A Chinese woman has been sued for counterfeiting $6.9 million worth of 8 luxury brands .

This could be the story of an American dream. An immigrant family builds a successful business and buys a four-bedroom house in a quiet neighborhood with good schools for their young son. But not all is as it seems on the steep, curving streets of San Diego's Rancho Penasquitos.

A 45-year-old Chinese woman, Xu Ting, lives in a brown shingle house with a weedy driveway. She has been sued for counterfeiting by eight luxury brands, including Gucci and Louis Vuitton, and owes Chanel Inc. $6.9 million in damages. None of this has stopped her from becoming a legal permanent resident of the US and achieving a comfortable suburban life.

China is not the only country with a counterfeiting problem. Most fakes are made in China, but they are sold in America. Counterfeiting is not a priority on par with drug smuggling or money laundering and is rarely prosecuted as a crime. The lack of legal cooperation with China makes it easy for counterfeiters to move their money beyond the reach of Western law enforcement — and hard to root out counterfeiting kingpins. As long as counterfeiters can stay out of jail and hold on to their profits — and consumers continue to buy — the trade in fakes will likely thrive.

Despite spending millions on brand protection, companies often end up playing whack-a-mole, shutting down producers and distributors of fakes, only to see them pop up again. Xu Ting simply refused to show up in court over the years. Instead, doing graduate studies in statistics at San Diego State University, she helped her family amass at least $890,000 in bank accounts back in China and bought the $585,000 Rancho Penasquitos house with her husband, who has also been involved in selling counterfeit luxury goods, public records and court cases in China and the US show.

"There's a million ways to game the system," said Dan Plane, an intellectual-property lawyer at Simone IP Services in Hong Kong, who is not involved in litigation against Xu Ting. "Probably the only thing that's going to stop her is when she passes away — probably on an island resort somewhere — or if she gets arrested."

FINDING XU TING

In the web of lies that counterfeiters weave — fake names, fake addresses, fake internet-domain registrations — one thing is always true: their bank account information.

The need to get paid is the counterfeiter's fatal flaw, and Xu Ting's bank accounts were the first crack in her armor of misdirection.

Her legal troubles began in 2008, when a federal judge in California ordered Xu Ting — who declined multiple requests for comment for this story — to pay Chanel Inc. $6.9 million in damages for selling counterfeits online. She still hasn't paid the damages, according to Chanel spokeswoman Kathrin Schurrer.

"The essential point for Chanel is really shutting down the counterfeiting operations, which we did successfully," Schurrer wrote in an email.

But after the lawsuit, Xu Ting's business continued to grow.

In 2009, a Florida judge ruled against Xu Ting and shut down seven websites she was accused of helping run that sold fake Louis Vuitton, Marc Jacobs, and Celine. She did not show up in court.

That case didn't stop her either.

The next year, Gucci, Balenciaga, Bottega Veneta, and Yves Saint Laurent — all brands belonging to France's Kering group — filed a lawsuit in New York federal court against Xu Ting, her future husband, her younger brother, her mother, and six others who the companies said sold more than $2 million worth of fake handbags and wallets online to US customers. Gucci alleges that the group shipped merchandise from China to a house in San Diego, where it was repackaged and passed off as genuine.

Four days after the suit was filed, Xu Ting married a Chinese man, Xu Lijun, a civil engineer licensed in California who is six years her junior, according to her marriage license issued in the San Diego suburb of El Cajon.

Gucci subpoenaed banking records. JP Morgan Chase handed over account records with a wealth of information about the couple: addresses, dates of birth, driver's license, Social Security and passport numbers, and a student identification card.

In November 2010, Xu Lijun reached a settlement with Gucci — the only defendant to do so. He denied wrongdoing but agreed to let Gucci keep $400,000 in counterfeiting proceeds seized from accounts outside China. He also agreed to pay a $7,500 fine, according to a copy of the judge's order.

Eric Siegle, a New York City lawyer who represented Xu Lijun, said he was "a small-time nobody," and that Gucci's lawsuit, like many others, failed to tackle the real powers behind the operation.

"The people they are arresting or suing here in the United States are low-level people," Siegle said. "If you can find where the money is going, you can get to the heart of the problem. It's like the drug wars. Why are we arresting all these kids on street corners?"

But Gucci, which is seeking $12 million in damages, couldn't find where the money was going because Chinese banks, including the state-run Bank of China, refused to disclose transaction details about the counterfeiters' accounts in China.

"BOC cannot comply with such orders without violating Chinese law," the Bank of China said in an email.

Kering declined to comment on pending litigation, but spokeswoman Charlotte Judet said in an email that Gucci would "vigorously enforce any judgment eventually entered against individuals who seek to tarnish its worldwide reputation for excellence no matter where they are located."

Meanwhile, in 2013, Xu Lijun bought the house in Rancho Penasquitos, according to property records. Two weeks after the sale, Xu Ting transferred her stake in the property to her husband. Immigration authorities have the Rancho Penasquitos address on record as her residence, said a person with access to immigration records who spoke on condition of anonymity because the information is not public.

