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Stores Watch For Retail Theft Rings; Large, Sophisticated Operations Are National Problem

by Patt Johnson - August 10, 2006
DesMoines Register

A growing form of retail theft - major organized operations that steal merchandise in large quantities and resell it - could be moving into Iowa.

Two incidents within the last year and a half point to the national trend seeping into the state:

In May, thieves distracted a Zales jewelry store clerk at Jordan Creek Town Center and stole $20,000 in merchandise. West Des Moines police later determined the bandits were part of a larger, out-of-state theft ring.

Bettendorf police arrested three people in April 2005 who had stolen several boxes of medication from a local Walgreens store. Police also found $10,000 worth of over-the-counter medicines in their van thought to be stolen from stores in several states.

Lt. Jeff Miller of the West Des Moines police said his department has been alerted to the theft rings, in particular one involving infant formula. Generally, though, West Des Moines has not been affected, he said.

Jordan Creek Town Center, which opened two years ago, has uniformed guards who wander through the mall and uses surveillance cameras to protect merchants against theft, said Randy Tennison, general manager.

"Theft rings are not a major issue for us right now," he said. "We don't tolerate it."

Des Moines police report no incidents of national theft rings hitting shops locally.

Nationally, the problem has become so large that stores are worrying less about teens stealing CDs than about sophisticated criminals. Merchants are coming together to fight organized retail theft, developing crime databases and establishing crime squads.

The National Retail Federation, the industry's largest trade group, estimates that shoppers pay almost 2 cents on every dollar they spend to cover the cost of retail theft.

Wal-Mart Stores Inc., the world's largest retailer, announced in July it will no longer prosecute one-time thieves unless they are between ages 18 to 65 and steal at least $25 worth of merchandise.

Wal-Mart, which had a zero-tolerance policy, joins a number of retailers who are putting more of their energy into bigger shoplifting crimes. They emphasize they are still going to catch and stop petty shoplifters, however.

Unlike average shoplifters, who steal for themselves, those involved in organized crime steal goods and resell them to flea markets, pawn shops or on the Internet. They typically focus on specific brands and products that carry a high resale value, are in constant demand and have a high profit margin. Among some of the coveted items are Enfamil baby formula, diabetic strips, over-the-counter brand name drugs like Tylenol and Advil, Gillette razors and jeans, including brands like Polo Ralph Lauren.

Retailers like Gap Inc., Sears Holdings Corp. and Wal-Mart - all of which are participating in these databases - also have their own organized crime squads. They're also using more sophisticated cameras in their stores to detect suspicious activity. Retailers would not give details on their efforts for security reasons.

One of the largest rings was led by Samih Fadl Jamal of Mesa, Ariz. He employed more than 20 people to steal infant formula at stores around the country from 1997 to 2003. The goods were then sold to other wholesalers and stores in other states through his company, Jamal Trading Co., in Tempe, Ariz. According to reports, Jamal's company gained $11 million in profits from the sale of $22 million of stolen baby formula.

Jamal was convicted last year of 20 charges and sentenced to 10 years in prison, according to the FBI.


Shoplifting Wars Targeting The Pros

By Reuters - August 4, 2006

CHICAGO -- Jerry Biggs tracks gangs of professional shoplifters who can steal $20,000 worth of goods in a day, but one of his biggest breaks came from the theft of a single tube of toothpaste.

Biggs, who fights organized crime for Walgreen Co., said a trio of thieves had stolen at least $68,000 worth of goods from the chain's stores in 2005.

The break came when an assistant manager spotted a man stealing toothpaste. Police stopped the man's car and found $10,000 worth of over-the-counter drugs.

"That toothpaste was being stolen for his own personal use," Biggs said, chuckling at the irony of a criminal gang busted over toothpaste.

Retailers like Walgreen and Wal-Mart Stores are less focused these days on individuals like Winona Ryder, the actress arrested for shoplifting in 2001, and more on organized rings, which cost the US retail industry more than $30 billion annually -- a sum equal to total sales at Best Buy Co. last year.

Eighty-one percent of US retailers have been victims of organized retail crime, and 93 percent said the problem was getting worse, according to a survey by the National Retail Federation.

A typical gang is made up of a half-dozen people called ``boosters," who travel along major highways, hitting 20 to 30 stores each day.

They aim for high-value items ranging from nonprescription drugs to designer clothing, and then either return them to the store for refunds or pass the goods along to a ``fence," who sells the merchandise at flea markets, on the Internet, or to illegal wholesalers.

A big attraction for criminals is that the penalties for shoplifting are much milder than for other lucrative crimes, such as drug dealing.

"It's not that risky," Walgreen's Biggs said. "I could be caught with . . . cocaine worth about $20 and go to jail for it. I could have a back seat full of diabetic test strips and, in some states, I get a ticket."


Retailers, FBI Team Up To Fight Organized Theft
August 2, 2006
Reuters

CHICAGO (Reuters) - The Federal Bureau of Investigation wants to crack down on organized shoplifting gangs, which steal more than $30 billion a year from stores yet often manage to avoid prison.

A federal law signed in January mandates that the FBI collaborate with retailers and set up a national database to track these gangs, some of which can rip off 20 to 30 stores in a single day.

Retailers and law enforcement are hopeful that the database will give them the upper hand in fighting criminal gangs, but so far there has been little progress as the notoriously secretive retailers struggle over how to share information among themselves.

Eric Ives, head of the FBI's Major Theft Unit, said shoplifting falls under state jurisdiction unless at least $5,000 worth of stolen goods crosses state lines.

"This database is the secret to the whole thing," Ives said.

"Maybe Target alone, or Sears alone, or Macy's alone couldn't develop a case big enough to reach that federal threshold. When they combine intelligence, they might determine that the same criminal enterprise is hitting all the different companies, and now it would be easier to make a federal case."

