The Best American Crime Reporting 2009

by Jeffrey Toobin

  No one in loss prevention can say precisely when shoplifters began to organize themselves into professionalized gangs, but there is general agreement that one of the first people to isolate the problem was a man named King Rogers. Rogers retired in 2001 as the head of Target Corporation’s asset-protection program and now runs his own consulting firm, the King Rogers Group, in Minneapolis. A short, voluble man, sixty-three years old, he is as close as anyone can come to being the star of an industry that is virtually defined by its secrecy. Rogers is a fixture at every loss-prevention conference, and is, in the words of Nate Garvis, the vice-president of government affairs at Target, “one of the giants on whose shoulders we stand.” Rogers worked for a short time at the National Security Agency before taking a job, in the late nineteen-sixties, as the head of asset protection at Strawbridge & Clothier, a regional department store in Philadelphia.

  In those days, store security was a decidedly less high-tech venture: no cameras, no live video monitoring. Agents were obliged to improvise, hiding among racks of clothes or in empty boxes to conduct surveillance. “I can recall lying in the return-air plenum of a ceiling—the space between the drop ceiling and the main ceiling—having poked a hole in the acoustic tile so I could look through,” Rogers told me. “In those days, you often didn’t have radios, so you had to signal to your compatriot somewhere on the selling floor that the person you were watching just concealed something. You dropped something gently out of that ceiling—usually a small piece of paper—and let it waft to the ground. That was the signal to go pick them up.” When security personnel did spot a thief, they commonly took what Rogers calls a “cops-and-robbers” approach—pursuing the suspect into the street and trying to tackle or otherwise detain him. “I remember working at the downtown Philadelphia store at Eighth and Market, chasing some shoplifter out of the store,” Rogers said. “He was running down the street with an armload of clothing and I’m yelling ‘Stop!’ and thinking, Do I really want to catch this guy? By then, we had those big clunky two-way radios, and I do recall seeing one or two of those being used like a football. They’d bring a fleeing thief to his knees quick.”

  Sometimes thieves escaping on foot would run into oncoming traffic (or into an innocent bystander). Retailers were responsible for any injuries incurred, and such incidents soon compelled them to take a more proactive approach. In the late seventies and early eighties, many stores began to install closed-circuit cameras and electronic-article-surveillance technology—known as E.A.S. E.A.S. tags, which can be sewn into garments or slipped between the pages of books, contain a small magnetic coil that triggers an alarm at store exits. The technology is still in wide use despite its questionable effectiveness. The problem is not only that false alarms are so frequent (who hasn’t set off an alarm at a store exit and been waved through by a weary security guard?), or that thieves have learned to defeat the system with foil-lined booster bags, but that the alarm sounds only after a thief has passed through the security gates. “If they’ve got a load of goods that they intend to convert to money, they’re going to keep going,” Rogers says—and, because retailers have forbidden loss-prevention agents to give chase, the merchandise is lost.

  In 1980, one of Rogers’s detectives at a suburban branch of Strawbridge & Clothier noticed a team of four people stealing men’s shirts off racks. Two people acted as lookouts while the other two stuffed clothing, hangers and all, into large black plastic garbage bags. The thieves fled the store before they could be detained, but the detective got their license-plate number and phoned the police. The cops apprehended the thieves, booked them for shoplifting, and soon released them on misdemeanor charges—typical in shoplifting cases. But the volume of the thefts, and the shoplifters’ brazenness, made Rogers suspect that something more was going on. The following week, a team of thieves using the same method was observed at a different branch, so Rogers enlisted the help of a colleague at the police department and traced the thieves to a tenement in Providence, Rhode Island. The shoplifters, Rogers told me, turned out to be members of a South American gang who were stealing designer clothing from department stores and specialty stores from Boston to Atlanta. “Ultimately, the police had enough evidence to charge them with some elevated theft-larceny charge, beyond shoplifting,” Rogers says. “That caused them to pretty much dissipate.”

  IN 1984, WHEN ROGERS JOINED TARGET (then part of the Dayton Hudson Corporation) as the vice-president of loss prevention, it was not widely recognized that big-box stores were also victims of organized retail crime. “And it was not obvious to me right away,” Rogers says. “In department stores, the gangs were hitting brand-name and in some cases designer clothes and accessories, but at Target it was the very popular branded-label goods: over-the-counter analgesics, film, batteries, baby formula, smoking-cessation products, condoms, teeth-whitening strips”—any small, easy-to-resell merchandise. “I couldn’t understand how there was an aftermarket for those items,” Rogers says. “But there obviously was.” Stores like Target, Wal-Mart, and Kmart were favorite stops for retail-theft gangs, who travelled from store to store and state to state, wiping out entire shelves’ worth of products. Razor blades remain so difficult for retailers to keep in stock that stores like Duane Reade display them behind the cash registers; CVS has installed elaborate push-dispensing mechanisms that release only one pack at a time. (Most large retailers today also keep baby formula and teeth-whitening products under lock and key, along with Wii game software and MP3 players.)

