Black Market Billions: How Organized Retail Crime Funds Global Terrorists (Gal Zentner's Library) (28 page)

Under the “Justice and Peace” process, Jose Gregorio Mangones (alias “Carlos Tijeras”), another ex-paramilitary commander, admitted to more than half the killings cited in the lawsuit, according to Terry Collingsworth, an attorney for the families. In addition, Mangones “received 70,000 Colombian pesos per hectare per year from Dole, [which was] roughly 40% of the William Rivas Front’s
⁴⁶
annual budget.” The court documents also state that as part of this financial arrangement, Dole allegedly asked the AUC to eliminate the leaders of the trade union in Magdelena. Mangones confessed to the murder of Pablo Perez, the former president of the union Sintrainagro in Magdelena.
⁴⁷

In addition, the lawsuit alleged that Dole hired the AUC as security forces knowing that they were designated as an FTO by the U.S State Department in September 2001. Dole Foods issued a statement denying any involvement with AUC, stating, “Dole categorically rejects the baseless allegations” and “this lawsuit is irresponsible and the allegations are blatantly false.” California court threw out the case in September 2010. However, Collingsworth said he will refile it in federal court.

In an interview with Reuters, Lee Wolosky, a partner at Boies Schiller & Flexner LLP (the firm acting on behalf of the 242 plaintiffs), said, “This lawsuit and others like it will hold Chiquita—which
had revenues in excess of $3.5 billion last year—accountable to those victimized by its unlawful conduct.”

Whether by choice or not, the accountability will inevitably come out of consumers’ pockets in the form of increased product costs. This is a high price to pay for an American multinational corporation’s involvement with a terrorist group.

Many might argue that billion-dollar multinational corporations have their hands tied when it comes to negotiating locally for their product to be distributed correctly and safely while making sure their employees stay safe. Terrorist groups often rule the land, so large corporations have no choice. However, when it comes to protecting the consumer at the local level, sometimes the largest corporations can’t prevent the consumer from purchasing illegitimate merchandise.

That’s where the little guys with the big ideas come in.

Part III: Putting a Band-Aid on a Broken Leg

The Failure of Preventative Measures
201

Letting the Bad Guy Get Away
219

10. The Failure of Preventative Measures

With the influx of failing security systems and preventive measures to fight organized retail crime, one chief of security took it upon himself to make his own rules. Steven Reed decided to ban people wearing hoodies and sagging pants from the Arden Fair Mall in Sacramento, California. “It was certainly controversial when I introduced it, but people were getting away with thousands of dollars worth of merchandise just by pulling the hood over their eyes and face so that no one could identify them,” says Reed. “I had a $12.50 piece of clothing that was negating a $1.5 million camera system. I wasn’t going to let that happen.”
¹

Implemented in October of 2009, not only did the rule catch the attention of the national media, but the ACLU also got involved (but ultimately decided it had no position on the dress code). Reactions from some Sacramento locals were angry, but that didn’t deter Reed. He was convinced that implementing a strict dress code was the only way to prevent theft from happening, including ORC. Customers had a choice when they decided to shop at a mall that boasted 169 retail tenants, 154 cameras, and a plethora of security officers in more than 1.2 million square feet of space. They could take off their sweatshirts and pull up their jeans or be thrown out.

Reed, who is a former teacher and vice principal and a former police officer of 20 years, would stereotypically be a likely candidate to implement such stringent dress codes in his facility. The “baggy pants and hoodie” look is associated with criminals and gangbangers. But Reed suggests it wasn’t about categorizing people by their appearance
and preventing them from shopping. Rather, it was about “keeping the mall safe.” In addition, Reed wanted to curtail a rampant problem that most malls and retailers have yet to control despite elaborate preventive measures.

Acting Locally, Thinking Globally

The idea to implement a dress code in the mall came to Reed after he saw a kiosk robbed one Saturday morning in February 2009. When security tried to identify who was behind the heist, the culprit’s hoodie prevented anyone from seeing his face, and he got away with hundreds of dollars in cash. “We needed to change the policy, and quick,” says Reed. “If malls and retailers realized it’s the little things that cost virtually nothing that prevent people from committing a larger crime, then they would see a significant drop in ORC and other thefts.” Significant is an understatement.