Unlike petty shoplifters, who may steal for their own personal use, organized rings steal vast quantities to resell at flea markets, on Web sites or through other stores. They typically operate in gangs of perhaps a half-dozen people who travel up and down major highways, stealing as much as $20,000 a day.

Retailers and police have trouble catching the thieves because they move fast, often crossing several jurisdictions and hitting many different chains.

That is where the database comes in. Stores would enter crime details whenever they suspected professional shoplifters had struck. The FBI could use that information to track the gangs, and other retailers would know to be on the lookout.

In the future, the database may help retailer predict where gangs are going to strike next.

BETA VS. VHS
The National Retail Federation, a trade group representing retailers, has a database that receives crime information from more than two dozen retailers, including Sears Holdings Corp. . The goal is to have as many as 500 retailers contributing, said Joe LaRocca, vice president of loss prevention for the federation.

But there is a catch. Another trade group -- the Retail Industry Leaders Association -- has a rival database, and it is not clear which will become the national standard.

The NRF has more members, but RILA boasts some of the biggest players, including Wal-Mart, the world's biggest retailer.

"My fear is what I call the Beta-VHS problem," said Richard Hollinger, a criminologist and professor at the University of Florida. "It doesn't matter which (database) you pick. They're both very powerful. I just hope there isn't a fratricide effect," Hollinger said.

Ives said the FBI has been working with the NRF on its database for about two years, but RILA's would also be viable. Under the law, only one database will be supported.

Retailers don't like sharing information with competitors, but they are starting to realize that the best way to combat organized crime is to get more organized themselves. Even arch-rivals such as drugstore chains CVS Corp. and Walgreen Co. are cooperating.

"CVS and Walgreen -- there's no two bigger competitors," said Jerry Biggs, who coordinates the organized retail crime division for Walgreen. "When it comes to organized retail crime, we work together probably weekly."

Biggs said Walgreen will probably participate in whichever database wins, and he hopes other chains will do the same.

"Retailers can make a difference but ... it's going to have to be every retailer working together," he said.


Sophisticated Retail Theft Rings On The Rise

By The Associated Press - August 1, 2006

NEW YORK -- Stores are worrying less about teens stealing CDs than about sophisticated criminals like Samih Fadl Jamal of Mesa, Ariz., the ring leader of a major organized theft operation that stole and resold millions of dollars in baby formula throughout the country.

Such highly sophisticated groups have been targeting retailers for several years, but merchants are just starting to come together to fight organized retail theft, developing crime databases and establishing crime squads.

Organized theft costs the industry an estimated $30 billion annually and is rising. Customers pay a hefty price, too.

The National Retail Federation, the industry's largest trade group, estimates that shoppers pay almost 2 cents on every dollar they spend to cover the cost of retail theft.

The increased focus on this issue was underscored last month when news broke that Wal-Mart Stores Inc., the world's largest retailer, will no longer prosecute one-time thieves unless they are between ages 18 to 65 and steal at least $25 worth of merchandise.

Wal-Mart, which had a zero-tolerance policy, joins a number of retailers who are putting more of their energy into stopping bigger shoplifting crimes.

Unlike average shoplifters, who steal for themselves, those who are involved in organized crime steal the goods and resell them to flea markets or pawn shops or on the Internet.

The rings typically focus on specific brands and products that carry a high resale value, are in constant demand and have a high profit margin. Among some of the coveted items are Enfamil baby formula, diabetic test strips, over-the-counter brand-name drugs such as Tylenol and Advil, Gillette razors and jeans, including brands like Polo Ralph Lauren.

Both the NRF and the Retail Industry Leaders Association launched password-protected national crime data bases online, which let retailers share information about thefts to detect whether they've been a target of organized crime.

In the past, merchants had never shared information, so rings could hit various stores in one area without being detected.

Meanwhile, retailers including Gap Inc., Sears Holdings Corp. and Wal-Mart -- all of which are participating in these databases -- also have their own organized-crime squads. They're also using more sophisticated cameras in their stores to detect suspicious activity. Retailers would not give details on their efforts for security reasons.

This year, Congress authorized funding for an organized retail crime task force run by the FBI.

According to Eric Ives, the FBI's unit chief for the major theft division, the agency will develop its own crime database that may combine those of both retail associations.

Still, criminals are responding with shrewder tactics. They carry out stolen merchandise in bags lined with foil or duct tape to avoid tripping security-tag alarms at the door or use sophisticated technology to print out counterfeit receipts and labels.

These organized groups have also become shrewd about whom they dispatch to do the stealing. According to Joseph LaRocca, vice president of loss prevention at the NRF, many of these rings use pregnant illegal immigrants, who if caught, are usually deported before their child is born in the United States.

Ives and LaRocca both noted that there isn't a specific profile of shoplifters, who could be from all ethnic backgrounds and regions.

Investigators say they move from region to region, and could target one specific item, or even one retailer throughout the country.

Ives noted that over the past two years, violent gangs, particularly one called MS-13 that has its roots in South and Central America, have become a growing force behind organized retail theft.

Thieves could also be criminals like Jamal, who employed more than 20 others to steal infant formula at stores around the country from 1997 to 2003. The goods were then sold to wholesalers and stores in other states through his company, Jamal Trading Co. in Tempe, Ariz. According to reports, Jamal's company gained $11 million in profit from the sale of $22 million of stolen baby formula.

Jamal was convicted last year of 20 charges and sentenced to 10 years in prison, according to the FBI.

For a long time, it was hard to detect such organized rings because stores had been secretive about giving out information about their incidents. Even now, stores remain anonymous in the database, which allows stores to see such details as how the crime was committed and what the criminals looked like.

Moreover, Ives pointed out that shoplifting doesn't become a federal crime until at least $5,000 in stolen merchandise crosses state lines. And Ives noted that U.S. attorney generals' offices don't prosecute unless the figure is $50,000 or higher.

Many stores declined to talk about specific measures they are adopting, but said that only by joining will they make a dent in the problem.

