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Coalitions, Cooperation, Congress Are Key in Battle Against ORC

Organized Retail Crime

by Terrie Ellerbee/associate editor

Organized Retail Crime TargetsShoplifting and Organized Retail Crime (ORC) are two very different crimes. A person may steal bread to feed a hungry family. A coordinated group steals items that can be turned into cash that typically funds other criminal activity.

If there has been an increase in ORC arrests, it is because retailers and law enforcement are doing a better job of recognizing it, said Karl Langhorst, director of loss prevention for The Kroger Co.

Understanding the difference is an important first step not only for store personnel, but also law enforcement and state and ­federal legislators.

“It is not shoplifting. That’s what we need to drive home,” Langhorst said. “Many of these crimes are what we call ‘gateway crimes,’ because ORC leads to financing for other criminal activity, be it narcotics, distribution, prostitution, gun running, those types of things. They just want the money. They come into the store with a shopping list like you and I have that they’ve been given, and they take what’s on their list.”

Langhorst said supermarket operators must stay on top of organized retail crime in their communities.

“Stay connected with local law enforcement, make sure that they understand what the trends are in their area, and make sure that their associates do as well,” Langhorst said.

 An ORC program is born

Kroger had no director of loss prevention until Langhorst was hired in 2008. In fact, there really was no formal corporate ­program, and no specialized ORC investigators. Langhorst, whose background includes loss prevention for Safeway’s Texas division, was charged with establishing the program for Kroger’s 2,500-store, 18-division grocery company.

The development and expansion of the ORC program would not have happened without the full support of Kroger’s senior management. That it took place in 2008-09 against a backdrop of intense financial ­uncertainty is a testament to its importance.

Four years later, Kroger has many specialized ORC investigators whose backgrounds predominantly are in law enforcement, ­including Dennis Dansak, who was a special agent/supervising special agent in the Pennsylvania Attorney General’s office. Personnel with backgrounds like Dansak’s lend credibility to their dealings with local, state and federal law enforcement personnel.

[gn_pullquote align=”left”]96.0 percent: Percentage of retailers who have been a victim of organized retail crime in last year

15.0 percent: Average percentage of
apprehensions retailers say lead to some level of violence

54.4 percent: Percentage of retailers who believe their top management understands organized retail crime

52.1 percent: Percentage of retailers who have been a victim of cargo theft in last year

73.4 percent: Percentage of retailers who have identified or recovered stolen merchandise through eFencing locations

Source: National Retail Federation 2012 Organized Retail Crime Survey[/gn_pullquote]The goal in ORC investigations is to identify “boosters”—the front line thieves who ­intend to resell stolen goods—and shut down and prosecute those who resell or “fence” stolen items.

At the National Retail Federation’s Loss Prevention Conference and Expo (LP ’12), held June 20-22 in New Orleans, CVS/Caremark’s National Manager for ORC Tony Sheppard listed three types of boosters: 1. An individual acting alone in familiar areas who target their neighborhoods or cities; 2. A loosely structured group with more expansive boundaries; and 3. Offenders who steal merchandise from ­multiple stores on a national scale.

That Sheppard knows what he’s talking about is without question. Even while taking a break from the conference, he helped nab a thief. Sheppard recognized the man because he’d helped prosecute him in Kentucky several years ago. He checked to see whether there were any outstanding warrants for him and found that he was wanted in Florida. Local police apprehended the man.

“Case in point: When it comes to cooperation and partnership at LP ’12, there’s no better story than retailers and local law ­enforcement uniting to bring a professional booster to justice,” states a blog by the NRF about the incident.

The next link in the battle are the fences who sell what boosters steal. As was the case in a $1.25 million ORC bust in north Seattle (see box), a market or bodega can operate as a fence. A residence also can serve as a clearinghouse for cleaning and repackaging stolen goods. Fences also can include wholesalers who move the merchandise back into public commerce, where consumers are ­unaware that they are buying stolen items.

Retailers can help undercover ORC agents build cases against those who fence stolen goods by providing them with merchandise to use in investigations, as also happened in the Seattle case. Catching the suspects is a matter of patience, as multiple transactions lead to better cases, the NRF’s blog states. Being too hasty could mean only parts of an ORC ring are eliminated.

