Legal Question in Business Law in California

Re: Selling counterfit item

The "U.S. Mail" part of the description of this crime is necessary to confer jurisdiction on the federal authorities by making it a federal offense.

In many crimes, so-called "criminal intent" is a necessary element, but criminal intent can be shown by a number of things. Consider fatal automobile accidents as an example. If the fatality occurs without a trace of blame on the driver, such as when a child darts out between two parked cars, there will be no prosecution and no basis for one. On the other hand, let's suppose the driver was doing 35 in a 25 zone, or was legally intoxicated. There is a good chance the driver will be prosecuted for manslaughter. Even though he lacked the specific intent to commit the crime of manslaughter, the intent can be imputed from his other reckless conduct.

The same is true where a tavern serves liquor to a minor; the owner can be penalized even though he was not the one who served the minor in person, and even though the minor presented fake ID.

So, there are general intent and specific intent crimes. Some require that the prosecution plead and prove specific facts. With others, the intent to commit the crime can be shown by the accused's disregard of precautions (the speeding driver), or in others there is strict liability imposed as a condition of having a certain license (the tavern owner assumes strict liability for code violations by applying for, accepting and using a license to operate a tavern).

My draft answer is too long, so I'll cut it in two and post twice.

Re: Selling counterfit item

Here's the rest of my answer.

Here, there are several questions. The first and most obvious is what must the prosecution plead and prove in the way of a "mens rea" (legal Latin for criminal intent) to make the case against you. I haven't read the statute so I'm not sure, but in a law where "fraud" is part of the description, I would guess that there must be at least a conscious disregard of the counterfeit nature of the goods. Your defense would have to show that you thought the goods were real and that your belief was reasonable. The judge or jury might think it was unreasonable (or unlikely) for you to believe the goods were genuine, for one reason or another. Again, I'm guessing, but I think if charged and tried, you'd run some risk of losing.

The second question is whether the postal inspectors or federal prosecutor would be sufficiently interested in prosecuting your small operation to bother bringing charges against you. Twenty items at $70 is hardly worthwhile for them unless they decided to make an example out of you.

The third question is whether you can or should de-fuse this situation by complying with the pawnbroker's request. What's to keep him from turning you in after you buy an original item and send it to him?

The fourth question is whether he would in fact report you if you didn't comply with his demand.

The fifth question is what are you going to do about this illegal business, now that you know what you have are fakes and no longer have any basis for pleading ignorance of that fact. I think you need to shut it down at once and make refunds to every customer.