NEW YORK (CNN/Money) - While the savvy bargain hunter can tell the real Coach handbag from a fake, many discerning buyers are missing one critical detail -- that purse or DVD for sale on the street corner might be funding a terrorist organization.

Testifying before the Senate Homeland Security Subcommittee in Washington yesterday, law enforcement officers warned that terrorist groups such as Hezbollah are generating revenue by pushing knockoff handbags, T-shirts and other accessories sold on the street and at flea markets across the country.

Lt. John Stedman of the Los Angeles County Sheriff's Department was among those who testified that items such as counterfeit Coach and Louis Vuitton purses as well as CDs, DVDs and tobacco were among goods that have been seized and linked to terrorist organizations.

In Los Angeles County alone, the Sheriff's Department reports that officers have arrested 125 individuals, and seized $16M in knock-off items and $3.5 million in cash.

The California law enforcement agency said it established a connection between the street vendors and the Lebanon-based Hezbollah mostly through admission by those arrested.

Despite the amount of revenue generated, many individuals have had a difficult time moving the money to overseas terror groups. According to the department, in the homes of one of the suspected individuals, an investigator discovered $800,000 in cash hidden in black trash bags under beds and more than $10,000 in a child's piggy bank.

"As a result of these kinds of cases, the joint task force is working effectively towards preventing these kinds of crime from occurring in the future and intercepting the money before it goes to its intended recipient," said Steve Whitmore, a spokesperson for the Los Angeles County Sheriff's Department, noting that the department is monitoring overseas wire transfers to Lebanon, Jordan and Syria.

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