Black Market Billions: How Organized Retail Crime Funds Global Terrorists (Gal Zentner's Library) (11 page)

The provisions were supposed to increase criminal penalties for cargo theft and create an all-inclusive database on cargo theft, allowing state and local law enforcement to coordinate reports of cargo theft.
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In addition (and arguably the most exciting aspect of the provision), cargo theft will be reflected as a separate category in the Uniform Crime Reporting System used by the FBI, enabling the tracking
and monitoring of trends in the crime. However, the government has yet to establish how these criminals will be prosecuted. Likewise, Jared Palmer lobbied to enforce the law that required there to be a separate category to report cargo theft under the Patriot Act. According to Palmer, the law was already on the books but not enforced until January of 2010 after he and other members of the National Cargo Theft Task Force made several trips to Washington, D.C.

“Each state has their own crime reporting system that is used to report crime information using unique codes,” Palmer says. In addition to the systems being siloed on a state-by-state basis, they have not been reprogrammed to accept the new cargo theft code. This is mostly because the states lack the proper funding. The irony is that in order to get more funding to combat cargo theft, the states need to report the problem to the feds. This vicious cycle continues to play into the hands of the cargo thieves, who continue to steal billions of dollars each year. To get an accurate idea of how big these numbers are, [years ago President Richard] Nixon commissioned a report that showed cargo theft was a $1 billion—$16 billion in today’s money—annual problem. Almost 40 years later, and estimates show that the problem is around $15 billion a year, so not much has changed.”
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To stay steps ahead of the thieves, the FBI and ICE have rolled out a database called Cargonet in conjunction with RILA and local police departments. From a financial standpoint, establishing a database will not only help connect law enforcement and businesses, but also will help reduce costs when it comes to insurance premiums on cargo trucks.

Coordinating Information in Real Time: LAPD and APD Case Studies

Miscommunication is an endemic problem—not only when it comes to cargo theft, but also for tracking ORC rings in general. Local law enforcement agencies have issues for several reasons. The first is
timing. When a booster is caught, it takes a while for store management to recognize what is going on, figure out whether it is petty theft or something larger, and then charge the person. More than 85% of all reported criminal offenses are property crimes. These can lead to larger crimes, such as murder, drug trafficking, or, in some instances, terrorist financing.
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Because the ways to track such thefts (such as by using software) are limited, law enforcement has a more difficult time finding patterns in theft that could potentially be the work of ORC rings. But agencies such as the Los Angeles Police Department and the Albuquerque Police Department are changing this situation by fostering communication in an online real-time environment.

Case Study: Los Angeles Police Department

In 1999, pinpointing, tracking, and fighting ORC was an uphill battle for the LAPD. Like social cliques in a high school, the government agencies and other participants in the fight against crime kept to themselves. The police department functioned autonomously, doing everything from going after criminal activity on their own to eating their meals and socializing as a group. Likewise, when the LA Sherriff’s Department caught wind of a potential ORC theft, they would identify the case, track the crime, and keep it to themselves. Private security companies and investigators at retail stores weren’t any better. According to James Hooper, a private investigator and consultant, if they got a tip regarding criminal activity, they would try to solve it on their own. “I think there were a lot of egos involved back then,” says Hooper. “Everyone wanted to be the hero and take the glory for it. There wasn’t a team mentality. The mission wasn’t ‘How can we collectively solve this crime together and make a massive impact?,’ it was more about ‘How can our group get the most kudos for the biggest case busted?”
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Recognizing that change needed to be implemented, and quickly, the LAPD created the Law Enforcement and Private Security
(LEAPS) conference. It promotes discussions and information sharing between government agencies and private security entities within retailers. What they didn’t realize was that communicating between themselves was also a preventive measure to stop terrorism.

During a walk-through of the city of Los Angeles’ top-secret and ultra-high-tech management facility, James Featherstone, general manager of the city of Los Angeles Emergency Management Department, referred to the work of Rick Rescorla. (Rescorla is an Army veteran and former World Trade Center security chief for the financial services firm Morgan Stanley Dean Whitter who predicted the 9/11 attacks and published a report on evacuation procedures.) Featherstone explained how Rescorla’s report wasn’t just his call to action over something he believed was about to happen, but a painstaking plan he created focused on communication. This was something many of the local agencies and the private sector did not have at the time.
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The report now serves as a foundation for the way the city of Los Angeles handles crisis management. “Rescorla had enough gumption not only to say something but to present a viable plan in the event something happened which posed a serious threat,” says Featherstone. “He was a ‘force multiplier.’ He changed things not only to secure the safety of his firm, but to change the way New York and the rest of the country look at crisis and emergency management. It’s not about fixing the situation after it happens; it’s about taking preventative steps before something of that magnitude happens again. That concept resonated for me and the city of Los Angeles emergency preparedness department. We make sure all lines of communication are open between all agencies. That’s the only effective way to manage crisis.”
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As the LEAPS meetings started to gain momentum throughout the years, and especially after 9/11, agencies started to discover that by having conversations as short as two minutes and no longer than a couple of hours, they could connect the dots more effectively. FBI agents began collaborating with private investigators on cases. ICE agents frequently spoke to retail security. And the most significant
change was that they were invited to join the fire department for a weekly dinner at the firehouse. “I told my guys that this was imperative if they wanted to work in our group,” says Featherstone at a speech given at the LEAPS conference in Los Angeles.
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The result was an efficient system with more terrorism-related ORC busts than any other police department in the country.
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“We realized just because a situation hadn’t presented itself didn’t mean it wasn’t about to happen,” said Assistant Chief Michael Moore, director of the office of special ops in the LAPD. “Conceptually, everyone understood what ‘When you see something, say something’ meant, but to put it into practice was a different story and took diligence and coordination on the parts of every government agency.”
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Captain Bill Williams, a 30-year veteran of the LAPD, knew that even a good interagency communication system could become even more efficient. Commercial crimes as well as property crime tend to take a backseat to the larger, more “If it bleeds, it leads” crimes, such as murder, drug busts, and terrorism. What people didn’t understand is that many large-scale crimes start with commercial crimes.
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And Williams and his team were adamant about making sure different divisions could connect the dots if needed.

