Police-like investigation

Retailers use police-like investigation centers to fight theft. Shoppers pay the price

By Curt Devine, Allison Gordon and Kyung Lah

When SWAT officers swarmed a house in a sleepy San Jose, California neighborhood last month, they found what could best be described as a make-shift hardware store inside: Shelves lined with boxes of brand-new tools, bathroom fixtures and spools of industrial wiring.

It resembled a mini Home Depot. And in some ways, it was.

Much of the cache of products—worth about $150,000—had been stolen from real Home Depot stores. The retail chain’s internal security force spent months investigating the thefts, scanning security camera footage, tracking license plates and surveilling suspects. They connected dots of the criminal network allegedly responsible and shared their findings with the Santa Clara County Sheriff’s Office, which executed search warrants and arrested the suspects.

Increasingly, this is how it goes today for retailers trying to battle theft and fraud by organized crime rings. A CNN review of court records and interviews with more than two dozen retail and law enforcement officials shows that persistent problems with sophisticated organized crime networks have led many private-sector companies to not only assist law enforcement but to often deliver the bulk of the evidence that leads to criminal prosecutions.

Anyone who has shopped at retail stores in recent years has encountered everyday products like laundry detergent, medication and beauty supplies locked up behind metal gates or plexiglass. Retailers say those in-store security measures are emblematic of the ongoing threat of organized retail crime, which typically involves groups of low-level thieves who steal items for middlemen who in turn sell to unsuspecting customers hunting for deals on marketplaces such as Amazon or eBay.

Efforts to counter this crime, however, have come with some costs. Security investments can translate into higher prices for consumers, and civil liberties advocates argue the surveillance technology used by retailers can infringe on individuals’ privacy.

While retailers have long partnered with law enforcement, the industry has bolstered its role in recent years, devoting more staff and financial resources to thwarting theft. Some retailers are researching body-worn cameras for employees. Others, including Home Depot, have invested in police-like investigation centers to sift through data and pinpoint theft-group members.

“A lot of times, local and state resources don’t have the capacity to investigate these crimes at that scale,” said Sean Browne, senior manager of asset protection for Home Depot. Browne said Home Depot, which has nearly tripled its investigative team since 2016, has started using license-plate readers in some store parking lots. “We try to full-service the investigations and ensure we cut off the head of the snake.”

Where law enforcement agencies sometimes face jurisdictional limits to their investigations, retailers can track cases across state and county lines with increasingly sophisticated tools – such as artificial intelligence that identifies patterns – and choose agencies with which to share cases.

“Retailers themselves are really taking the ball and running with it and then partnering with law enforcement at all levels,” said David Johnston, vice president of asset protection for the National Retail Federation (NRF), a top lobbying group for the retail industry. NRF surveys of retailers last year found that more than half reported budget increases to combat organized retail crime.

Precise national data on organized retail crime is lacking. Last year, NRF even retracted a claim in one of its reports related to the scale of the crime, which led critics to charge that the industry had exaggerated the issue to achieve policy goals or justify store closures caused by underperformance.

Still, most retailers insist they have seen an uptick in organized theft. About 90% of asset-protection professionals surveyed last year by NRF said the crime had become more of a risk over the prior three years.

“These investments wouldn’t be made for no reason,” said Browne of Home Depot, which has also added security to stores like locks, gates, cameras and other tech to deter theft. “Unfortunately, this creates an environment for our customers that isn’t very friendly,” he said.

A complex crime

The industry’s push to crack down on organized retail crime comes amidst differing policies and law enforcement priorities across the nation. Some states have focused on tackling such theft, with more than a dozen launching organized retail crime taskforces, which collaborate with private companies and police.

Investigators for the attorney general of Washington state, which created an organized retail crime unit last year, specifically credited businesses Target and Ulta Beauty for gathering much of the evidence behind two felony cases, according to probable-cause affidavits. That material included loss prevention reports, security footage and photographs.

In the case involving Ulta Beauty, a company investigator identified the defendant and accomplices who allegedly stole products across six counties, according to an affidavit.

“We can’t bring the cases without them,” Washington state Attorney General Bob Ferguson said when asked by CNN about the role of retailers. “Everything you’re seeing in those probable-cause statements is what you would see in case after case after case as we go forward with this work.”

Ferguson said organized retail crime cases are inherently complex to investigate and prosecute, especially for local agencies with limited resources, so public-private partnerships are a necessity.

That was evident in the case of Linda Ann Been, an Oklahoma woman sentenced to more than five years in prison earlier this month for managing an organized theft ring that federal prosecutors say stole about $9 million in property from retailers.

The case largely began with an investigator for CVS who noticed a trend of thefts at his company’s stores in the Tulsa area, according to a state affidavit. He then used records to link low-level thieves who physically robbed the stores with Been and shared his findings with a local detective.