Still, they are realistic.

"This is an ongoing issue. It is not an issue that you are going to solve," said Bill Titus, vice president of loss prevention at Sears. "Our job is to get ahead of it and prevent it," he said.


Merchants Fight Against Organized Theft

By Anne D'Innocenzio, AP Business Writer - July 31, 2006
The Associated Press

NEW YORK — Stores are worrying less about teens stealing CDs than about sophisticated criminals like Samih Fadl Jamal of Mesa, Ariz., the ring leader of a major organized theft operation that stole and resold millions of dollars of baby formula throughout the country.

Such highly sophisticated groups have been targeting retailers for several years, but merchants are just starting to come together to fight organized retail theft, developing crime databases and establishing crime squads.

Organized theft costs the industry an estimated $30 billion annually and rising. Customers also pay a hefty price too. The National Retail Federation, the industry's largest trade group, estimates that shoppers pay almost 2 cents on every dollar they spend to cover the cost of retail theft.

The increased focus on this issue was underscored earlier in July, when news broke that Wal-Mart Stores Inc., the world's largest retailer, will no longer prosecute one-time thieves unless they are between ages 18 to 65 and steal at least $25 worth of merchandise.

Wal-Mart, which had a zero-tolerance policy, joins a number of retailers who are putting more of their energy into bigger shoplifting crimes.

But that doesn't mean that the nation's retailers are giving a free pass to petty shoplifters. They emphasize they are still going to catch and stop such thieves.

"This is not an invitation to petty theft," said Sharon Weber, a Wal-Mart spokeswoman. "We are hard targets for crime and we intend to stay that way." In fact, Weber warned that the new policy is only a guideline for stores, and such thieves will still be detained and will be prosecuted if they refuse to show identification or are violent.

Unlike average shoplifters, who steal for themselves, those who are involved in organized crime steal the goods and resell them to flea markets, pawn shops or on the Internet. They typically focus on specific brands and products that carry a high resale value, are in constant demand and have a high profit margin. Among some of the coveted items are Enfamil baby formula, diabetic strips, over-the-counter brand name drugs like Tylenol and Advil, Gillette razors and jeans, including brands like Polo Ralph Lauren.

Both the NRF and the Retail Industry Leaders Association launched password-protected national crime data bases online, which let retailers share information about thefts to detect whether they've been a target of organized crime. In the past, merchants had never shared information, so rings could hit various stores in one area without being detected.

Meanwhile, retailers like Gap Inc., Sears Holdings Corp. and Wal-Mart _ all of which are participating in these data bases _ also have their own organized crime squads. They're also using more sophisticated cameras in their stores to detect suspicious activity. Retailers would not give details on their efforts for security reasons.

Earlier this year, Congress authorized funding for an organized retail crime task force run by the Federal Bureau of Investigation. According to Eric Ives, FBI's unit chief for the major theft division, the agency will develop its own crime data base that may combine those of both retail associations.

Still, criminals are responding with shrewder tactics. They carry out stolen merchandise in bags lined with foil or duct tape to avoid tripping security-tag alarms at the door or use sophisticated technology to print out counterfeit receipts and labels.

These organized groups have also become shrewd about who they dispatch to do the stealing. According to Joseph LaRocca, vice president of loss prevention at the NRF, many of these rings use pregnant illegal immigrants, who if caught, are usually deported before their child is born in the States.

According to LaRocca, a growing problem over the past year is a dramatic increase in the reselling of stolen products on the Internet, an area that is harder to track than flea markets or pawn shops.

"You don't realize that a longtime drug user that you would never do business with is behind Uncle Bob's online store," LaRocca said.

Ives and LaRocca both noted that there isn't a specific profile of shoplifters, who could be from all ethnic backgrounds and regions. Investigators say they move from region to region, and could target one specific item, or even one retailer throughout the country.

Ives noted that over the last two years, violent gangs, particularly one called MS-13 which has its roots in South and Central America, have become a growing force behind organized retail theft.

Thieves could also be criminals like Jamal, who employed more than 20 others to steal infant formula at stores around the country from 1997 to 2003. The goods were then sold to other wholesalers and stores in other states through his company, Jamal Trading Co. in Tempe, Ariz. According to reports, Jamal's company gained $11 million in profits from the sale of $22 million of stolen baby formula.

Jamal was convicted last year of 20 charges and sentenced to 10 years of prison, according to the FBI.

For a long time, it was hard to detect such organized rings because stores had been secretive about giving out information about their incidents. Even now, stores remain anonymous in the database, which allows stores to see such details as how the crime was committed to what the criminals looked like. The identity of the merchant can be limited to location of the crime and the type of retailer. Stores can identify themselves when they send an e-mail to another retailer.

State laws have been weak on shoplifting; many states have continued to raise the felony theft levels amid the overflowing of jails. That has encouraged professional shoplifters to steal more often without reaching the felony level, according to an NRF report.

Moreover, Ives pointed out that shoplifting doesn't become a federal crime until at least $5,000 in stolen merchandise crosses state lines. And Ives noted that U.S. attorney general's offices don't prosecute unless the figure is $50,000 or higher.

Many stores declined to talk about what specific measures they are adopting, but said that only by joining will they make a dent in the problem.

Still, they are realistic.

"This is an ongoing issue. It is not an issue that you are going to solve," said Bill Titus, vice president of loss prevention at Sears. Stores, he said, have all this inventory, and criminals are trying to get at that.

"Our job is to get ahead of it and prevent it," he said.


$30 Billion A Year In Goods Taken By Retail Theft Gangs, Group Says

by Lynda Edwards - July 9, 2006
Arkansas Democrat-Gazette

Retailers normally blame individual shoplifters or inside jobs by employees for most thefts. But the National Retail Federation believes that merchants are dangerously wrong.

The federation says in conclusions from a recent study that organized gangs are responsible for $30 billion in retail loss annually and are the biggest threats to Wal-Mart, Target and other stores. One of the most notorious gangs is the violent Central Americanspawned MS-13.