After implementing the new rule, Reed saw a 70% percent decrease in ORC, car theft, and other thefts such as robberies “because [suspects] couldn’t hide their faces anymore.” He expected the numbers to go down even more by the end of 2010. In addition to the infamous dress code rule, Reed implemented a new license plate recognition system on each security vehicle that took pictures of license plates and kept them in a database. With a grant of $50,000 from the Department of Homeland Security in October 2006, and another grant of $50,000 from unused federal funds, Reed and his team were able to invest in a closed-circuit television system (CCTV) and license plate recognition software. Working together, the systems take pictures of license plates of vehicles in the parking lot. Then the systems communicate with a database of more than 5 million license plate numbers on file with the Sacramento Police Department (SACPD). Using Verizon Wireless technology, the inquiry is answered within seconds, and a picture of the license plate in question appears and is
GPS-stamped with the location, with information on whether the car or the license plate have been stolen. After this information on the license plate comes back to the Arden Fair Mall security officer, the officer contacts SACPD to run the license plate numbers and verify the information given by the license plate recognition system. Then the security officers quickly leave the area and review CCTV footage to pinpoint the geographic location of the suspect within the mall.

While watching the Arden Mall surveillance video, I noticed something about many of the ORC rings targeting malls. Their getaway cars are almost as crucial as ensuring that the perfect heist was being committed within the stores. Criminals committing ORC make it a point to communicate with the getaway driver, to make sure he is nearby and that the car they are using is parked close by. Criminals committing ORC typically use rental cars that they don’t return, causing the cars to come up as stolen within the license plate recognition system’s database and allowing the security officers to track the suspect inside the mall. They also use the car as a mobile storage facility, storing thousands of dollars of merchandise in the trunk of the car. In this particular surveillance video, Reed points out how the license plate number recognition software was able to identify a pattern with a specific car that had been stolen. After screening multiple tapes, I noticed that the car in the video had also appeared in other shopping mall parking lots and strip mall lots. When the car was identified at the Arden Fair Mall as being stolen, the security officer in the parking lot promptly notified SACPD, which verified that the car was stolen, and the security guard reviewed CCTV footage to find the suspect inside the mall. When the boosters came out of the mall, they got a law enforcement surprise—police officers surrounded the car to apprehend them. When the police officers opened up the trunk of the car, they found several thousands of dollars of stolen clothing from other malls.

“[In this area] many of these ORC rings travel in groups and come to the mall in stolen but also in rented cars,” says Captain
Daniel Hahn of the SACPD. “The Arden Fair Mall has also been a target of potential terrorist activity as well. The owners of the mall are Jewish, and because of the mall’s high-profile nature, we made a point to increase security and implement systems where security at the mall and local law enforcement can communicate effectively with one another.”
²

Terrorist activity? In a quaint Sacramento mall? I suddenly realized no area was safe. In a world where the suspected Underwear Bomber chose the Detroit route only because of the cheap airfare, anything—even a mall in a peaceful suburban area—could be a target.

The partnership of the Arden Fair Malls and the SACPD has proven fruitful. After just a couple years of working together, mall security and the police department not only share information, but they also attend and provide space for training sessions that include SWAT team preparations, evacuation drills, crisis management scenarios, and K-9 training. And the partnership has paid off. Within a year, the SACPD and Arden Fair Mall security have recovered 58 stolen vehicles and apprehended 43 suspects while recovering thousands of dollars of merchandise, all from the license plate recognition system.

Types of ORC Theft Prevention That Are Supposed to Work But Don’t

The Arden Fair Mall might be an example of security staff, retailers, technology, and law enforcement working harmoniously, but not all retailers work like that. Stores from Walmart to Saks Fifth Avenue were plagued with the same challenge at the beginning of 2008, while facing sinking profits, a glut in inventory, and weak staffing. How does a business that once pulled in hundreds of millions of dollars in sales per quarter curb retail theft and rescue profits without inconveniencing customers and losing even more money?

