Black Market Billions: How Organized Retail Crime Funds Global Terrorists (Gal Zentner's Library) (15 page)

Jojola used his talent as a skateboarder to his advantage. While most kids saw skateboarding as a hobby, Jojola quickly developed it into a potential way to make money. At age 13 he was sponsored by a skating marketing company that gave him free skateboards and clothing. By the time he was 16, he was making nearly $2 million.

But it wasn’t from skateboarding.

When Jojola was just 14, he realized he could make more money by reselling stolen items than through sponsorships. Reaching out to
his sources and his friends from the skate park, Jojola started putting together an ORC ring that primarily engaged in “smash and grab” theft. They stole cars, drove them into store windows, and lifted as much as $10,000 worth of merchandise within minutes. Every couple of days Jojola gathered his workforce to plot out which stores they would hit next. He would dispatch his ring members to stores such as Kmart, Best Buy, Hastings, and a handful of mom-and-pop stores (50 in total). He said that stores selling “Christian-themed merchandise” had the highest resale value.

“What shocked us the most was that he was so young to have so many people working under him,” says Albuquerque Police Department detective Harold Prudencio, who was familiar with the case. “No one would think a kid that age would be able to have the sense to run such a large ORC ring on his own. It was as if he was running a corporation.”
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According to the APD and published reports, Jojola’s ORC underlings were mostly ex-convicts and drug addicts. Jojola faced more than 82 counts for his scheme, including burglary, larceny, and racketeering. In 2007, despite the numerous crimes he had committed and the amount of merchandise he had stolen, Jojola was sentenced to just one year in a juvenile detention center. His accomplices were brought up on larceny charges. However, putting away this group for racketeering (a charge that would come with a stricter penalty and longer jail sentence) wasn’t going to help.

“These people do not care whether or not they get caught,” says Biggs. “They are focused on one thing, and that is how they are going to make their next dollar on what they are selling. They know if they are ever caught, they are facing a maximum of a couple days in jail. Likewise, they also know law enforcement doesn’t want to take the time to book them. With those factors in mind, this is a crime that is tailor-made for these types of criminals.”

Moving the Merchandise: The Role of a Fence

Although the role of a booster is important, the role that the fence plays in an ORC ring is equally vital. Fences and fencing operations are the point people who sell stolen merchandise to consumers at flea markets, swap meets, pawn shops, and online auction sites (also known as e-fencing). Fences often operate legitimate businesses in conjunction with illegitimate enterprises.
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Fences fall into two categories: commercial and residential. Level 1 fences usually are in the residential category, operating out of their homes and selling merchandise to friends, family, and neighbors, and can be broken down further into six categories or subsections when describing their business. The highest level is the professional fence, who treats her fencing operation as a legitimate business (also categorized as commercial). Other levels include part-time fences, associational fences, neighborhood hustlers, drug dealers who barter drugs for stolen property, and amateur fences.
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Most Level 1 boosters take the merchandise and sell it to a fence, who then resells the merchandise at the local level at a flea market, street fair, or pawn shop, or sells it back to the retailer.

At the Los Angeles Police Department’s annual LEAPS conference in August of 2010, Joe LaRocca from the National Retail Federation showed a couple of pictures in his presentation that were hugely disturbing. The first was of a haul of clothing, merchandise, and equipment uncovered in a $3 million bust where seven residents were arrested for selling stolen merchandise out of their home. What was shocking about the image was that the home was set up just like a store, complete with racks, shelving, and areas to try on merchandise. When I looked closely at the product, I couldn’t help but think, “If the merchandise looks this good, why
not
purchase it from your neighbor?” Then I realized I was talking about a criminal enterprise! The next picture was of three semi-tractor trailers filled with piles of Levi’s jeans. According to LaRocca, these jeans were part of a sting authorized
by a search warrant; the LAPD uncovered $3 million worth of denim lifted by a South American booster crew targeting Levi’s. That day I wandered around downtown Los Angeles and visited a local weekend flea market and checked out the stacks of unworn, fully tagged jeans and the cartons of beauty products. I wondered how much of the merchandise had been delivered by Level 1 boosters, and if I purchased this merchandise, whose fix (either drugs or something more sinister) was I funding?

