Phony Barbie dolls and stolen tech: Counterfeit seizures on the rise at Minnesota-Canada border

International Falls, Minn. – In a nondescript warehouse on the edge of the forest, federal agents were dissecting shipping containers pulled off trains, in search of things that should not be there.

A conveyor belt helped unload hundreds of tightly packed boxes all stamped "Made in China" as U.S. Customs and Border Protection agents dug for drugs, bombs and, increasingly, counterfeit products. The slightest tell — like the lettering on a power cord — could show that someone is trying to smuggle counterfeits into the U.S.

Counterfeit seizures have been on the rise at the International Falls port of entry, which now boasts the busiest international rail crossing in North America at nearby Ranier. Since 2012, traffic has nearly doubled as more Asian-made goods are shipped to Canada and sent by rail through Minnesota and on to Chicago to be dispersed around the country.

"With increased volume comes increased risk," said International Falls Port Director Anthony Jackson, who started a rail-targeting team to root out counterfeits in 2015. "We get better each year identifying what we're looking for and what we want to take a look at."

Just about anything you can buy in a store in the United States, other than fruits and vegetables, makes its way into the U.S. here. Hidden among the constant stream of shipments, Customs and Border Protection (CBP) officers have discovered imitation computer tablets, TVs and even Sharpies and Barbie dolls in recent years.

Last month officers seized more than 15,000 fireplaces that were in violation of intellectual property rights. In December agents discovered 900,000 counterfeit one-dollar bills, the crisp stacks stuffed in white paper bags inside the same kind of brown cardboard boxes that arrive by the thousands every day.

Nearly $8 million in phony merchandise has been stopped at the crossing just this year — $25 million since 2015 — and Jackson said the expectation is that traffic — and seizures — will only continue to increase.

"Threats are constantly evolving and CBP will adapt to those threats," he said. "We've got better targeting systems, the technology is better, the training is better, and therefore the result is we do better."

On the ground

Fewer than 1% of all 400,000 containers from Asia/Pacific Rim countries that pass into Minnesota every year are physically taken apart and inspected, but all are looked at with X-rays as they slowly move across the 112-year-old international cantilever bridge over Rainy Lake.

From a small office near the bridge, officers match what should be in those big metal boxes with what appears to be in there. Sometimes shipments are flagged ahead of time, and inevitably one or more containers will be taken off a 10,000-foot-long train for a closer look.

Down the tracks, suspect containers are piled up outside the warehouse where agents are poring over imports 24 hours a day. The operation has between seven and 10 officers working at a time and 30 total staff dedicated to rail targeting.

On one side of the tall metal building that is itself reminiscent of a shipping container, the guts of a container are spilled out a few at a time, cut open and examined for contraband.

"We're looking at everything that crosses the Pacific," supervisor Chad Shikowsky said as an agent walked an item back to an office to compare its markings to a database detailing what should be there. "If we get a sense we want to dig deeper we'll take apart the entire thing if necessary."

On the other side of the building, agricultural products are taken out of smaller but heavier containers and checked for pests, like the khapra beetle, that could wreak havoc on grain stores. Khapra larvae were intercepted at the Minnesota border in May this year.

Counterfeiters aren't necessarily targeting northern Minnesota to get their goods across the border, Jackson said; the Canadian National Railway line from British Columbia happens to be one of the fastest ways to get Asian goods to the Midwest market.

When Jackson was hired as the port's director in 2012, there was no railside warehouse with fumigation abilities, and no supersized forklifts to easily take containers off trains. CN spent millions on the inspection facility to aid the flow of its increasing rail traffic.

"CN deeply appreciates the tremendous working relationship we have with CBP," company spokesman Larry Lloyd said in a statement. "CN works closely with CBP to identify opportunities to make continuous investments jointly or separately that enhance the security and efficiency of cross border traffic."

Next steps

It is the importers, not the railway, that will ultimately be held responsible for bringing counterfeit goods across the border.

Following a CBP seizure the Homeland Security Investigations division takes on the case and will present it to the U.S. Attorney's Office for potential charges. If the case is declined, CBP can follow up with administrative charges. If the case is prosecuted, an investigation is launched. Officials with Immigration and Customs Enforcement (ICE) said the agency doesn't publicly discuss investigation methods.

Last year the U.S. Attorney's Office in Minnesota launched a forfeiture lawsuit against the parent company of Dollar Tree stores, Greenbrier International, for allegedly attempting to import nearly 22,000 counterfeit dolls at the Minnesota border. That case was quickly settled with the dolls disposed of and without the company making an "admission of infringement."

CBP agents worked with Mattel to find "several features of the copyrighted CEO Barbie head sculpt infringed by the fashion dolls, including the shape of the mouth, nose and jaw," according to the U.S. Attorney's Office.

It's that level of detail, Jackson said, that can only be identified with expertise developed over time. Those skills will increasingly be in demand as rail traffic continues to grow over the next decade.

"There may come a time when we need to consider expansion," Jackson said.

When a northwestern British Columbia port opened to shipping container traffic in 2007, it was the beginning of a new age of trade.

It's a much shorter trip from China to the Port of Prince Rupert than any other deepwater port in North America, which means shippers can save a great deal of money sending goods there instead of Seattle or Long Beach, Calif.

In July, the port said it would be adding another container terminal, eventually quadrupling its capacity, and likely sending even more furniture, electronics, pet supplies and other goods into the U.S. through Minnesota.

Today an average of three container trains per day cross Rainy Lake; up to 14 daily trains in total arrive from Canada, most others carrying oil, grain or other bulk products.

This year may be the first in a decade that sees international rail traffic into Minnesota decrease after the pandemic shook the world economy this spring, however. CN reported a 12% drop in container revenue in the second quarter, though the company is still spending billions in anticipation of long-term growth.

CN officials recently pledged $25 million in rail spending in Minnesota and $100 million in Wisconsin to "support growing demand and enable supply chains."

"The most critical element will always be North American consumer demand," said Lloyd, the company spokesman.

If that demand continues to increase, the historic cantilever bridge that carries so much commerce between Canada and Minnesota will make way for a new structure to carry trade — legal and counterfeit.

brooks.johnson@startribune.com 218-491-6496