  By the mid-nineteen-nineties, Target was the fifth-largest retailer in the country, with around twenty-one billion dollars a year in sales. (Today, Target has annual sales of sixty-three billion dollars.) Target won’t release exact figures, but the average shrink rate for retailers is between one and two per cent of sales, which would conservatively put Target’s losses in 1995 at around two hundred and ten million dollars. To combat this loss, King Rogers established a national investigations team to focus on organized retail crime. “We had a dozen agents around the country,” Rogers says. “They had two roles. One was investigating these professional thieves and professional fraudsters who, also in teams, pass bad checks and use stolen credit cards. The second role was to train asset-protection people how to respond when they identified a possible organized retail gang at work.” Rather than detain boosters, agents were told to allow them to think that they had got away undetected, and then tail their vehicles.

  In this way, Rogers and his investigation team learned that the stolen goods were entering a highly organized distribution chain that often began with the hundreds of flea markets that had sprung up among the suburban sprawl of cities across the country. Crooked flea-market venders would buy stolen goods from boosters, then put a few samples out on their tables—“as a marketing ploy,” Rogers says. “Because the next-level-up buyer, a ‘middle buyer’—often ex-cons who had discovered this great opportunity—made a habit of going to flea markets looking for product. When he saw Tylenol on a vender’s tabletop, he’d say, ‘Can you get me more Tylenol in fifty-count gelcaps?’” The vender, if he did not have the item in stock, would tell his boosters what to go and steal. “We’d catch boosters with lists of stuff to steal all the time,” Rogers says. Typically, the middle buyers would sell the products to a “cleaning house”—in most cases, a three-to-five-thousand-square-foot warehouse staffed with undocumented workers whose job was to remove price stickers, E.A.S. tags, and identifying store labels. Often, products such as baby formula would sit in cleaning houses beyond their expiration date, in which case workers changed the dates stamped on the products. (In 2001, authorities in Texas arrested an organized retail-crime gang that had reportedly stored a million dollars’ worth of stolen baby formula in rodent-infested garages at an improper temperature.) The cleaned products were shrink-wrapped and put in master cartons to look as if they had been bought from the manufacturer, then sold to corrupt wholesalers who would commingle the stolen goods with legitimately purchased products
and sell them back to retailers—often to the same store from which they had been stolen.

  In 1998, Target began an investigation of an organized retail-crime ring in Atlanta that was stealing computers, DVDs, stereos, televisions, and clothing, along with over-the-counter medicines and razors. Target’s agents learned that the group comprised thirty Pakistani immigrants, most of them illegal, who operated a string of convenience stores. They shipped the stolen goods via UPS to large cleaning and repackaging operations in New York, Maryland, and Pakistan. “We got the Atlanta police department and county sheriff’s office involved,” Rogers says, “and were finally able to lure the F.B.I. into the situation, because at least one of the insiders in this group was a police officer. Then it became a public corruption case.” In October, 1998, the F.B.I. launched Operation American Dream, which resulted in the bust of one of the country’s biggest organized retail-crime rings. The gang used more than two hundred professional shoplifters, who stole up to a hundred thousand dollars’ worth of merchandise a day from various chain stores—Target, Wal-Mart, Kmart. The bust resulted in eighty-seven arrests, the seizure of four hundred and fifty thousand dollars in cash, and the recovery of more than a million and a half dollars in stolen merchandise. Investigators learned that the gang was also involved in money laundering, illegal-alien smuggling, and car theft.

  ROGERS RETIRED FROM TARGET IN 2001 and was succeeded as the head of asset protection by Brad Brekke. A tall, lean man of fifty-two, Brekke worked both as an F.B.I. agent and as a lawyer before being recruited by Rogers, in the late nineties, as an investigator. When he became the head of asset protection, Brekke had the revolutionary idea of creating a crime laboratory inside office headquarters to combat retail-theft gangs. “We’re realists here,” Brekke told me recently, when I met with him at Target’s main offices, in downtown Minneapolis. “Property crimes generally are not a high priority for law enforcement, nor should they be. So we took the approach that if we could do the front-end work—do the video analysis, the fingerprint and computer analysis—then give it to the law-enforcement agencies, they don’t have to spend the time and effort on it.”

  Target’s crime labs are situated on the first floor of a sprawling office complex in an industrial park twenty minutes north of downtown Minneapolis. I was given a tour of the labs by Rick Lautenbach, Target’s manager of forensic services. We entered through a series of password-protected doors—Lautenbach punched his personal code into a keypad. “We can’t just go into a closet at the back of a Target store and open a crime lab,” he explained. “We have to have a facility that measures up to the government’s standards for admissibility of evidence.”