A slight man in wire-rimmed glasses who answered the door at the Rancho Penasquitos house identified himself as Xu Lijun. Behind him, in a two-story foyer, there were voices of a woman and young child. Xu Lijun asked an Associated Press reporter why he had come, then said, "I don't want to talk to you."

At a sprawling company compound in Beijing, no one answered the door at Xu Ting's family apartment.

"After your colleague's visit, we communicated, and she still did not want to do the interview," the family's lawyer in Beijing, Chen Peng, said. He declined to comment in detail on the US court cases against Xu Ting and her family, but said they were not the prime culprits.

"My client also thinks making counterfeits is illegal, but they did not make them," Chen said. "She is exercising her rights when choosing not to appear in court, which shouldn't merit any moral or legal judgment."

AP Photo/Ng Han GuanIn this photo taken March 20, 2015, a street vendor hawks counterfeit branded items to tourists on the streets of Beijing.

GREEN CARD? NO PROBLEM

Xu Ting's legal troubles did not prevent her from getting a green card. In February 2014, she became a legal permanent resident by virtue of being married to someone with an advanced degree or "extraordinary ability," according to the person familiar with the matter.

US Citizenship and Immigration Services spokesman Christopher Bentley declined to comment, citing privacy concerns.

Dan Kowalski, an immigration attorney and editor of Bender's Immigration Bulletin, said immigration officials may not have known about Xu Ting's legal problems but, more likely, didn't consider them disqualifying. Grounds for denying a green card range from committing a serious crime to having communicable disease, but there's nothing about civil liabilities. "A vaguer requirement for "good moral character" is more commonly applied for citizenship, not legal residence.

In the US, most counterfeiting prosecutions are civil cases brought by companies seeking to shut down websites selling fakes and get financial compensation. Criminal cases, which lawyers say are a far more effective deterrent, are rare.

"A person is more likely to be struck by lightning than imprisoned for counterfeiting," said Geoffrey Potter, an intellectual-property lawyer at New York's Patterson Belknap Webb & Tyler.

In an email, Justice Department spokesman Peter Carr said, "Large-scale commercial counterfeiting is one of the top enforcement priorities of the department's Intellectual Property Task Force, which continues to have a number of significant prosecutions."

The Department of Homeland Security seized $1.2 billion worth of fakes at US borders last year, but the Justice Department filed just 91 criminal cases for selling counterfeit goods and services in fiscal year 2014. By comparison, the Justice Department filed 22,530 cases for immigration violations, 12,184 cases for drug-related offenses, and 12,509 violent crime cases during the same period.

The National Intellectual Property Rights Coordination Center, a multiagency group led by Immigration and Customs Enforcement, reports slightly more counterfeit-related crime — 683 arrests, 454 indictments, and 461 convictions in the 2014 fiscal year — because its tally includes local prosecutions and counterfeit-related activity, like wire fraud.

Decisions about whether to prosecute criminally typically start with a US attorney's office, whose priorities vary by district, said Bruce Foucart, director of the multiagency group. Some may give weight to the volume of faked goods, others to the suspect's history. If the US attorney's office declines a case, investigators try to persuade local prosecutors.

China is the largest source country for seized counterfeit goods, and apparel and accessories are the largest category of merchandise. Foucart, who didn't know about Xu Ting, said luxury goods are typically made in Guangzhou and sent by container or courier like FedEx to the US. They may be sold in stores or flea markets but are usually hawked online.

"Unfortunately, once you shut one (website) down, they have 10 more ready to open up in a different name," said Foucart.

Brand owners also bear responsibility. Government agencies often rely on them for tips and investigative legwork.

US law gives companies broad powers to enforce court judgments. Unpaid judgments accrue interest and last for 20 years, said Potter, the intellectual-property lawyer. Even a bankruptcy won't erase the debt. "The counterfeiter can't own a business, buy a house, have a bank account or borrow money from a bank," Potter said. "If the counterfeiter takes a regular job, the judgment holder can garnish her wages."

Steve Kovach/Business Insider

But doing the kind of work required to root out debtors like Xu Ting — public records searches to see whether they own real estate, subpoenaing credit-card bills to track spending habits, hiring investigators to determine whether they have jobs — takes relentless commitment, and money.

Schurrer, the Chanel spokeswoman, declined to comment in detail on Xu Ting but said California law prohibits seizure of a primary residence in civil litigation.

"The biggest game changer for me would be if foreign companies took a more aggressive attitude toward enforcing their rights," said Mark Cohen, former intellectual-property attache at the US embassy in Beijing. "We need to close the loops. I think there are a lot of companies that care a great deal about counterfeiting but, at the end of the day, there may be an economic calculation about how much money it's worth to pursue these people."

Spagat reported from San Diego. Associated Press writer Raphael Satter in London contributed to this report, and news researcher Rhonda Shafner contributed from New York. Associated Press news assistants Fu Ting and Liu Zheng contributed from Shanghai and Beijing.