I think that used to be generally true, and there are certainly still some out there that have been turned into looky-leicas because they'd be unsellable as actual functioning cameras.
There are, however, people taking good Zorkis and FEDs and leicaficating [sic?] them to produce reliable copies. Spotting the difference can be tricky... I've nothing but good experiences with DVDTechnik, though, and they usually have a few for sale.
Cheers
Jamie
Edit - fair enough, it wouldn't fool anybody who really knew Leicas. It convinced the guy who ran Morris in Oxford, which (to be fair) didn't have much of a high-end rangefinder stock. Surprisingly, it also convinced the guy who runs the camera stall in the antiques centre in Warwick, and he did have a shelf of IIs and IIIs.
I've found it invaluable for weddings; you always get a know-it-all who is bemused/dismayed/even angry to find the photog using a russian camera, but smiles knowingly when he spots my 'Leica'. Of course, now I have an M3...