  I was taken to a large, windowless room at the end of the main hallway, where Target operates its latent-fingerprint lab—a facility for detecting and recording fingerprints that are not visible to the naked eye. The room contained a fuming chamber, which resembles a glass-fronted refrigerator. To check for prints, agents place any type of nonporous object—plastic CD cases, metal iPods—in the chamber. A drop of Superglue is put into the chamber in a small tin dish and heated; the heat releases fumes of the glue’s active ingredient, cyanoacrylate, which adheres to the moisture secreted by fingertips, creating a visible white print. The prints are then dye-stained with a fluorescent pigment and taken to a small adjoining room with black walls, ceiling, and floors, for photographing and scanning under lights of different wavelengths. “We don’t have connectivity to any database with people’s criminal history, because we’re private,” Lautenbach says, “but we can match events together to catch a criminal or criminal gang and we pass that along to law enforcement.” Lautenbach told me about a recent case of a man suspected of repeated thefts at Target stores in Arizona. He was captured on a security camera as he picked up several items and put them in a shopping cart. Apparently aware that he was under surveillance, the man abandoned his cart and left the store. Loss-prevention agents retrieved a tissue holder that the man had handled and sent it to the fingerprint lab for analysis. Meanwhile, the investigations team was looking into whether the man was selling stolen items on eBay; recent online sale postings matched his known thefts. The agents made a “controlled purchase” from the eBay seller—a box set of “The Sopranos” on DVD. Lab analysis revealed that the fingerprints on both the tissue holder and the “Sopranos” DVDs were the same. “We turned the fingerprints over to the Maricopa County attorney’s office,” said Lautenbach. The man was convicted of felony trafficking in stolen property and computer tampering.

  Next to the fingerprint lab is the video-analysis laboratory, a small room stocked with desktop computers and video equipment. Two agents sat at a computer and compared security-camera recordings of after-hours “smash and grab” A.T.M. thefts at several Target stores in three states in the South. One video showed thieves backing a Jeep Cherokee through the locked glass entrance doors of a Target, shattering them, then hitching a chain to the A.T.M. and ripping the machine off its moorings as they gunned away. Another tape showed the same crime, involving an S.U.V., at a different location. Though the thieves were masked, and the vehicles were different (the license-plate numbers revealed that both were stolen), the thieves’ practiced movements and the precision of their actions suggested to the agents that they were the same crew. Lautenbach explained that, in order to get law enforcement to take on a theft case, Target needs to establish the seriousness of the crimes. “To do that,” he says, “we need to establish the scope of the criminal activity across a geographic area, or at least show that a common suspect is involved.”

  Next, I was shown the computer forensics lab. Here Brent Pack, a burly, bearded man who is Target’s senior computer investigator, analyzes digital storage devices seized from suspected retail-crime gangs—BlackBerrys, photo memory cards, cell phones, business servers, and desktop computers. Pack joined Target three years ago, after a stint in the United States Army, where, as part of the Computer Crime Investigative Unit, he analyzed the photographs taken by soldiers at Abu Ghraib prison. (“I had to extract the metadata from inside the pictures and create the time line, because there were multiple cameras taking different photographs and each of them was set to different times,” Pack said. “Took about two months to complete and another month to finalize. Then I had to go to court for two years to testify about it.”) At the moment, Pack was analyzing a hard drive seized by the police in a phony-check-writing operation that had victimized Target stores. “I’m going through here and looking for any evidence of check-writing software on any of their hard drives,” he said, pointing to his computer screen, which showed a JPEG of a bank check. “Drives are so big now—some are five hundred gigabytes—you can’t just randomly search,” he said. “You’ve got to be tactical.”

  Brekke launched Target’s crime laboratories, five years ago, with the intention of fighting the “brick and mortar” storefront fences and warehouse repackaging operations that King Rogers had helped to uncover. But since then, Brekke says, the labs have increasingly been used to fight “e-fencing,” the resale of stolen goods online through eBay, Craigslist, and other e-commerce sites, where thieves can operate with virtual anonymity. (Sellers on eBay and other sites are not required to post any personal information; eBay says that “such requirements do nothing to effectively prevent the sale of stolen goods and would expose honest online sellers to significant risk for identity theft.”)

  “Those sites have, overnight, become the world’s largest pawnshops,” Nate Garvis, Target’s vice-president of government affairs, says. “It used to be that you’d rip off a stereo, you’d go to a bad part of town and sell it for ten cents on the dollar, and Mrs. Smith, who’d never be caught dead in that part of town, would never find that product. Now you rip it off in bulk, you put it online, you get sixty to seventy to ninety cents on the dollar—because you’ve cut out the middleman—and Mrs. Smith is shopping in her slippers at her dining-room table.”

  Brekke says that the explosion of online selling
to well-heeled buyers has changed what boosters steal from stores. Instead of baby formula, razors, and over-the-counter medicines, thieves now go after small electronic items and household appliances. According to Paul Ostenson, a senior investigator for Target, and a specialist in the investigation of e-fencing, Dyson vacuum cleaners, which retail for between three hundred and five hundred dollars, have become one of the hottest theft items for sale on auction sites. Thieves often steal the bulky vacuum cleaners through a tactic called “ticket switching”: buying a cheap vacuum cleaner for thirty-nine dollars, then removing the U.P.C. bar code and affixing it to a Dyson that costs ten times as much. Some thieves buy their own U.P.C.-bar-code-making machines—available legally on the Internet—and print their own price stickers.