 Coalitions important tool in fight

There is power in the sharing of information. Loss prevention professionals band together in groups like the Los Angeles Area Organized Retail Crime Association (LAAORCA) to raise awareness and compare experiences. It was founded in 2009 by a core group of ORC loss prevention managers with the assistance of the Los Angeles Police Department (LAPD) Commercial Crimes Division.

The public/private business partnership includes retail investigators, law enforcement personnel and prosecutors. Its mission is to share case intelligence and work collaboratively on retail crime prevention and investigations.

A record 1,000 people attend LAAORCA’s third annual conference in February.

These coalitions bridge the gap between public and private investigations. Kroger is a member of several ORC coalitions across the country, Langhorst said.

“The continued education of both law ­enforcement and legislators on the difference between shoplifting and ORC is something that these coalitions do a very good job of when they come together,” Langhorst told The Shelby Report. “They really enlighten law ­enforcement on the difference.”

The LAPD credited its partnership with the LAAORCA in the successful bust of a large-scale organized crime ring that stole more than $6 million worth of merchandise. (See box.)

The Texas Retailers Association (TRA) was probably one of the first organizations in the country to seek partnerships with law ­enforcement. Texas realized there was a large-scale problem when in 2003 more than $31 million worth of infant formula was stolen in the Lone Star State alone. A Texas state trooper found a rental truck loaded with infant formula during a routine traffic stop, and that sparked a statewide campaign against ORC.

“We developed the Infant Formula Task Force comprised of state, local and federal law enforcement; retail loss prevention, and state agencies (like the health department/WIC and the attorney general),” said Joe Williams, VP, regulatory and member services at the Austin-based TRA.

It is clear that education and information sharing are important tools in the fight against ORC. These are the tasks coalitions or task forces are designed to take on. Their emphasis is always on getting the word out.

“Today grocers, along with other retailers, all work to share video, tips, IDs, photos—anything that might help take down these prolific ORC gangs,” Williams said. “We also use email blasts that include tips, photos or other information to warn retailers. Law enforcement is actively involved and, in several cases, actually monitors and sends out the email blasts.”

Through Google Groups information is shared only with law enforcement and ORC investigators or managers so that data can be stored and available for research, Williams said.

Other technology, including wireless capabilities and live streaming into a third party location with 24/7 live monitoring, also are now employed in the battle.

 eFencing and acts of Congress …

Technology has helped in the fight against ORC, but it also has given criminals new outlets for their stolen goods. ORC professionals call it eFencing. Amazon Marketplace and Craig’s List make it all too easy to sell goods online.

“We’ve worked closely with eBay in recent years to build a partnership trying to defer this type of activity on its site,” Langhorst said. “But Craig’s List and others still are not stepping up to actively work with us on it. Hopefully we’ll get some federal legislation one of these days.”

In that void, states are creating their own solutions, which is leaving a patchwork of ­retail theft laws across the country. For example, in Virginia the felony threshold—that point when a theft is considered a felony—is $200. In Texas it is $1,500. Some states have raised the threshold, like Ohio where it rose from $500 to $1,000. In Georgia, it ­increased from $300 to $500 this year.

In Colorado, the state increased penalties for setting off false alarms or preventing alarms in stores from sounding as part of an organized effort to steal in mass quantities. This is an effort to combat mobs that create a diversion while others swipe items from the store. Similar laws have been passed in California, New Mexico, New Jersey and Texas.

A bill signed by Wisconsin Gov. Scott Walker this year tackled ORC on three fronts. One, it makes it a felony to steal with the intent to resell the stolen goods online. Two, it requires flea market merchants to prove that they own certain kinds of merchandise, including baby food, cosmetics, drugs, infant formula and batteries. Proof could be in the form of the name, address and telephone number of the supplier of the merchandise. It is required that the information be on hand and available to give to a law enforcement officer for inspection. Three, it substantially lowered the state’s previously high threshold for felony charges.

Michelle Kussow, VP of government affairs for the Wisconsin Grocers Association (WGA) said her state had been targeted because the felony threshold there was so high—$2,500. The WGA was successful this year in getting it lowered to $500.

Retailers can help themselves by pushing for legislation criminalizing ORC in their states and, importantly, at the federal level.

“It has been considered for several years,” said Langhorst, who has testified before the U.S. House Judiciary Subcommittee on Crime, Terrorism and Homeland Security. “It’s a work in progress.”

The grocery industry could help by pressuring members of Congress to act on federal ORC legislation similar to that passed in states like Wisconsin.

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