Parked outside a strip mall in Tempe, Ariz., Jerry Howe removes his sunglasses and skims through a file. This shop has been selling counterfeit handbags for months. In his hand is a cease-and-desist letter, neatly folded into a little white envelope, stamped with a brown Coach logo.

He's ready to go in.

The investigator is on a mission to fight counterfeit, a worldwide crisis marked as "the crime of the 21st century" by the U.S. Patent and Trademark Office.

"It's a multibillion-dollar business," said Howe, 62. "Terrorists make more money selling counterfeit than selling dope."

Counterfeit merchandise, from handbags to extension cords to prescription drugs, drains the nation's economy of up to $250 billion and 750,000 jobs a year, according to the U.S. Chamber of Commerce. U.S. Customs and Border Protection reported that the number of seizures in 2006 climbed more than 72 percent from the same period last year.

And Interpol warns of an ever-strengthening link between the sale of counterfeit goods and financing for terrorist groups such as al-Qaida.

The effects have hit home, said Travis Johnson, associate council for the International AntiCounterfeiting Coalition. Counterfeiters don't pay taxes or licensing fees, affecting local funding.

"That money could have improved access to healthcare or improved public schools," he said.

Selling rampantly today are fake handbags. They can be made cheaply with sweatshop labor and can reap high profits, especially when real bags can cost more than a month's rent in some cities.

With no law against personal possession of counterfeit goods, label-craving ladies are delighted to find designer styles at a fraction of the price they would pay at department stores and boutiques.

"You can't complain about the budget deficit or the war in Iraq when your money is going into the pockets of the bad guys," said Barbara Kolsun, senior vice president and general counsel of 7 For All Mankind and previously of Kate Spade. "People say, 'I really want a bag that has a logo.' Well, we can't always afford what we really want."

Hired by companies such as Coach, Dooney & Bourke, Nike, General Motors and Louis Vuitton, Howe, a former FBI agent, is one of about 20 private investigators in the nation dedicated to stopping counterfeit.

For retailers, it's not so much that counterfeit goods cut into their sales (some say that those who buy $30 fake Louis Vuitton bags would never shell out $900 for the real thing, anyway), but that they devalue their image.

"If it falls apart, who gets blamed? Not the counterfeiter, but the designer," Kolsun said.

For example, Dooney & Bourke receives an average of 60 counterfeit purses each week from people requesting warranty repairs, according to Michigan-based Loss Prevention Concepts Ltd., an investigation service.

As a private investigator, Howe cannot issue search warrants or make arrests ("I do everything but put them in handcuffs," he said), but he can ask storeowners to surrender their counterfeit goods and warn them of the consequences of repeated offenses. The goods often are sent back to the manufacturer or destroyed.

The federal government has tightened its belt on counterfeiting since Sept. 11, and this year, President Bush signed HR 32, the "Stop the Counterfeiting in Manufactured Goods Act," the most aggressive anti-counterfeiting legislation in more than 20 years.

Ninety percent of Howe's job is spent on "counterfeit patrol," hours of driving and pacing through neighborhoods in search of fake goods.

When he started working in Arizona, Howe would most often visit swap meets and flea markets, known as centers for poor-quality counterfeit goods. Now, he said, fake purses are displayed in shopping center kiosks. He has discovered counterfeit goods at ethnic supermarkets and on display at upscale salons.

"You never know," Howe said. "If I can find counterfeit in big Westcor malls, I can find it anywhere. All you have to do is look."