In January of 2009, Captain Williams and Detective Oda established the Los Angeles Area Organized Retail Crimes Association (LAAORCA). It has a database that tracks the frequency of certain ORC, where it happens, and possible perpetrators. LAAORCA communicates the information in real time to its agency and private-sector partners. The reasoning was to provide a proactive partnership between police and community. In addition, it exposes the root causes of crimes and disorder and creates efficiencies between prosecutors, legal entities and corrections.

The LAPD also established a private-sector partnership between law enforcement and the retail community so that each could learn from the other. This partnership had been in the works since 2008, according to Williams. Back then, it was just local communities
gathering information and learning from each other in ways similar to LEAPS. In 2009 and 2010, LAAORCA began digitizing information and placing it in an easily accessible database. Retail, government, and state agencies could access the system and look up information about the perpetrator such as his age, hair color, description of the crime, how many stores he has hit, how many items he has lifted, and if he is working in a group or by himself. The database contains other information that the LAPD asked me not to disclose for the sake of protecting the system and their agents. In 2010, LAAORCA had more than 200 people from the business and the law enforcement communities attend meetings and log onto the database—not only to update it but to see whether there were any connections to the cases on which they were working. In 2011, the number went up to more than 800. Cornerstone (a financial division of ICE that deals with money laundering and fraud), the Department of Homeland Security, the Secret Service and the Federal Bureau of Investigation are two of the organizations on the international side working with LAAORCA. Both recently became involved because of the growth of ORC in which the profits were being moved overseas to countries such as Jordan, Lebanon, and Afghanistan, especially from major cities such as Los Angeles. “ICE has been involved in five of our most recent cases in Los Angeles, because the stolen property we’ve discovered inevitably goes overseas. In order to bust them, we not only seize their buildings, but we can also seize their property,” says Williams.

The greatest success, says Captain Williams, was that after the establishment and help of LAAORCA, the LAPD saw declining crime rates. Property crime in Los Angeles dropped by 5%. The major-crimes unit also completed a bust called the Hernandez Operation. They nabbed a notorious Los Angeles-based ORC ring that was stealing $6 million worth of merchandise per year, including formula, diapers, health and beauty products, hair-care products, and over-the-counter medications. Four banking institutions also worked with the LAPD after the Los Angeles Superior Court issued search warrants to seize
multiple accounts showing transactions equaling hundreds of thousands of dollars. San Francisco has rolled out its own system, called BAORCA, modeled after LAAORCA, and Chicago is putting together its own database as well, and another is about to roll out in Las Vegas and southern Nevada. Retailers who are members of LAAORCA saved an estimated $60 million in revenue lost to ORC in one year.
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Case Study: Albuquerque Police Department

Before LAAORCA existed, there was Karen Fischer.

Fischer, a high-energy mom of two, is considered a civilian but has worked with the Albuquerque Police Department for close to 25 years with the commercial crimes division. She bounces around her office at the Albuquerque Police Department, answering emails and checking her schedule to make sure she is not late to her daughter’s soccer game. She is also checking on the latest ORC to hit retail stores. She pulls up a Google map, which looks like a digitized version of a wall map with pinpoints. On the right side of the screen is a picture of a perpetrator. In the middle are all the places they have hit. With a couple of mouse clicks, Fischer can find out how many crimes the person is being charged with, what was lifted from the stores, any bank accounts, and, most importantly, if the person was working with a group or was solo. “This is my baby,” Fischer beams as she takes me on a virtual tour of the Albuquerque Retail Assets Protection Association (ARAPA). Fischer (who has a knack for thinking up acronyms while driving) is the brains behind ARAPA, a web site and partnership to further build the “local trust” for law enforcement and local Albuquerque Police personnel to feel comfortable in exchanging information on incidents. ARAPA is what LAAORCA is based on. She thought of the idea when she realized community watch programs such as Neighborhood Watch weren’t as effective as they could be. “There is something to be said about community policing,” she says. “The proactiveness and the willingness of everyone, including police
departments, community organizers, and civilians to work together to fight crime. I wanted to create something where both law enforcement and retail partners could do that in real time.”

Fischer describes the case of Marin Moreno. This Mexican native would steal Tide laundry detergent, razors, energy drinks, and toys from retailers such as Target and Walmart and send the money he made selling his haul in flea markets and online back to Mexico. When the APD finally arrested him, they found $30,000 worth of merchandise and $30,000 in cash.

Similar to Moreno, Nick Jojola, an unassuming skateboarder and subsequent meth addict, ran an ORC ring of adults who helped him steal nearly $1 million in DVDs, electronics, clothing, and Christian-themed merchandise. Nick was only 16 when ARAPA’s information exchange began logging his license plate number every time he engaged in a “smash and grab” hit at retailers such as Kmart, Hastings, and Best Buy. What’s more, the exchange was able to track the adults working with Jojola, thus creating a substantial case against that ring.

The system was so effective that the LAPD flew in Fischer and Kenneth Cox, director of loss prevention at Target in Albuquerque and the co-creator of ARAPA, so that they could give a three-day tutorial about how the LAPD could create their own system based on what Fischer created. As ORC prevention and communication between agencies and retailers becomes more technically savvy, police departments around the country and the world have Fischer and Cox to thank for their database.