Retailers Rail

Retailers Rail Against Shoplifting Rings

BY VALERIE MILLER
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."

FENCING 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.