Hot Off the Shelves
NEW YORK -- Retailers beware: There's a new security threat out there. Organized gangs of shoplifters are hitting stores nationwide, according to a report in The New York Times.
In one such case, investigators nicknamed the gang of shoplifters the Ghali organization after its leader, Mohammed K. 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, reported The Times .
The gang controlled convenience stores to stockpile the merchandise and a warehouse to distribute it, according to court records. To keep morale up, leaders showered shoplifters with perks, from free transportation to bail money, as needed.
Well-organized groups like the Ghali gang have operated for years, and, according to an estimate from the Federal Bureau of Investigation, losses from organized retail theft have reached as much as $30 billion. But retailers have just begun to recognize that the teenager who shoplifts a candy bar or a pair of jeans is no longer their biggest nemesis, and they are now coordinating efforts to combat organized gangs, according to the report.
Major 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, reported The Times .
Retailers said in the report that 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 proved 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," Daniel J. Doyle, vice president of loss prevention at Beall's, a department store chain based in Florida that has helped develop one of the databases, told The Times .
According to the report, three retailing industry trade groups are building the databases. One is the National Retail Federation in Washington, which represents thousands of chains from Federated Department Stores 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 like Wal-Mart and Target. Its 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 J. LaRocca, vice president of loss prevention at the National Retail Federation, said in The Times report that 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 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 aim at retailers that have traditionally had less security than jewelry and electronics stores. Among the most sought-after items are Enfamil infant formula, Oil of Olay skin products, Pepcid heartburn medicine and Gillette shaving products, according to the report.
The Ghali organization operated much like the retailers it preyed on, 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 take 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. Seven other members of the organization pleaded guilty.
But the retailing 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," Keith White, head of loss prevention at the Gap, told The Times .
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," Eric Ives, acting chief for the major theft unit at the F.B.I., which oversees organized retail crime investigations, said in the report.
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 United States attorney's office is unwilling to commit resources to a shoplifting case unless that figures rises to $50,000, Ives said in the report.
But, he told The Times , 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 F.B.I. is hoping the databases work.
Retailing executives also complain that state shoplifting laws, created largely to address petty theft, are inadequate when it comes to organized 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 F.B.I. said he hoped the retailers, using a database, could "work up a case large enough for the F.B.I.," reported The Times .
The classification of organized retail crime did not exist until the early 1980's, when the F.B.I. broke up several groups operating in Pennsylvania and Michigan. Soon after, Wal-Mart created a special team of investigators called the A-Team that tracks organized burglary rings, according to the The Times report.
Only in the last couple of years has the issue begun to dominate retailers' discussions. The Gap and Sears, for example, have developed special investigative teams trained to spot the crime rings, and the industry holds annual conferences to share strategies for fighting the problem.
But secrecy remains an issue, so much so that retailers would not participate in the databases unless they could post information about shoplifting incidents without revealing the identity of the stores. Several retailers declined to discuss their roles in developing the National Retail Federation system. But a handful have acknowledged their participation, including Federated Department Stores, Walgreens, Sears, the Gap, Beall's and Helzberg Diamonds, a jewelry chain based in North Kansas City, Mo, according to the report.
The National Retail Federation database, which can be accessed on the Web using a password, looks much like an online survey. To report a crime, retailers log in and fill out a form requesting details like the methods used to enter a store ("fence cut," "glass broken" or "door forced"), weapons used during the robbery ("bat," "knife" or "verbal threats") and the type of products stolen. Digital images of suspects and security camera footage of a crime in progress can be posted, allowing retailers to identify common suspects.
LaRocca of the National Retail Federation told The Times that when enough retailers reported a similar pattern in the database--say, the shoplifter wears a red baseball cap and steals infant formula around closing time--they could notify law enforcement agencies, which have access to the system. "Police will not investigate every case of a missing laptop," LaRocca said in the report. "If we can present a case to them that is compelling, they will investigate."
The idea of retailers banding together to fight shoplifting is not without precedent. The Jewelers' Security Alliance, a network of jewelry stores that issues alerts to members after a robbery, has operated for more than a century.
Department stores, discount chains and convenience stores have worked out their own informal security networks, but most rely on low-tech methods: phone trees that require store managers to call each other after a robbery or the occasional conference where security teams trade war stories and try to connect the dots, reported The Times .