In its “Organized Retail Theft” report, the federation details how gangs travel interstates, stealing thousands of dollars in goods from stores along their routes.

Federation Vice President Joe LaRocca heads the group’s loss prevention services. He said the thieves go to stores armed with detailed shopping lists of items their fencing operations want them to steal. The gangs often hijack truck cargo.

“MS-13 is regarded as a particular menace given their history of murder and kidnapping,” LaRocca said. “They now have a logistical system set up in the United States that makes shoplifting as lucrative for them as the drug trade.”

The study said MS-13 has bases in Houston, Los Angeles and Reno, Nev. Graffiti of the type used by the gang has been found on walls in Arkansas.

With input from Bentonville-based Wal-Mart Stores Inc. and other retailers, the federation has set up the Retail Loss Prevention Intelligence database. When a shoplifting gang strikes a store, the retailer can log information about the crime - location of the interstate nearest the store, what was stolen, total value, streaming security camera video - into the database. It’s a Doppler forecast for crime. Retailers can trace the path of an oncoming gang and warn authorities. At the federation’s June 6 loss-prevention seminar, 81 percent of retailers attending said they had been victimized by organized theft rings. This month, the database will be available to law enforcement officials.

“Organized theft gangs are a huge problem for retailers in Texas and have been for some years,” Texas Department of Public Safety Sgt. Johnnie Jezierski said. “I’d say the first time law enforcement became aware of how organized and far flung the gangs are was the night of the Sept. 11 [2001] attacks.”

Jezierski said a state trooper that day got a tip that a driver on an interstate was behaving suspiciously and might be carrying a bomb. Instead, the truck was loaded with stolen baby formula. Subsequent investigation uncovered gangs of Hondurans and Salvadorans who stole merchandise for Middle Eastern distributors.

“They’ve hit CVS, Krogers, Wal-Mart, Targets, really all the retail chains in Texas,” Jezierski said. “Violent gangs found a crime that often isn’t taken seriously as a major crime - shoplifting - and found a way to organize it into a multimillion-dollar illegal industry.”

While MS-13 ’s brutal history made it a focal point of the federation’s report, other shoplifting gangs can be just as dangerous. Jezierski pointed to Mohammed Ghali as an example.

In February 2005, Ghali was convicted in Dallas on 15 federal charges for leading a theft gang that stole and resold millions of dollars’ worth of Viagra, cigarettes, nicotine gum, perfume, lipstick, razors, baby formula and glucose test strips.

Prosecutors told the jury that Ghali ran a warehouse where anti-theft devices and price tags were replaced with counterfeit tags bearing higher prices. Then merchandise was distributed by Sunshine Wholesale, a trucking firm Ghali owned.

In Oregon, Safeway investigators teamed up with FBI agents for a four-year investigation starting in 2000 and ending in 2004 with federal indictments of a gang of 49 shoplifters, 26 fencing operators and seven bogus wholesalers. The FBI documented 523 shoplifting forays by the gang from dozens of retailers in 23 states.

Jezierski said law enforcement officials in various states in which retail gangs operate began comparing notes in the past two years. The information in the retail federation’s report is mostly anecdotal since law enforcement officials had no central database tallying the number of gang members convicted of running retail theft gangs.

In Arkansas, Benton County sheriff’s office investigator Tou Chao Vang said, “MS-13 is definitely showing its influence in graffiti in Rogers, although it’s difficult to discern whether that translates into a presence here.”

In 1997, MS-13 kidnapped and murdered the Honduran president’s son. In 2004, the gang machine-gunned a bus packed with Honduran Christmas shoppers in a poor barrio, killing 24, The Austin American Statesman in Texas has reported.

“We’ve worked with all Arkansas state and local law enforcement to ensure they know what MS-13 is and how they operate,” said FBI spokesman Steve Frazier in the agency’s Little Rock bureau. “I don’t want to serve as MS-13 ’s early warning system by stating our exact assessment. We’ve seen indications of their presence in Northwest Arkansas. We’re seeing all agencies are prepared.”

Wal-Mart spokesman Sharon Weber said Wal-Mart has used a basic version of the retail federation’s database to share information with many retailers.

“Companies that compete bitterly in the marketplace will sit at the same table to try and prevent each other from being victimized by thieves,” Weber said.

Minneapolis-based Target Corp. has given Minnesota police departments access to Target’s two cutting-edge forensics labs, Target spokesman Lena Michaud said. One is in Minneapolis, the other in Las Vegas.

“We’ve helped over 125 police departments since the Minneapolis lab opened in 2003,” Michaud said. “Mostly, our labs enhance security camera tapes. We have equipment that outstrips most police departments. That’s not the fault of the police, just budgets are tight.”

Target created a version of the retail database for its store managers and police officers to use years ago. “It’s called Crimnet, and it makes it possible for an officer in one Minnesota county to see what record of shoplifting and burglary a suspect has in other Minnesota counties immediately,” Michaud said.

A U.S. Treasury Department task force called Green Quest recently documented how gangs sold their stolen baby formula through small stores the gangs operated. The stores defrauded the federal Women Infant and Children program, a grant program that helps lowincome mothers with children under age 5. Mothers unable to nurse their children get vouchers for baby formula.

Green Quest’s report said the gang stores had defrauded the program of millions before law enforcement officials busted a major baby formula shoplifting ring in Texas.

“It would be much more difficult for gangs now,” said John Harrison, operations manager of Florida’s Women Infant and Children program. “Participants in the program must now buy baby formula only from stores we’ve authorized, usually major retail chains. Our inspectors regularly go to small stores we’ve authorized to sell formula to check invoices.”

The store owner must show the inspector an invoice proving that he bought formula from a reputable wholesaler and he has priced the formula at a fair-market rate.


