Federal Bureau of Investigation (F.B.I.)
In December 2003, the FBI established an Organized Retail Theft (ORT) Initiative aimed at identifying and dismantling multi-jurisdictional retail crime rings. The Initiative focuses on information sharing between law enforcement and the private sector in order to investigate ORC and develop a greater understanding of the nature and extent of ORC around the country. The Initiative relies on federal statutes such as the Money Laundering, Interstate Transportation of Stolen Property, and Racketeer Influenced and Corrupt Organizations (RICO) to investigate and prosecute ORC rings. In addition to the Initiative, the FBI leads seven Major Theft Task Forces around the country that is responsible for investigating a host of major theft areas, including ORC. These task forces are composed of local, state, and federal law enforcement agencies, as well as retail industry loss prevention experts.
In the Violence Against Women and Department of Justice Reauthorization Act of 2005, Congress directed the Attorney General and FBI to establish a clearinghouse within the private sector for information sharing between retailers and law enforcement. The result was LERPnet. LERPnet began as a partnership between the FBI, ICE, various local police departments, individual retailers, and retail organizations including the Food Marketing Institute (FMI), National Retail Federation (NRF), and Retail Industry Leaders Association (RILA). As of January 2010, 2011, LERPnet has been linked with the FBI’s Law Enforcement Online (LEO) system, providing federal and local law enforcement a direct link to retail industry crime reports.
Despite the establishment of the ORT Initiative, the use of the Major Theft Task Forces to investigate ORC rings, and the creation of LERPnet, the FBI continues to focus most of its resources on counterterrorism efforts. The FBI has indicated that the primary barrier to increasing its involvement in ORC investigations is the lack of resources dedicated directly to combating retail crime. Although the FBI has reportedly requested this directed funding, it has yet to be realized.
U.S. Immigration and Customs Enforcement (ICE)
Because ORC often involves interstate and international transportation of stolen goods and the movement of illicit proceeds associated with the sale of these goods, ICE has become increasingly involved in investigating ORC. Further, ICE may become ever more involved in ORC investigations if reports indicating that ORC rings rely on unauthorized (illegal) aliens (particularly from Mexico) to act as boosters are true. Employing these aliens as low-level boosters allows them to earn an income while protecting the higher-ups in the organization from being apprehended while stealing; if apprehended, unauthorized aliens may be jailed and then deported, saving higher-ups from the fines or jail time that they could otherwise face if arrested.
In July 2009, ICE launched an ORC Pilot Program. This program, originally slated to last for six months in Houston, Los Angeles, Miami, and New York, focused on developing (1) an ORC threat assessment, (2) a tracking system for ORC cases, (3) a database of retail industry contacts to complement the LERPnet database, and (4) an investigation of how ORC groups exploit vulnerabilities in the nation’s banking systems to launder illicit proceeds. In February 2011, this program was expanded into a national initiative—the Seizing Earnings and Assets from Retail Crime Heists (SEARCH) Initiative. As of May 2011, over 93 cases were initiated through SEARCH, resulting in 41 criminal arrests, 29 indictments, and 15 convictions. Through these cases, about $4.9 million in cash, property, and monetary instruments was seized.
U.S. Secret Service (USSS)
The USSS is most well-known for protecting the President and Vice President of the United States, as well as visiting heads of state and government. However, it was originally established as a law enforcement agency charged with investigating and preventing the counterfeiting of U.S. currency. The USSS’s authorities have expanded, and the agency now investigates crimes ranging from counterfeiting and financial institution fraud to identity crimes, computer crimes, and money laundering. Through investigations into crimes such as credit card fraud, access device fraud, and computer fraud, the USSS has occasionally become involved in investigating organized retail crime groups who steal or fraudulently purchase merchandise from retailers (both traditional and online) and then resell these goods for a profit online. The USSS receives ORC case referrals from state and local law enforcement, retail industry investigators, and online marketplaces fighting the sale of stolen goods.
The USSS has 31 Electronic Fraud Task Forces and 38 Financial Crimes Task Forces that investigate various financial crimes, including ORC. In addition to state and local law enforcement agencies, these task forces consist of investigators from retail stores, online auction houses and the banking and finance industries. There are an estimated 100 or more retail investigators participating in the USSS task forces.
U.S. Postal Inspection Service (USPIS)
The USPIS works to prevent mail fraud as well as illegal substances, contraband, and dangerous products from entering the mail system. When investigating cases of ORC, the USPIS investigates individuals using the mail to ship stolen products or to transmit payment to a seller. These ORC schemes tend to fall into the categories of Internet auction fraud and re-shipper fraud. In cases of Internet auction fraud, the criminals sell stolen goods and ship them domestically and internationally. In cases of re-shipper fraud, criminals may recruit individuals (often unwitting accomplices) to receive the stolen goods and then ship them (often internationally) to other members of the criminal organization or to the buyer of the goods.
Federally Criminalizing ORC
Combating retail theft has primarily been handled by state law enforcement under state criminal laws. In particular, major theft laws are the statutes that states have relied upon most to investigate and prosecute ORC. These major theft laws, however, vary from state to state with respect to the monetary threshold that constitutes major theft. While some states, such as New Jersey and Massachusetts, have relatively low thresholds, other states, such as Wisconsin and Pennsylvania, have relatively higher thresholds. Over one-third of states have felony theft thresholds that meet or exceed $1,000. With respect to organized retail crime, in 2009, at least 16 states had passed legislation criminalizing ORC, and 8 others had pending legislation.
There is currently no federal law specifically prohibiting organized retail crime as such. There are, however, provisions in the U.S. Code that federal law enforcement uses to bring forth cases against ORC rings.
Examples of such provisions include
• 18 U.S.C. Section 1956, “Laundering of monetary instruments”;
• 18 U.S.C. Section 1957, “Engaging in monetary transactions in property derive from specified unlawful activity”;
• 18 U.S.C., Chapter 96, the Racketeer Influenced and Corrupt Organizations (RICO) provisions;
• 18 U.S.C. Section 2314, “Transportation of stolen goods, securities, moneys, fraudulent State tax stamps, or articles used in counterfeiting”; and
• 18 U.S.C. Section 2315, “Sale or receipt of stolen goods, securities, moneys, or fraudulent State tax stamps.”
Current federal law addressing theft does not criminalize the theft itself, but rather prohibits the transportation of stolen goods across state lines as well as the sale or receipt of these goods.
For these activities to be considered federal crimes, the monetary value of the stolen goods must meet or exceed $5,000.
When debating the federal government’s role in combating organized retail crime, Congress may consider whether current law should be amended to create new provisions that would provide penalties for ORC. Proponents of such legislation argue that criminalizing ORC may benefit law enforcement in several ways, including (1) illuminating the growing problem of ORC and (2) providing a statutory framework for tracking ORC case data rather than lumping these cases into other categories for statistical purposes. Opponents of legislation criminalizing ORC argue that already existing statutes allow for effective investigation and prosecution of ORC (as outlined above) and that creating a separate provision for ORC would be redundant. Representatives from federal law enforcement agencies have provided congressional testimony indicating that they indeed have sufficient laws and procedural tools to investigate ORC as mentioned.