The investigation later revealed how Been had provided the thieves with lists of items to steal from businesses across multiple states. The items were organized at a warehouse and boutique clothing shop in a suburb of Tulsa and sold by Been to other sellers – known as “fences” – outside of Oklahoma who in turn sold the products through websites, including eBay and Amazon, to customers, documents show.

In a brief interview with CNN prior to her sentencing, Been questioned why those higher-level fences to whom she sold products appear not to have faced consequences. “How come … nothing happened to those people?” she asked.

In her guilty plea in 2022, Been specifically named one such fence to whom she “frequently sent stolen inventory” as a man named Baruch “Butch” Treff.

Treff, in an interview with CNN, acknowledged buying products from Been, whom he said other vendors had recommended, but insisted he had no idea she had traded in stolen goods.

“If I knew I would never have bought from her. I don’t deal with stolen goods,” Treff said. An attorney for Treff, Yosef Jacobovitch, added that his client did due diligence and met with Been to try to ensure she was a legitimate vendor. “She fooled him and others,” Jacobovitch said.

A government investigator familiar with the case, who was not authorized to speak publicly, said one of the challenges of such cases is determining whether higher-level fences knowingly purchased stolen goods for resale.

The case against Been’s organization involved a range of state and federal authorities including Homeland Security Investigations and the IRS, but during a news conference, a federal prosecutor credited retail-industry investigators for contributing and called such collaborations a “force multiplier.”

Aside from supplying evidence, retailers sometimes identify broader trends of groups moving from city to city before law enforcement, said Sgt. Patrick Flynn of the Las Vegas Metropolitan Police Department’s organized retail crime unit, which launched last year.

Patrick Walsh, an organized-retail-crime manager for grocery chain Kroger, said his company has heavily invested not only in its investigative capacity but also visual deterrents. For example, the company purchased an old police car to drive around parking lots to ward off would-be criminals.

Some companies’ efforts have backfired. In December, drugstore chain Rite Aid agreed to a five-year ban on facial recognition technology after the Federal Trade Commission found that the company’s use of the tech led to false shoplifting allegations against customers – especially people of color – who appeared to match entries in a company watchlist. A Rite Aid spokesperson said the company is enhancing its information-security practices and policies.

The way retailers have collected evidence for police with such tech has alarmed privacy-rights advocates.

“Police are public entities. You can send them a public records request. You can elect a mayor who may want to change the police department. You cannot do that with a giant corporation. You have very little control over what technology they deploy, how they deploy it and then what they do with that data,” said Matthew Guariglia, a senior policy analyst with the Electronic Frontier Foundation, a digital rights group.

Calls for more federal action

The threat of organized retail crime and pressure from the industry has led some officials to call on the federal government to do more.

Over the last year much of that push has centered on a federal bill, the Combating Organized Retail Crime Act, that would create an intelligence-sharing hub at the Department of Homeland Security and broaden the scope of applicable criminal conduct.

San Diego County District Attorney Summer Stephan, a Republican-turned-independent who expressed support for those changes at a congressional hearing in December, referred to limited coordination between law enforcement and retailers and laws that apply relatively light penalties for habitual thieves as “key challenges” in policing the issue.

The bill has received criticism. A coalition of civil rights groups that included the ACLU and NAACP argued in a letter in March that the legislation promotes punitive policies that would disproportionately affect marginalized communities and exacerbate poverty by pushing more crime into the federal system. “This enforcement-first response, we don’t think that leads to crime deterrence,” Chloé White, an attorney with one of those groups, the Leadership Conference on Civil and Human Rights, told CNN.

The bill has garnered support from a bipartisan group of lawmakers, but it has not advanced.

“Everything is stalled in Congress,” said Rep. Dina Titus, a Nevada Democrat who helped introduce the legislation. Reacting to the way private retailers have been growing their internal investigative efforts, Titus said, “That’s the reason we need to do something at the federal level… I’m not trying to put down local law enforcement. I think they are doing the best they can with the resources they have.”

Congress has taken some steps to help the retail industry. A law that took effect last year requires online marketplaces to verify and disclose information on large, third-party sellers, such as bank account numbers. The law in effect makes it harder to sell stolen products through the internet with impunity.

But industry sources argue online platforms could do more to police organized retail crime on their sites.

Specifically, those marketplaces should more proactively question high-volume sellers of discounted goods and “ask for proof that these goods have been acquired lawfully,” said Khris Hamlin, vice president of asset protection for the Retail Industry Leaders Association.

Major online marketplaces say they have taken steps to combat such crime. Amazon touts a program that applies unique codes to certain products that can be used to detect and track stolen items. Mike Carson, eBay’s senior director of global policy, said eBay has safeguards including automated processes that flag irregularities among items for sale, which can prompt further investigation.

Browne of Home Depot said he welcomes more assistance from online marketplaces and the federal government.

“Crimes like drugs, human trafficking, they have major organizations going after this and rightfully so. Retail crimes have not gotten that same attention over the years,” he said. “It’s expanded beyond the bandwidth of local and sometimes even state law enforcement.”