Retailers, Police Take On a New Breed of Shoplifters

by Maggie Shepard - June 30, 2006
Albuquerque Tribune

A new generation of shoplifters, using smart and cooperative tactics, is sucking the life out of local, big box retailers.

The retailers, including Target, Wal-Mart and Walgreens, are fighting back by banding together with police to share intelligence on the month's hot items, the new shoplifting methods, and the teams of offenders who are popping up on each retailer's radar.

"Nowadays, it is a lot more of an occupation for these guys," says Lt. Matthew McWethy, in charge of Albuquerque Police Department's property crime unit.

"They are not stealing booze or one CD or one tool. They are going in and hitting five, six, seven stores in a day. It is more like commercial theft."

It's actually called Organized Retail Crime and results in an estimated $30 billion worth of merchandise around the nation annually, according to the National Retail Federation.

In addition to the local cooperation between retailers and police, the popularity, or profitability, of the new profession has prompted the FBI this year to create a specialized Organized Retail Theft Task Force. A national database has emerged for store security managers to share information.

"It's the biggest thing we're working on now," said Ken Cox, Target's district manager of security for New Mexico.

He and other retailers started meeting together with police in April.

They are working on a plan to share photos of their most prolific shoplifters. Already, they share which items are being targeted.

McWethy says the shoplifting teams seem to operate with a shopping list.

"They have specific targets. They want Chanel No. 5, the 10-ounce bottle. So they go in and swipe every bottle off the shelf," McWethy said.

With that in mind, Cox has his teams zero in on the hot items.

"If I know they are stealing razors, then I'll sit and watch the razors," Cox said.

Razors consistently make the list of most stolen items, he said.

"It's traditional stuff: iPods, CD players and over-the-countertop products, DVDs," he said.

Socks, clothing and perfumes also make the list, McWethy said.

Most of the goods end up at flea markets, either at Expo New Mexico or in other cities, he said.

"They are making thousands of dollars of profit," he said.

"We know it was stolen, but the problem is, the tags are pulled and there is no way for us to tell."

McWethy said his officers are working with the retailers to develop a way for police to access retail records of label and identification numbers so products can be tracked.

Cox said such a system is years away from development.

"Right now we're just in the infancy stages (of cooperation)," Cox said. "But it's the common knowledge because we're all focused on the same thing."

Shoplifting 20 years ago was mostly a case of individuals needing a night's worth of booze, desiring a new cassette tape or items to trade for drugs, police say.

Now, crews work together to lift large amounts of products.

Here are some of the new methods and a few of the tried-and-true that still bother police and retailers.

Read the label

This is the most recent - and sophisticated - trend in shoplifting, says Albuquerque Police Lt. Matthew McWethy.

He uses the word ingenious to describe how some criminals will purchase a $10 item, for example a DVD, then replicate the item's bar code by running it through a photo imagining scanner.

With the image printed on an appropriate-sized sticker, the criminal then makes a trip back to the store, places the fake UPC sticker on a similar item, for example the $200 complete edition of the TV series "Sex and the City."

A busy cashier is likely to just pass the item through, bringing the shoplifter a great profit when the item is sold on the street.

The back door

Law-abiding shoppers might notice signs of this heist.

The offenders pile the target goods near an exit door, then rush out the door as a group to a car waiting nearby.

Ken Cox, the security director for Target stores in New Mexico, says some retailers are now using delayed-exit doors to stop this method.

Otherwise, it's up to alert staff or security notice the piles to foil the theft.

Tag team

This method is traditional, McWethy said, but easier to catch these days since retail greeters are now more shoplifter-aware.

This year, a mother-daughter tag team was caught, on Mother's Day, buying a cart full of items legitimately, unloading them in their vehicle, then returning to collect another identical basket-full.

They thought since the items in the cart matched the items on their original receipt, they'd freely pass detection.

They didn't.


Retailers Rail Against Shopliftiing Rings

by Valarie Miller - June 26, 2006
Las Vegas Business Press

Organized crime has struck again in Southern Nevada and this time, its victim is the retail industry. These criminals are not involved with drugs, prostitution or money laundering, but disappearing inventory with losses the industry says totals billions of dollars.

Retail crime rings coordinate large groups of shoplifters as well as the more traditional operations that steal from warehouses and loading docks. And industry officials and legislators say new laws may be required to tackle the problem.

Congress passed legislation in January allocating $5 million to create a Federal Bureau of Investigation task force and database to combat the $30 billion national problem. The Retail Association of Nevada is talking to state lawmakers to organize a similar local effort. So far, officials don't have precise numbers on the size of the problem because individual retailers usually report their losses but Metro does not track organized retail crime as a separate statistic. Shoplifting and all other retail thefts are lumped in with other kinds of property thefts.

The association is trying to gather statewide numbers to present to legislators, explained Retail Association of Nevada lobbyist Leah Lipscomb. "It is something that has been overlooked in the state so far. I think it is just sinking in," she said.

Significant Jump
Nationwide, the FBI uses numbers provided by the National Retail Federation, which says the crime rings cost retailers about $30 billion a year. That is a significant jump from the $12 billion to $20 billion a year in losses estimated 10 years ago, according to FBI Major Theft Unit Chief Eric Ives. "It's a big problem," he said, "and it's been growing over the years."

For the FBI to get involved, at least $5,000 worth of stolen merchandise has to be taken across state lines. If that factor is not present, retail theft is left to local law enforcement.

Retail Association of Nevada President Mary Lau would like to see a local database created, along with stiffer sentences for perpetrators committing organized retail thefts. Nevada law currently classifies in-store thefts as petty larcenies if the amount is under $250. "Shoplifting penalties are just not strong enough laws," she contended.

Lau won't get an argument from Las Vegas Metropolitan Police Department Detective Eric Brutch. He has investigated about 20 suspected organized retail theft cases in Clark County over the past three years. As one of only two officers assigned to Metro's Retail Theft Unit, he is convinced crimes taking place in stores are part of a bigger operation, with as many as hundreds of separate rings operating.

