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Organized Retail Crime Goes Global

Hitha Prabhakar discusses the connection between organized retail crime and terrorism.
This chapter is from the book

A hush falls over the room as a man in a designer suit jacket walks to the podium. The man is tall and well spoken and is comfortable addressing an audience of 30,000. Methodically pointing to charts projected onto a screen using high-tech equipment, he reviews how much this organization spent within the last year, its new financial targets, how it can make more money in the upcoming year, and, most importantly, how the American army fighting across the border in Afghanistan is no match for his organization. In the wings, spokespeople for the organization take notes furiously, ready to communicate the main points of the meeting to the rest of the world.1

This man isn't the chief executive of a Fortune 500 company. He is Baitullah Mehsud, head of Pakistan's Tehreek-e-Taliban terrorist group.2 (Mehsud was subsequently killed in August of 2009 along the Afghan border in U.S. air strikes.)

As it turns out, consumers and businesses weren't the only ones suffering from the repercussions of the global recession. Terrorist organizations such as al Qaeda that once brought in close to $30 million a year before the 9/11 attacks felt the financial pinch just like legitimate businesses around the world. Abd al Hamid Al Mujil, known as al Qaeda's "million dollar man,"3 at one point turned to charitable donations to raise money for the terrorist group. When the U.S. government realized in 2006 that he was using his position as the executive director of the eastern province branch of the International Islamic Relief Organization (IIRO) to funnel money back to al Qaeda, he was removed from his post, costing the IIRO millions of dollars in potential donations. With its once large bank account dwindling, al Qaeda decided to decentralize. Instead of having one major unit functioning in the Afghanistan and Pakistan regions, al Qaeda suddenly had affiliates all over the world that shared the same ideals but planned and executed their own terrorist attacks.

Professor Bill Martel of Tufts University's The Fletcher School of Law and Diplomacy told me, "Pre-9/11, the conventional wisdom was that groups like al Qaeda were tightly organized with clear lines of control from its leadership. What's happening now is that al Qaeda has lost central control [of] its power as well as its financing. Once the U.S. began to attack al Qaeda, it became a very dynamic organization with a constantly evolving set of networks all connected to the core group. These subgroups are all highly adaptable as well and take it upon themselves to recruit from within—convincing their own people that supporting their group is one step closer to God while using the Internet for self recruitment, planning and financing."4

Martell notes that al Qaeda wasn't the only organization facing a funds shortage once these groups started to come under greater scrutiny and attack. After all, they declared war on the U.S. and attacked it, and in response the U.S. attacked al Qaeda and its financial means of support. Hezbollah and the Taliban also became decentralized, creating an opportunity for subgroups to crop up in unsuspecting areas such as Latin America, Africa, South and Southeast Asia, and even the U.S. These affiliated groups supported the main organization and indoctrinated extremist ideals shared by their members worldwide. However, they were on their own when it came to getting money to fund attacks. They raised funds by increasing the cocaine trade, carrying out kidnappings, and running scams that bilked donors out of money meant for charitable organizations. Transferring funds via hawalas5 was commonplace and in fact was a standard way of accumulating money.

What wasn't typical was that the Lashkar-e-Taiba (LeT), al Shabaab, and South American cells of Hezbollah6 were increasingly relying on gangs, cartels, and international sympathizers to build their bank accounts. One of the main sources of money was organized retail crime (ORC).

Why Is ORC Such a Threat?

Once known to the retail community as the minor crime of shoplifting, in the past decade ORC has grown into an estimated $38 billion a year black market operation.7 U.S. government agencies such as Immigration and Customs Enforcement (ICE), the Federal Bureau of Investigation (FBI), and the Department of Homeland Security (DHS) have all tracked ORC synchronized teams that steal from our economy and use the money to attack us and support international terrorist groups. These groups include Partiya Karkeren Kurdistan (PKK) in Iraq (led by Saddam Hussein's son, Uday, until his death), the FARC (Revolutionary Armed Forces of Colombia), the IRA in Ireland, as well as Hezbollah, Hamas, and Lashkar-e-Taiba (Pakistan/India).8

These terrorist organizations are hell-bent on destroying not only the lives of the people within their own countries who don't stand with them (or their mission) but also the American economy, its people, and its way of life. While it is difficult for government organizations to track exactly how much money is actually being made, the National Retail Federation (NRF), ICE and FBI estimates the proceeds from stolen goods equal $600 million dollars annually and have been funding everything from weapons, to fake visas and passports, to paramilitary equipment.9 ORC is one of the easiest and least detectable ways for criminals to make money quickly and send it to terrorist groups overseas. What's even more disturbing is that these terrorist organizations are using grassroots tactics to recruit people into ORC rings. According to Joe LaRocca, spokesperson for the NRF's ORC initiative, the rise in ORC, especially within the past two years, has had to do with the economy. Consumers were quite literally "dying for a deal" by purchasing items that were stolen by crime rings with links to terrorist organizations overseas—they just didn't realize it.

"The economy played a big role in the organized retail crime and the resale market," says LaRocca. "Consumers who were cashed-strapped and lost their jobs looked for alternative places to purchase everyday items at an affordable cost. When places like Walmart, Target, and Walgreens became too expensive for them, the only option was to tap into resale markets, flea markets, pawn shops, and online web sites. These consumers forfeited their comfort and trust with retailers they knew, and chose those [retailers] who had what they were looking for at lower prices in order to save some money. And when the economy is tight like that, consumers made those tough choices. Suddenly, shopping at a desolate warehouse or purchasing a clearly fake or stolen purse at a handbag party thrown by a friend seemed like a good idea, regardless of who or what the ripple effect may be [impacting]."10

LaRocca sat down with me one humid afternoon at the Atlanta National Retail Foundation conference on loss prevention. He explained how domestic ORC groups were fully aware of American consumers' spending vulnerabilities and took advantage of them. "People were forced to do more with less, and these guys were smart enough to make money off of it," he said. LaRocca also pointed out that with the economic downsizing that was taking place, retailers had to cut back, creating an endless cycle of understaffed stores that aided criminal acts.

Another reason why these crimes are so attractive to ORC rings is that they are not looked upon as federal crimes. Retail theft falls into the category of "property theft" and takes on a lesser charge than an offense that would fall within the jurisdiction of the major crimes division. Despite ORC rings stealing upwards of $1 million in a couple of months, they are still viewed as petty thefts in some instances.

One ORC ring, which was busted in Polk County, Florida in 2008, involved an orchestrated group who stole $100 million in over-the-counter (OTC) drugs, beauty products, and baby formula, reported Casey Chroust, executive vice president of retail operations at the Retail Industry Leaders Association (RILA).11 This group was a well-organized crime ring, masterminded by someone who knew how the system worked. They worked as a team, blocking cameras and using boosters (someone who steals items from a store) to steal the merchandise, making handsome profits.

Up the coast in New York City, another ORC leader established and oversaw a ring of about 75 to 100 people. Jerry Biggs, director of the organized retail crime division at Walgreens, called this man "Samuel Elias." Elias' ring stole upwards of $2.5 million in merchandise from Walgreens per hit and used it to fund everything from his gambling addiction to overseas accounts based in Jordan.

Both of these rings are similar in how they organized and executed and profited from ORC. However, neither was prosecuted under federal statutes despite engaging in anti-American acts for years, including sending money overseas to support terrorist organizations.

These are just small examples of a larger issue that spans three continents and involves people and cultures from around the world, including the U.S.

Although some involved in ORC are doing it for personal financial gain, most are motivated by the idea of jihad and having a hand (small or large) in plotting the demise of one of the world's greatest superpowers—the United States of America.

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