Being Convicted as a Level 1 Fence: More Like a Slap on the Wrist Than a Slap in the Face

A Level 1 booster or fence arrested in California might face different charges than if he is arrested in Illinois, Florida, or New Mexico. For example, in California, “petty theft” involves taking property valued at less than $400. The penalty can be a sentence of up to six months in jail and a fine ranging from $50 to $1,000. If the property is worth less than $50, the booster might only be charged with an infraction, with a fine of $250 or less. Grand theft applies to stolen merchandise that has a value of $400 or more. If a booster is convicted, the crime can be classified as a misdemeanor or felony, based on what the prosecution decides is the proper penalty.

“The laws are very gray around it, and they’re usually dealt with at the local level,” said loss prevention expert Paul Jones in an interview with NBC News. “There is no consistent law across the board that invokes a sense of fear in Level 1 boosters. Because the laws are so loose, they think they can get away with it, and, most of the time, they can.”
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In Florida, the law is more complicated. For example, the shoplifting laws have several sections with nearly 16 different subsections for laws pertaining to retail and farm theft, transit fare evasion, detention
and arrest, exemption from liability for false arrest, resisting arrest, and penalties. Sorting through the laws to figure out exactly what law pertains to someone who has just lifted $400 worth of merchandise took me half a night. I can’t imagine what law enforcement and prosecutors must be thinking. No wonder Level 1 boosters are turned out as quickly as they can say “shoplifter.”

The laws in Illinois are not much better. Article 16A of the Illinois statutes has 13 different sections, all of which have different definitions of what “to conceal” merchandise means, as well as what a “peace officer” is, all the way down to the definition of what a “person” is. And what constitutes a felony is much more complicated. For example, if someone commits the offense of “retail theft,” as defined in Section 16A-3, paragraphs (a), (b), and (c) of Article 16A on Retail Theft, [the person] shall be civilly liable to the merchant of the merchandise in the amount consisting of (i) actual damages equal to the full retail value of the merchandise as defined herein, plus (ii) an amount not less than $100 nor more than $1,000, as well as (iii) attorney’s fees and court costs. For minors accused of a committing retail theft, the parent or guardian is responsible and civilly liable for the minor. To be convicted for a Class 4 felony (which, according to Illinois law, can mean one to three years in prison), the amount of the item stolen cannot exceed $150. You also would have to have been convicted of any type of theft, robbery, armed robbery, burglary, residential burglary, possession of burglary tools, or engaged in a home invasion.

In New Mexico, not only are the values of the merchandise shoplifted different for petty misdemeanors (the amount must be under $250), but the definitions of “merchant,” “store,” and “merchandise” also differ compared to how they are defined in Illinois and California. One thing that all local shoplifting and theft laws do have in common is that they are filled with confusing language, definitions, and loopholes that vary from state to state. This makes retail theft a perfect crime for those who want to finance something quickly with virtually no legal ramifications.

“In most cases, as long as the boosters keep theft under $1,000, it is just a misdemeanor [depending on the state],” says Frank Muscato, an executive in the organized retail crime division at Walgreens. “They have not created a federal offense unless they cross state lines into, for example, Indiana or Pennsylvania, where it is a felony to transport stolen merchandise of any value across state borders. I’m telling you, it’s really a bad problem.”
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According to the CRISP (Connecting Research in Security to Practice) Report on organized retail crime, put out by the ASIS Foundation, the absence of criminal statutes that address the unique nature of ORC contributes to the crime’s growth. Many state and federal laws are applicable and directed toward two criminal statutes: shoplifting or the Interstate Transportation of Stolen Property Act. Currently no federal criminal statutes are used to prosecute organized retail criminals.
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In addition, the report outlines how shoplifting penalties fail to recognize the aggregated impact and the number of individual shoplifting acts committed against multiple retailers in multiple jurisdictions, as well as penalties for selling and distributing merchandise both online and offline. The lack of criminal statutes also applies to the Level 1 fence, who by law can be apprehended for knowingly selling stolen merchandise. However, because these fences operate at such a low level, fences who are apprehended rarely have enough information to help law enforcement in larger ORC cases. On the rare occasions when those arrested do have information about the larger ORC ring, the law enforcement involved uses them as potential sources rather than arresting them on the spot.