Typically, the group comes from out of state and are already trained to remain silent and act as if they are separate individuals. "The (suspects') cars were all rented from California," Brutch recalled in one instance. "And at no time did the suspects cooperate. They just stay quiet and get arrested. The normal person, if they were stealing for their drug habit and selling it (the stolen goods) to somebody, will say, 'Hey, I'll make you a deal.'"

In cases that cross state lines, Metro officers contact their counterpart agencies to investigate further. The other police department "would have to go knock on a door, and not many people will confess to a crime," Brutch admitted. If it is a first offense, the perpetrators usually don't go to prison. Of the rings Brutch has seen, the suspects have been Californians of Hispanic origin. If they are suspected of being illegal aliens, they are turned over to immigration authorities.

Organized retail rings typically steal items that are hard to trace and easy to sell, according to National Retail Federation Vice President for Merchandising and Retail Operations Dan Butler. "The more in demand they are and the more they are used on a daily basis, the more likely it is to have a higher street value."

Fenciing Operation
Wal-Mart organized crime task force investigator Terry Smith worked on curtailing retail thefts in Nevada for nine years. The key for organized rings is having a good fencing operation, he explained. In cooperation with Metro, Smith exposed a ring that was stealing DVDs out of area Wal-Marts and reselling them to a swap meet booth owner for a fraction of the original price.

"We would sell them for $15 in the store, and the vendors would pay $5 for every movie and resell it for $10 at the flea market," he explained. "We know if they are selling it cheaper than we could buy it from the manufacturer, it has to be stolen or (sold as) salvaged."

An extended family operated one out-of-state theft ring, Smith recalled. The men would box up the movies in an isolated aisle in the store as children were used as distractions. Later, the females would return to pay for the product, such as a baby car seat, which was supposed to be in the box. The plan was almost foolproof, the investigator said. "If the box was opened at checkout, the women would say, 'No, we wanted a baby seat,' and they weren't the ones on the (surveillance) video."

Last year, a ring made up of members of Middle Eastern descent was caught selling stolen baby formula, which is always in demand. That group operated in Arizona and Nevada and sold much of its haul to mom-and-pop convenience stores at a substantial discount, Smith pointed out.

FBI Involvement
The FBI did get involved in that investigation because there was a concern about possible ties to terrorism, although that has not been confirmed to date, Ives explained. That case opened the eyes of federal officials to the problem of organized retail crime. "Since then, there haven't been a lot of counterterrorism links, but we know there is a huge theft problem," he said.

Brick-and-mortar stores are no longer needed to get rid of hot property. Fencing the goods is much easier via the Internet; it's called "e-fencing." "One thing that happens with online fraud is that people will put things online they don't own and then go out and fulfill the order by stealing," Butler said.

Online auction houses tend to look the other way when suspicious bulk quantities of goods turn up on their sites, he added, pointing to a sting operation that found that 22 out of 42 gift cards posted for sale on one online site were stolen. "You'll hear online auction houses refer to themselves, saying, 'We are just portals, there's nothing we can do to control what is happening,' but we think they can do more to control it than they do. We'd like to see them have tougher penalties for people who are caught online doing fraudulent sales," Butler added.

Because of the inability of local law enforcement to track thieves across state lines, the FBI's database will be pivotal to combating organized retail theft.

"Unfortunately, there are only two of us in Clark County," lamented Detective Brutch.


Theft Rings Hit Grocers: Medicine Cabinet Items Apparently Swiped For Resale

by Paul Shukovsky - May 10, 2006
Seattle Post Intelligencer

By the way they are organized, you'd think they were planning a high-class heist -- Paul Allen's art collection, perhaps.

Instead, teams of criminals linked by cell phones have fanned out across Western Washington to steal all the Visine eye drops, Crest White Strips, Prilosec heartburn medication, Similac infant formula and Excedrin pain relievers they can get.

It's a major headache for supermarket chains that have reported losing hundreds of thousands of dollars' worth of targeted products, often in just a few months.

No one knows how many organizations are involved, said Jason Moulton, Safeway's loss-prevention director in Western Washington.

"It's organized retail theft," said Moulton, a former FBI assistant special agent-in-charge in Seattle. "They've got production schedules, crew chiefs and ship the stuff back to California," where it is sold.

One shoplifter arrested recently in Pierce County told investigators that six groups were working in Pierce and South King counties, and that he was recruited by someone from Southern California.

On March 29, Safeway investigator Jeff Scales caught a man at the store in Crown Hill who had pocketed 21 bottles of Visine. A check of surveillance videotapes revealed that the man had been targeting the store -- wiping out supplies of certain products in nine separate visits.

Chains such as Safeway are responding by placing plainclothes officers in their stores and taking other security measures.

In Washington, supermarket chains and other major retailers persuaded lawmakers last session to adopt new criminal statutes, including theft with intent to resell and organized retail theft.

The laws "up the seriousness level above and beyond what you would be prosecuted for if it were a straight theft," said Clif Finch, vice president of the Washington Food Industry, a trade association representing independent grocers and supermarket chains.

Finch said no industrywide figures on losses in Washington from organized retail theft are available, but grocery chains have reported major increases in theft-related losses.

In this region, it became apparent a couple of years ago that supermarkets were facing more than the occasional addict looking to turn stolen merchandise into quick cash. In March 2004, a Safeway investigator began looking into the systematic theft of baby formula from Pierce County stores.

"Store employees reported that groups consisting of both males and females using cell phones to communicate were entering the stores and cleaning the shelves out of Similac Advance with iron, 12.9 oz, $12.99 each," according to an internal Safeway report.

When the investigator began reviewing the surveillance tapes, a pattern became apparent.

"Two to six people in minivans with tinted windows hit several stores in one day, usually weekdays from 9 a.m. to 5 p.m.," the investigator wrote in the report. "They would park in the perimeter of the parking lot and send one or two people in at a time.