"It has all been pencil and paper," said Bill Titus, head of loss prevention at Sears in the report. "We've been communicating way behind the curve."
In one such case, investigators nicknamed the gang of shoplifters the Ghali organization after its leader, Mohammed K. 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, reported The Times .
The gang controlled convenience stores to stockpile the merchandise and a warehouse to distribute it, according to court records. To keep morale up, leaders showered shoplifters with perks, from free transportation to bail money, as needed.
Well-organized groups like the Ghali gang have operated for years, and, according to an estimate from the Federal Bureau of Investigation, losses from organized retail theft have reached as much as $30 billion. But retailers have just begun to recognize that the teenager who shoplifts a candy bar or a pair of jeans is no longer their biggest nemesis, and they are now coordinating efforts to combat organized gangs, according to the report.
Major 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, reported The Times .
Retailers said in the report that 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 proved 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," Daniel J. Doyle, vice president of loss prevention at Beall's, a department store chain based in Florida that has helped develop one of the databases, told The Times .
According to the report, three retailing industry trade groups are building the databases. One is the National Retail Federation in Washington, which represents thousands of chains from Federated Department Stores 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 like Wal-Mart and Target. Its 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 J. LaRocca, vice president of loss prevention at the National Retail Federation, said in The Times report that 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 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 aim at retailers that have traditionally had less security than jewelry and electronics stores. Among the most sought-after items are Enfamil infant formula, Oil of Olay skin products, Pepcid heartburn medicine and Gillette shaving products, according to the report.
The Ghali organization operated much like the retailers it preyed on, 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 take 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. Seven other members of the organization pleaded guilty.
But the retailing 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," Keith White, head of loss prevention at the Gap, told The Times .
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," Eric Ives, acting chief for the major theft unit at the F.B.I., which oversees organized retail crime investigations, said in the report.
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 United States attorney's office is unwilling to commit resources to a shoplifting case unless that figures rises to $50,000, Ives said in the report.
But, he told The Times , 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 F.B.I. is hoping the databases work.
Retailing executives also complain that state shoplifting laws, created largely to address petty theft, are inadequate when it comes to organized 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 F.B.I. said he hoped the retailers, using a database, could "work up a case large enough for the F.B.I.," reported The Times .
The classification of organized retail crime did not exist until the early 1980's, when the F.B.I. broke up several groups operating in Pennsylvania and Michigan. Soon after, Wal-Mart created a special team of investigators called the A-Team that tracks organized burglary rings, according to the The Times report.
Only in the last couple of years has the issue begun to dominate retailers' discussions. The Gap and Sears, for example, have developed special investigative teams trained to spot the crime rings, and the industry holds annual conferences to share strategies for fighting the problem.
But secrecy remains an issue, so much so that retailers would not participate in the databases unless they could post information about shoplifting incidents without revealing the identity of the stores. Several retailers declined to discuss their roles in developing the National Retail Federation system. But a handful have acknowledged their participation, including Federated Department Stores, Walgreens, Sears, the Gap, Beall's and Helzberg Diamonds, a jewelry chain based in North Kansas City, Mo, according to the report.
The National Retail Federation database, which can be accessed on the Web using a password, looks much like an online survey. To report a crime, retailers log in and fill out a form requesting details like the methods used to enter a store ("fence cut," "glass broken" or "door forced"), weapons used during the robbery ("bat," "knife" or "verbal threats") and the type of products stolen. Digital images of suspects and security camera footage of a crime in progress can be posted, allowing retailers to identify common suspects.
LaRocca of the National Retail Federation told The Times that when enough retailers reported a similar pattern in the database--say, the shoplifter wears a red baseball cap and steals infant formula around closing time--they could notify law enforcement agencies, which have access to the system. "Police will not investigate every case of a missing laptop," LaRocca said in the report. "If we can present a case to them that is compelling, they will investigate."
The idea of retailers banding together to fight shoplifting is not without precedent. The Jewelers' Security Alliance, a network of jewelry stores that issues alerts to members after a robbery, has operated for more than a century.
Department stores, discount chains and convenience stores have worked out their own informal security networks, but most rely on low-tech methods: phone trees that require store managers to call each other after a robbery or the occasional conference where security teams trade war stories and try to connect the dots, reported The Times .
"It has all been pencil and paper," said Bill Titus, head of loss prevention at Sears in the report. "We've been communicating way behind the curve."