Atlanta GA. Nov. 7 2007
Major retailers, who for years thought the teenage shoplifter swiping a candy bar or a pair of jeans was their biggest nemesis, are recognizing that organized gangs who use sophisticated techniques pose a more serious threat, and they're banding together to put up a fight.
Well-organized groups of shoplifters have operated for years, and, according to an estimate from the FBI, losses from organized retail theft have reached as much as $30 billion.
Well-organized groups of shoplifters have operated for years, and, according to an estimate from the FBI, losses from organized retail theft have reached as much as $30 billion.
Retailers ranging from the Gap and Sears to Walgreens and Wal-Mart are quietly developing national crime databases to compile evidence from shoplifting incidents. One such database will begin operating this month. The industry is hoping that the information will help federal investigators build legal cases against suspected theft rings.
Retailers said the databases, an unusual collaboration in a fiercely competitive industry, should eliminate the biggest hole in their security systems: a failure to share information. Secrecy surrounding a chain's losses from theft, even how it protects against shoplifting, is a powerful tradition in retailing. But it has also proven to be a boon to organized shoplifting teams, which can strike dozens of retailers in a given area without fear that the stores will realize they are the victims of an organized attack.
"We feel like we're sharing the same criminals, but we don't know about it," said Daniel Doyle, vice president of loss prevention at Beall's, a department store chain based in Florida that has helped develop one of the databases.
Three retail industry trade groups are building the databases. One is the National Retail Federation in Washington, which represents thousands of chains from Federated Department Stores (parent company of the Macy's chain) to Crate & Barrel, whose database goes on line this month; another is the Retail Industry Leaders Association in Arlington, Va., which focuses on discount retailers such as Wal-Mart and Target, whose database is scheduled to begin operating early next year. The National Association of Chain Drug Stores, in Alexandria, Va., which represents pharmacies, started its database last year.
Joseph LaRocca, vice president of loss prevention at the National Retail Federation, said the rush to develop the databases suggested that the problem of organized retail crime had "been pushed up to the front burner across the industry."
Unlike conventional shoplifters, who take merchandise for personal use, organized retail crime rings sell the products at flea markets, online and, in some cases, right back to the same national retailers from which they originally stole. The groups focus on a shopping list of products, and target retailers that have traditionally had less security than jewelry and electronics stores. Among the most sought-after are Enfamil infant formula, Oil of Olay skin products, Pepcid heartburn medicine and Gillette shaving products.
One gang of shoplifters was nicknamed the Ghali organization after its leader, Mohammed Ghali, and organized it was. Every day, gang members stole, repackaged and resold up to $2,000 in infant formula, diabetes test strips, razor blades and nicotine gum from stores across northern Texas.
The gang controlled convenience stores to stockpile the merchandise and a warehouse to distribute it, according to court records. To keep up morale, leaders showered shoplifters with perks, from complimentary transportation to bail money, as needed.
The Ghali organization operated much like the retailers it targeted, court papers suggest. It had a chief executive (Ghali), a chief financial officer (his wife), a business manager (his ex-wife) and an executive officer (his brother). Using word of mouth, the group recruited more than 100 shoplifters in the Dallas area, investigators said, and members stole an estimated $5 million in merchandise from Target, Wal-Mart and Walgreens before the ring was broken up in 2003.
The group rented vans to bring shoplifters to stores, developed a system to remove security devices from products and shipped stolen products across the country using Federal Express, according to court records and interviews with investigators.
Federal investigators say the gang was broken up only when several shoplifters agreed to become informers, allowing the authorities to infiltrate the group and record its activities. Ghali was convicted and sentenced in 2005 to 14 years in federal prison. Six other members of the organization pleaded guilty.
But the retail executives who are building the databases complain that, in general, law enforcement agencies have been slow to recognize the shift to a professional class of thieves. "I hate to say it, but there have been times when law enforcement has had a profile of a shoplifter as a kid with a backpack," said Keith White, head of loss prevention at the Gap.
The federal authorities rely on retailers and local police departments to bring cases of suspected shoplifting to their attention, but such referrals are "very infrequent," said Eric Ives, acting chief for the major theft unit at the FBI, which oversees organized retail crime investigations.
One reason for the small number of cases is that shoplifting does not become a federal crime until at least $5,000 in stolen goods are shipped across state lines. In some places, a busy U.S. attorney's office is unwilling to commit resources to a shoplifting case unless that figure rises to $50,000, Ives said. But, he said, the average shoplifter is unlikely to steal that much merchandise on a single trip, allowing members of organized retail crime rings to slip through the system even when they are arrested.
For that reason, the FBI is hoping the databases work.
Retail executives also complain that state shoplifting laws, created largely to address petty theft, are inadequate when it comes to organized retail crime rings. The vast majority of shoplifting incidents are treated as misdemeanors, and the punishment is often no more than a written citation or a few nights in jail, according to a report prepared by the National Retail Federation.