"A male would act as a lookout while the females would put up to eight cans of baby formula into a shoulder bag and walk out of the store. The women typically wear black leather jackets and have black handbags. The whole process takes less than five minutes."

It's the same story in King County.

On Dec. 23, 2004, two of Moulton's investigators, Scales and Stacy Smalls, were working undercover in Kenmore in an attempt to catch whoever was wiping out the store's stock of baby formula.

Just before noon, they spotted a woman with six cans of Similac in her hand basket. The woman was talking on a cell phone and looking toward the direction of the store's doors, according to a Safeway report.

She moved up the aisle and met a man who took the cans from the hand basket, put them in a cloth bag hanging from his shoulder and walked out of the store without paying for them. Smalls followed him while Scales kept an eye on the woman.

The investigators alerted nearby King County Sheriff's Deputy Jeff Durrant, who approached the man as he entered a minivan and ordered him to get out.

When Durrant searched the vehicle, he found 30 cans of Similac worth $430 and 16 packages of Pepcid AC worth $325. The man admitted stealing the merchandise that day from Safeways in Kenmore and Kingsgate.

"It's like the flavor of the day -- almost like they steal to order," said Safeway investigator Gene Blahato of the regional headquarters in Bellevue. "And every time we take countermeasures, they switch products."

Moulton said that "the frustration is we can't get anybody to look at this. There's no law-enforcement organization that is following up."

The local FBI office cited competition for its investigative resources as the reason it has not addressed the organized retail theft problem.

"Terrorism is the No. 1 priority in the state of Washington, and we have fewer and fewer resources to devote these days to other criminal activity like retail theft," said Special Agent Robbie Burroughs.

There's been a lot of speculation on the structure of retail-theft rings: Are they crime syndicates? Terrorist funding schemes?

A U.S. Treasury Department terrorist-financing task force called "Green Quest" lists the theft and resale of infant formula as well as interstate cigarette smuggling as ways by which terrorist groups finance their operations.

FBI agents in Portland broke up a retail theft ring last August that was a traditional criminal enterprise. Agents arrested 27 people on suspicion of trafficking in stolen merchandise and money laundering stemming from the theft of goods from grocery, hardware, drug and department stores, according to the U.S. Attorney's Office in Oregon.

The goods were resold for 10 to 20 cents on the dollar to "secondhand" stores, which would resell to "wholesalers" for a healthy profit. FBI Special Agent in Charge Robert Jordan said the shoplifters were driven by addiction to drugs.

The federal officials in Oregon seized more than $2 million in stolen products, said Assistant U.S. Attorney Leslie Westphal. The investigation revealed that an enormous amount of stolen goods are flowing through the pipeline, and they are turned over quickly.

"It's huge," Westphal said. "It has an impact economically that we are not capturing and measuring. But it's certainly there."


Retailers Struggle With Problem of Organized Theft

by Amy Fletcher - April 28, 2006
Denver Business Journal

Colorado retailers are facing a new breed of thief that costs stores $30 billion a year nationwide, driving up prices for consumers.

The increase in crime is prompting stores to install special devices, limit how many products they keep on their shelves and lobby for state legislation designed to help crack down on criminals.

"It is big problem and it has been for awhile," said Dave Thomas, executive director of the Colorado District Attorney's Council, which represents the state's 22 district attorney offices. "It cuts into the profit margin."

Stores long have dealt with shoplifters, but organized retail theft (ORT) is a newer crime that's more sophisticated and costly.

Safeway estimated organized retail theft accounts for 75 percent to 80 percent of its losses, amounting to $100 million nationwide a year.

"The last 10 years, we've seen the problem escalate," Safeway spokesman Jeff Stroh said. "Every cost is ultimately reflected in consumer prices."

ORT usually involves multiple people who steal products, not for their own personal use, but to sell through fencing operations, flea markets and swap meets. In some cases, they sell it back to the same retailer from which they originally stole.

"Sometimes we buy our own product back," said Jim Stein, director of security and loss prevention for Safeway in Denver.

ORT also generally involves higher quantities of stolen goods.

Instead of slipping, say, a candy bar into a pocket, thieves steal whole shopping carts of goods. Target said criminals remove a large item such as a filing cabinet from its box, place it in a cart, and then travel around the store dumping small but costly products inside. When they reach the checkout stand, they pay only for the filing cabinet.

There haven't been big busts of organized theft rings in Colorado, but retailers said privately they hope law enforcement will step up their efforts here.

Safeway and Target are among the businesses supporting House Bill 1380, sponsored by Rep. Jim Riesberg, D-Greeley, which would create a task force to review ways to prevent ORT and develop recommendations for enhanced law enforcement. The bill also would require dealers at flea markets to show proof of ownership for often-stolen items, including infant formula, cosmetics, over-the-counter drugs, razor blades and batteries.

These goods often are targeted because they're small, in demand, fairly expensive and nonperishable.

"Part of what we are doing with this legislation is establishing that paper trail ... to prove where they got it from," Stein said.

It can be tough for employees to see everything going on in a store. For example, the average Safeway store is 50,000-70,000 square feet -- the equivalent of 18-20 aisles.

"You can't be everywhere at once," Stroh said, adding that features that make shopping more convenient for customers -- such as two main entrances and centralized checkout stands -- also make it easier for thieves to steal. The ORT groups often include a spotter, the person who actually steals the goods and someone to drive the getaway car.

To combat the problem, retailers such as Safeway have installed shelving devices that allow consumers to remove only one product a time for certain items, hoping to head off criminals who look to quickly steal goods by the armful. For other products, including razors and over-the counter drugs such as Claritin-D, customers must take a laminated card to check-out clerks, who then retrieve the item from the customer service desk.

"It's a simple thing," Stein said, "but it does help us."

Small businesses and convenience stores also back HB 1380, which the House passed April 18. Next, the Senate Business, Labor and Technology Committee will consider it.

