Self-storage operator Safeguard Properties LLC has settled a civil lawsuit with authorities in New York City who sued the company over counterfeit merchandise that was seized last summer from one of its facilities. Approximately 44,000 counterfeit trademarked goods and pirated video and audio recordings worth more than $550,000 were being stored and distributed by Safeguard tenants. Merchandise included pirated DVDs of movies like “The Hunger Games” and music from artists such as Lady Gaga and Rihanna.
As part of the settlement, Safeguard Properties agreed to adopt a code of best practices and include more stringent rules in its rental agreements with tenants. The new procedures include a requirement to report all suspected criminal activity to law enforcement and a tenant-lease requirement granting Safeguard access to units without prior notice.
“Counterfeit goods not only rob legitimate businesses of customers, but the illegal activity often has a nexus to organized crime,” said John Feinblatt, the city’s chief policy adviser. “The message to the self-storage industry is clear: You can’t look the other way when criminals turn your storage facility into a warehouse for illegal activity.”
“Safeguard is pleased to have reached this agreement with the city of New York,” said Allan Sweet, CEO of Safeguard Self Storage. “Although Safeguard already had procedures in place which aimed to prevent illegal activity at our facilities, we agree that the new and comprehensive procedures in the ‘Code of Best Practices’ should become the standard for our industry. We are pleased to be a partner with the city in creating this new standard.”
As part of its ongoing efforts to combat counterfeiting, the city has expanded its scope to target self-storage facilities that provide safe harbor for counterfeit trademarked and unlicensed goods before they reach the hands of illegal retailers, officials said. As part of the settlement, Safeguard agreed to:
- Report all illegal/criminal activities observed within its facilities to a governmental law-enforcement agency, keep written record of all such reports, and provide timely information in such reports to the city upon request.
- Expressly prohibit storage of counterfeit merchandise and machines capable of producing counterfeit merchandise, and sales of any kind out of units.
- Require customers to expressly grant Safeguard access to their units for inspection, without prior notice, when Safeguard reasonably believes a nuisance is occurring in that unit.
- Conduct walk-through patrols of all its facilities at least once per day, keeping a record of each patrol and any observations of unusual activities or conditions.
- Photocopy the picture ID cards and store all of an applicant’s information for no less than one year after termination of a rental agreement.
- Install sufficient video cameras to monitor each facility’s activities.
- Review its internal records on a daily basis to see if unusually heavy activity occurred at any particular unit, and if so, further investigate that unit.
Headquartered in Atlanta, Safeguard Self Storage was founded in 1989 and today operates more than 60 facilities in Florida, Illinois, Louisiana, New Jersey, New York and Pennsylvania. The company is owned and operated by Morgan Stanley’s Prime Property Fund.