"Because state laws are often soft and there is a lack of federal laws addressing the issue, retail theft has become a high-profit, low-risk avenue of crime," Frank Muscato, Wal-Mart's investigative coordinator, said in recent testimony before Congress. Ives of the FBI said he hoped the retailers, using a database, could "work up a case large enough for the FBI."
Retailers said the databases, an unusual collaboration in a fiercely competitive industry, should eliminate the biggest hole in their security systems: a failure to share information. Secrecy surrounding a chain's losses from theft, even how it protects against shoplifting, is a powerful tradition in retailing. But it has also proven to be a boon to organized shoplifting teams, which can strike dozens of retailers in a given area without fear that the stores will realize they are the victims of an organized attack.
"We feel like we're sharing the same criminals, but we don't know about it," said Daniel Doyle, vice president of loss prevention at Beall's, a department store chain based in Florida that has helped develop one of the databases.
Three retail industry trade groups are building the databases. One is the National Retail Federation in Washington, which represents thousands of chains from Federated Department Stores (parent company of the Macy's chain) to Crate & Barrel, whose database goes on line this month; another is the Retail Industry Leaders Association in Arlington, Va., which focuses on discount retailers such as Wal-Mart and Target, whose database is scheduled to begin operating early next year. The National Association of Chain Drug Stores, in Alexandria, Va., which represents pharmacies, started its database last year.
Joseph LaRocca, vice president of loss prevention at the National Retail Federation, said the rush to develop the databases suggested that the problem of organized retail crime had "been pushed up to the front burner across the industry."
Unlike conventional shoplifters, who take merchandise for personal use, organized retail crime rings sell the products at flea markets, online and, in some cases, right back to the same national retailers from which they originally stole. The groups focus on a shopping list of products, and target retailers that have traditionally had less security than jewelry and electronics stores. Among the most sought-after are Enfamil infant formula, Oil of Olay skin products, Pepcid heartburn medicine and Gillette shaving products.
One gang of shoplifters was nicknamed the Ghali organization after its leader, Mohammed Ghali, and organized it was. Every day, gang members stole, repackaged and resold up to $2,000 in infant formula, diabetes test strips, razor blades and nicotine gum from stores across northern Texas.
The gang controlled convenience stores to stockpile the merchandise and a warehouse to distribute it, according to court records. To keep up morale, leaders showered shoplifters with perks, from complimentary transportation to bail money, as needed.
The Ghali organization operated much like the retailers it targeted, court papers suggest. It had a chief executive (Ghali), a chief financial officer (his wife), a business manager (his ex-wife) and an executive officer (his brother). Using word of mouth, the group recruited more than 100 shoplifters in the Dallas area, investigators said, and members stole an estimated $5 million in merchandise from Target, Wal-Mart and Walgreens before the ring was broken up in 2003.
The group rented vans to bring shoplifters to stores, developed a system to remove security devices from products and shipped stolen products across the country using Federal Express, according to court records and interviews with investigators.
Federal investigators say the gang was broken up only when several shoplifters agreed to become informers, allowing the authorities to infiltrate the group and record its activities. Ghali was convicted and sentenced in 2005 to 14 years in federal prison. Six other members of the organization pleaded guilty.
But the retail executives who are building the databases complain that, in general, law enforcement agencies have been slow to recognize the shift to a professional class of thieves. "I hate to say it, but there have been times when law enforcement has had a profile of a shoplifter as a kid with a backpack," said Keith White, head of loss prevention at the Gap.
The federal authorities rely on retailers and local police departments to bring cases of suspected shoplifting to their attention, but such referrals are "very infrequent," said Eric Ives, acting chief for the major theft unit at the FBI, which oversees organized retail crime investigations.
One reason for the small number of cases is that shoplifting does not become a federal crime until at least $5,000 in stolen goods are shipped across state lines. In some places, a busy U.S. attorney's office is unwilling to commit resources to a shoplifting case unless that figure rises to $50,000, Ives said. But, he said, the average shoplifter is unlikely to steal that much merchandise on a single trip, allowing members of organized retail crime rings to slip through the system even when they are arrested.
For that reason, the FBI is hoping the databases work.
Retail executives also complain that state shoplifting laws, created largely to address petty theft, are inadequate when it comes to organized retail crime rings. The vast majority of shoplifting incidents are treated as misdemeanors, and the punishment is often no more than a written citation or a few nights in jail, according to a report prepared by the National Retail Federation.
"Because state laws are often soft and there is a lack of federal laws addressing the issue, retail theft has become a high-profit, low-risk avenue of crime," Frank Muscato, Wal-Mart's investigative coordinator, said in recent testimony before Congress. Ives of the FBI said he hoped the retailers, using a database, could "work up a case large enough for the FBI."
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