"The problem is not specific to big cities and big stores," said Mary Lou Chapman of the Rocky Mountain Food Industry Association.

Nationwide, major retailers, including The Gap, Kmart, Walgreens and Wal-Mart, have been working to develop national crime databases to compile and share information on criminal incidents. They say sharing the information will help them protect consumers, employees and merchandise.

The Retail Industry Leaders Association launched the InfoShare pilot program last year. It should be live soon, the association said.

In 2004, retailers also formed the National Retail Federation (NRF)/FBI Intelligence Network, a partnership between the FBI, state and local law enforcement, and retail corporate security to share information, discuss trends, and identify and target the most significant ORT operations. The National Retail Federation also has created a database to share information.

The issue is also getting attention from Congress. Early this year, President George W. Bush signed legislation that will establish an Organized Retail Theft Task Force at the FBI and create an organized retail crime database similar to NRF's.

"That was a big win for us," said Chris Howes, president of the Colorado Retail Council, whose members include Safeway, Wal-Mart, Target and King Soopers.

Retailers say it's important that the FBI, Congress and state lawmakers have begun to recognize the seriousness of ORT.

"It's moving in the right direction," Howes said. "And 1380 is a way for us to focus people's attention on a $30 billion problem."


Formula for Disaster
 Baby formula is the fourth most popular item to shoplift. Do the proceeds support ¨terrorism¨?

by Nathan Conz - April 13, 2006
Hartford Courrier

Baby formula theft represents as much as a quarter of all retail theft losses.

Talk to just about any supermarket manager or security guard and they´ll tell you that baby formula is one of the most popular items shoplifted from store shelves. In fact, the Washington, D.C.-based Food Marketing Institute told newspapers that baby formula was the fourth most common item stolen from grocery stores they surveyed in 2004 (unfortunately, they didn´t say what the top three are and we haven´t been able to reach them. Gummy bears? Gel insoles?). Of the 10 most shoplifted items, ranked by FMI on its website, two are baby formula products.

But it isn´t desperate mothers stealing the formula for their babies´ nourishment. Sometimes it´s drug addicts. And more often, it´s organized crime rings -- many of which funnel their profits to the Middle East, according to authorities.

¨[Baby formula is] targeted because of its high dollar value and its easy resale value,¨ Joseph LaRocca, vice president of loss prevention for the National Retail Federation says. ¨Also, it´s consumable. So, it´s something where people need to keep coming back to the well to obtain it.¨

Lori Coppinger is captain of the detective division at the West Hartford Police Department. She says that baby formula theft is common in town. The Advocate ´s routine review of the West Hartford police reports yields at least one formula-related report of theft each week.

¨It´s easily sold on the streets,¨ Coppinger says. ¨A lot of people have children, so it´s easy to resell. Even if they get half the price or less, it works for them.¨

Many of the baby formula shoplifters that are caught in West Hartford are drug addicts, Coppinger tells us. Often times, those addicts are likely selling to fences -- people who purchase stolen goods for resale that may be part of an organized retail theft ring, LaRocca says.

If you´re looking at shoplifting as a whole, baby formula is only among the popular products, sharing the distinction with other small-sized, high-cost items like over-the-counter medications, condoms, preparation H, and razor blades.

Organized retail theft, or ORT, is essentially the business of professional shoplifting. Typically, teams of professional boosters will steal products from a store and then sell the items to a fence. More often than not, that fence will sell the product to another larger, or level-three fence.

¨That person will repackage the goods and then sell them to retail stores or directly to the public,¨ LaRocca says. Typically, the level-three fence is operating a business that appears legal and the stolen goods may be commingled with items purchased legitimately.

In March 2005, Chris Swecker, assistant director of the FBI´s Criminal Investigation Division testified before the House Judiciary Committee about ORT and specifically infant formula. ¨The potential threat to the health and safety of unsuspecting consumers is most evident in cases in which infant formula is stolen, repackaged and then resold to both knowing and unknowing wholesalers, who then sell the infant formula to government food programs and discount stores,¨ Swecker told the committee.

Last year, Charles Miller, the author of a 123-page NRF report and study on ORT, told the Christian Science Monitor he estimated that $7 billion of infant formula is stolen and resold for profit annually. That represents nearly one-fourth of the money Miller and others estimate is lost annually from all retail theft. (Several factors make it difficult to be certain how much is lost, as there is no uniform reporting in the industry. More conservative estimates put total retail theft closer to $10 to $14 billion.)

In November 2003, Darrell Taylor, the director of loss prevention at a Texas-based 300-store grocery chain, spoke before the Congressional Subcommittee on Criminal Justice, Drug Policy and Human Resources, calling infant formula the cash cow of ORT rings. ¨It´s gold in a can,¨ he said.

As long as people continue to procreate, babies will need formula. What´s more, the WIC (Women, Infants and Children) program, which offers assistance to low-income parents with young children, publicly subsidizes baby formula which only increases demand.

According to Miller´s NRF study, many ORT rings have ties to the Middle East and that´s often where some of the profits end up. In an e-mail, Eric B. Ives, chief of the FBI´s Major Theft Unit told the Advocate that it´s suspected that some ORT rings are funneling proceeds overseas to support terrorism: ¨This has been a particular concern with respect to organized theft of infant formula throughout the United States,¨ Ives wrote.

In January, President Bush signed into law a House bill that, in part, mandated the FBI to create an ORT task force and set aside $5 million per year for the next three years to fund a national database that will allow retailers and law enforcement to better share information regarding ORT.

Mardi Mountford, executive vice president of the International Formula Council, a U.S.-based trade association of formula manufacturers, advises consumers to purchase formula from reputable sources. Larger stores are more likely to use reliable distributors. Stolen formula repackaged for sale, Mountford says, may not have the nutritional value the label purports. In rare cases, such as when a formula contains milk but is relabeled as milk-free, it could be a health risk.
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