We've all gotten an appreciation that the counterfeiting problem is much greater than we thought it was," said Norman Sharp, president of the Washington-based Cigar Association of America.

Altadis USA, a subsidiary of Spanish tobacco giant Altadis SA, holds the trademark rights to many of the best-known Cuban cigar brands including Montecristo, Romeo y Julieta and H. Upmann. New York-based General Cigar Co. holds the rights to Cohiba, Partagas, Macanudo and other premium brands.

That means anyone who uses those brands to market a cigar as made in "Habana" or as a "Cuban replica" is either violating the U.S. embargo against Cuba or the trademark rights of Altadis, General Cigar and other companies. Altadis USA, which has 7,800 employees and had 2005 revenue of about $700 million, has been leading the charge against counterfeiters using its own private investigators to assist police.

Some counterfeiters simply make their own replica packaging at elaborate operations revolving around Miami, where many Cuban-Americans have experience with cigars. Experts say it's sometimes difficult to tell the difference in labels, but it's usually obvious which ones are fake to an experienced smoker.

Real cigars are usually all the same color, she added. They are lined up neatly in the box with all the rings at the same level on each cigar and facing out. Fakes are often of different colors, have loose-fitting rings and can sometimes appear splotchy or moldy.

"Word quickly got out that the potential for an arrest was an acceptable cost of doing business," said Chuck Grimes, an Altadis attorney in Norwalk, Conn. "They might lose some inventory and have a little inconvenience, but they would be back in business pretty quickly."

Five Miami men are currently facing federal counterfeiting charges stemming from the big warehouse bust in December. To the north in Broward County, sheriff's deputies have raided several smoke shops that were allegedly dealing the fakes out of back rooms.

Some industry officials say the counterfeit trend could have its roots in the cigar boom of the 1990s, which encouraged more entrepreneurs to get into the cigar business. When demand began to wane, some turned to fakes in an effort to recoup their investment.

"All of a sudden the cigar smoking fad ended, and a lot of these folks could no longer sell their cigars," Grimes said. "This is part of the Cuban heritage, and these people are giving that heritage a bad name."

Source: Leading The Charge