Tracking the stolen merchandise is equally difficult. Once the product is taken out of the store and sold on the black market, it pretty much doesn’t exist anymore. While stores take into account costs for shrinkage, stolen products valued at $100 or less are just written off as a loss, says Muscato. Although it might seem like a petty crime, the result is nearly $30 billion in lost revenues for the retail industry—a major and expensive issue when you look at the big picture.

The Level 2 Booster: Inside the Mind of a Potentially Dangerous Criminal

The difference between a Level 1 booster and a Level 2 booster is subtle, yet significant. Many Level 2 boosters suffer from the same addictions and “survival mode” mentality as a Level 1 booster. However, the Level 2 booster is more organized, tends to travel to different states, and takes an entrepreneurial approach to boosting by creating a small business out of it.

A typical day for Samuel Elias, a Level 2 booster well-known by the Walgreens Loss Prevention group, started out like this: He got up, read the paper, and checked in with his children before they went to school. After his morning ritual, he got ready for work. His workplace wasn’t in an office park, tall building, or downtown metropolis. His work space was a garage filled from floor to ceiling with stolen merchandise that he and his team of boosters took from stores such as Target, Walgreens, and Walmart. Around mid-morning, Elias would call some potential fences needing product for their stores. He filled orders based on what he had in his office-turned-warehouse. Then he went out for a couple of hours to case stores or sometimes boost, depending on the day. On a typical outing, he took as much as $5,000 to $7,000 in merchandise, mainly in OTC drugs, razors, diabetic test strips, and baby formula. The OTC drugs with the highest value on the market are Prilosec and Sudafed, both of which Elias boosted often. (When Immigration and Customs Enforcement [ICE] operatives, as well as the organized retail crime team at Walgreens, raided Elias’s home, they found well over 400 boxes filled with stolen OTC medication.) At some point during the day, Elias would also figure out a route for a boosting spree. The M.O. of a typical Level 2 booster is to occasionally travel to different states to boost from other retail stores. Elias would go out for five or six days once a month, traveling through northern Kentucky and southern Indiana, according to Biggs. During his week-long trips, Elias would pick up close to $41,000 worth
of merchandise from one state alone. His total haul usually equaled $200,000 to $300,000.

“Elias was such a seasoned professional booster he had a three-ring binder that kept track of the merchandise he would sell to another Level 2 fence called Alpha Trading. This wholesale business would clean the merchandise, repackage it, sell it to another, higher-level fence, who would then turn around and sometimes sell it back to the stores,” says Biggs.
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Elias grew up in Iran. When the Shah fell, his close-knit family decided to stay in Iran despite an oppressive government and even worse living conditions. Elias made his way to the U.S when he was in his 20s. A chronic gambler, Elias started out boosting to supplement his addiction. The money he made selling the merchandise would ultimately be spent at the blackjack table or roulette wheel in Las Vegas or Reno, Nevada or Indiana. He spent at least four or five days out of the month at these gambling locations, where he might win up to $200,000. This money was used to make mortgage payments for a 5,000-square-foot home and two luxury cars. To say Elias was living well off the profits of stolen merchandise would be an understatement. On the radar of many local authorities, Elias was apprehended and arrested often. Sometimes he would be jailed for a couple of months. However, due to different state laws and penalties, Elias continued to boost for almost a decade, working with a group of three or four recruits who were immigrants from Mexico and South America before he was ever convicted of a felony and put in jail for 15 years.