Steven Reed and the Arden Fair Mall invested a couple million dollars in surveillance systems, partnerships with wireless providers, and extra staffing. But it wasn’t until Reed implemented his infamous (and inexpensive) dress code policy, the license plate recognition system, and the CCTV system that he saw a 3-5% increase in traffic and a 10% increase in sales over the last 11 months. Crime incidents at Arden Fair Mall have decreased 215% from 2010 to 2011, due in large part to these crimefighting tools and Reed’s eagerness to publicize these techniques via a robust relationship with the media. Although customers initially felt as if their civil rights were being compromised, Reed insists that he’s “not about a Big Brother approach,” and foot traffic at the mall increased instead of decreasing as customers realized that they were safer because of the security changes.

Retailers such as Target and Walgreens were placed in a difficult position because of the economy. Having to act fast, they decided to pour millions into technology upgrades, figuring this was the only way to solve the shrinkage pandemic quickly. The National Retail Federation (NRF) reported in its 2010 survey that 90% of retailers (including Target and Walgreens) indicated that their companies had been victimized by ORC. This was a drop from the 92% reported in 2009 but was higher than the 85% reported in 2008.
³
Of the retailers who responded to the survey, more than half said they were allocating additional resources to combating ORC. Staffing shortages, especially during the holidays, meant shrinkage numbers would go up. That, combined with plummeting profits, had CEOs and upper management freaking out in their corner offices.

In the 2009 Retail Information Systems (RIS) Store Systems Study, 40% of retailers reported that loss prevention is in their top ten store system priorities for 2009, up from 29% the year before.

But making loss prevention a “priority” didn’t mean having endless numbers of executive meetings in board rooms; it meant retailers had to upgrade their older video cameras and recording systems.
Investing in live visible as well as hidden CCTV systems was one way in which old systems were upgraded. These improvements cost from $7,000 to $20,000 for cameras alone. That cost didn’t include maintenance for the cameras, video, storage, or bandwidth if the hours of surveillance tapes were being stored on servers. And these expensive upgrades didn’t necessarily guarantee protection from theft, anyway.

“Stores can install all the video cameras, security mirrors, and alarms they want, but relying on technology too much is allowing ORCs to get away with stealing millions of dollars in merchandise,” says Alan Herbach, president of American Theft Prevention Products. He believes the lack of personal contact between the shop owner/employee and potential thief allows more merchandise to be stolen. “People who are stealing items in bulk want privacy. They tend not to shoplift right in the open. If someone is looking them in the eye, thieves are more likely not to steal an item.”
⁴

Another way retailers upgraded their systems inefficiently was by installing electronic sensors on clothing and products and installing in-store alarm systems. Security tags and sensors can cost $10 to $20 per tag. If a moderately sized retailer with 500,000 stock-keeping units (SKUs) decides to tag all its merchandise, the cost could run as much as $5 million. It was estimated that retailers spent on average $300,000 on alarm systems that beginning boosters and experienced ORC rings could get past just by using shopping bags lined with metal. The estimated losses retailers incurred because of ORC gangs using this method was nearly $750 million per store per year.
⁵
Even with both of these methods of theft deterrence working in tandem, potential thieves were able to circumvent them by creating technology that was more sophisticated than what the stores were using. Loss prevention research and development were no match for these boosters, who were ten steps ahead of retailers even with their rudimentary technology.

“It’s not that difficult to just put merchandise in your bag and walk out with it,” says Sarah, a former department store employee
turned booster. “Stores are so understaffed you can pretty much walk out with a TV set in your bag, and no one would even notice. And half the time the people they hire to ‘watch’ the door or conduct surveillance a) don’t want to be there and so they don’t care, or b) are working in conjunction with fellow employees. There is no accountability, so why should anyone care?”
⁶