[House Hearing, 118 Congress]
[From the U.S. Government Publishing Office]

FROM FESTIVE CHEER TO RETAIL FEAR:
ADDRESSING ORGANIZED RETAIL CRIME

=======================================================================

HEARING

before the

SUBCOMMITTEE ON
COUNTERTERRORISM,
LAW ENFORCEMENT, AND
INTELLIGENCE

of the

COMMITTEE ON HOMELAND SECURITY
HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTEENTH CONGRESS

FIRST SESSION
__________

DECEMBER 12, 2023
__________

Serial No. 118-45
__________

Printed for the use of the Committee on Homeland Security

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Available via the World Wide Web: http://www.govinfo.gov
__________

U.S. GOVERNMENT PUBLISHING OFFICE

56-827 PDF WASHINGTON : 2024

COMMITTEE ON HOMELAND SECURITY

Mark E. Green, MD, Tennessee, Chairman
Michael T. McCaul, Texas Bennie G. Thompson, Mississippi,
Clay Higgins, Louisiana Ranking Member
Michael Guest, Mississippi Sheila Jackson Lee, Texas
Dan Bishop, North Carolina Donald M. Payne, Jr., New Jersey
Carlos A. Gimenez, Florida Eric Swalwell, California
August Pfluger, Texas J. Luis Correa, California
Andrew R. Garbarino, New York Troy A. Carter, Louisiana
Marjorie Taylor Greene, Georgia Shri Thanedar, Michigan
Tony Gonzales, Texas Seth Magaziner, Rhode Island
Nick LaLota, New York Glenn Ivey, Maryland
Mike Ezell, Mississippi Daniel S. Goldman, New York
Anthony D'Esposito, New York Robert Garcia, California
Laurel M. Lee, Florida Delia C. Ramirez, Illinois
Morgan Luttrell, Texas Robert Menendez, New Jersey
Dale W. Strong, Alabama Yvette D. Clarke, New York
Josh Brecheen, Oklahoma Dina Titus, Nevada
Elijah Crane, Arizona
Stephen Siao, Staff Director
Hope Goins, Minority Staff Director
Sean Corcoran, Chief Clerk

------

SUBCOMMITTEE ON COUNTERTERRORISM, LAW ENFORCEMENT, AND
INTELLIGENCE

August Pfluger, Texas, Chairman
Dan Bishop, North Carolina Seth Magaziner, Rhode Island,
Tony Gonzales, Texas Ranking Member
Anthony D'Esposito, New York J. Luis Correa, California
Elijah Crane, Arizona Daniel S. Goldman, New York
Mark E. Green, MD, Tennessee Dina Titus, Nevada
(ex officio) Bennie G. Thompson, Mississippi
(ex officio)
Michael Koren, Subcommittee Staff Director
Brittany Carr, Minority Subcommittee Staff Director

C O N T E N T S

----------
Page

STATEMENTS

The Honorable August Pfluger, a Representative in Congress From
the State of Texas, and Chairman, Subcommittee on
Counterterrorism, Law Enforcement, and Intelligence:
Oral Statement................................................. 1
Prepared Statement............................................. 3
The Honorable Seth Magaziner, a Representative in Congress From
the State of Rhode Island, and Ranking Member, Subcommittee on
Counterterrorism, Law Enforcement, and Intelligence:
Oral Statement................................................. 5
Prepared Statement............................................. 6
The Honorable Bennie G. Thompson, a Representative in Congress
From the State of Mississippi, and Ranking Member, Committee on
Homeland Security:
Prepared Statement............................................. 7
The Honorable Dina Titus, a Representative in Congress From the
State of Nevada................................................ 6

WITNESSES
Panel I

Mr. Michael J. Krol, Special Agent in Charge, Homeland Security
Investigations, New England, U.S. Immigration and Customs
Enforcement, Department of Homeland Security:
Oral Statement................................................. 8
Prepared Statement............................................. 10
Mr. Jason D. Kane, Special Agent in Charge, Nashville Field
Office, U.S. Secret Service, Department of Homeland Security:
Oral Statement................................................. 14
Prepared Statement............................................. 16
Mr. Jose A. Perez, Deputy Assistant Director, Criminal
Investigative Division, FBI, U.S. Department of Justice:
Oral Statement................................................. 19
Prepared Statement............................................. 21

Panel II

Mr. David Johnston, Vice President, Asset Protection and Retail
Operations, National Retail Federation:
Oral Statement................................................. 36
Prepared Statement............................................. 38
Ms. Summer Stephan, District Attorney, San Diego County,
California, Testifying on Behalf of the National District
Attorneys Association:
Oral Statement................................................. 44
Prepared Statement............................................. 46
Mr. Scott Glenn, Vice President, Asset Protection, The Home
Depot:
Oral Statement................................................. 49
Prepared Statement............................................. 50
Ms. Abby Jagoda, Vice President, Public Policy, International
Council of Shopping Centers:
Oral Statement................................................. 52
Prepared Statement............................................. 54

FOR THE RECORD

The Honorable Elijah Crane, a Representative in Congress From the
State of Arizona:
Letter From CHEP USA........................................... 67
Letter From the Retail Industry Leaders Association............ 68

APPENDIX I

The Honorable Seth Magaziner, a Representative in Congress From
the State of Rhode Island, and Ranking Member, Subcommittee on
Counterterrorism, Law Enforcement, and Intelligence:
Statement of ABL............................................... 73

APPENDIX II

Questions From Chairman August Pfluger for Michael J. Krol....... 77
Questions From Chairman August Pfluger for Jason D. Kane......... 80
Questions From Chairman August Pfluger for Jose A. Perez......... 83
Questions From Chairman August Pfluger for David Johnston........ 85
Questions From Chairman August Pfluger for Summer Stephan........ 88
Questions From Chairman August Pfluger for Scott Glenn........... 91
Questions From Chairman August Pfluger for Abby Jagoda........... 91

FROM FESTIVE CHEER TO RETAIL FEAR:
ADDRESSING ORGANIZED RETAIL CRIME

----------

Tuesday, December 12, 2023

U.S. House of Representatives,
Committee on Homeland Security,
Subcommittee on Counterterrorism,
Law Enforcement, and Intelligence,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:41 p.m., in
room 310, Cannon House Office Building, Hon. August Pfluger
(Chairman of the subcommittee) presiding.
Present: Representatives Pfluger, Bishop, D'Esposito,
Crane, Magaziner, Correa, and Titus.
Mr. Pfluger. The Committee on Homeland Security,
Subcommittee on Counterterrorism, Law Enforcement, and
Intelligence will come to order.
Without objection, the subcommittee may recess at any
point.
The purpose of this hearing today is to evaluate the
unprecedented uptick in organized retail crime in the United
States and to hear testimony from key witnesses from Federal
Government and private industry.
I now recognize myself for an opening statement.
Good afternoon. We welcome you to today's important hearing
on organized retail crime and threats to our public safety. The
topic of today's hearing is the issue of organized retail crime
which has been rising throughout the country demonstrating a
threat to tens of thousands of retailers of all size and
subjecting employees and customers to real harm.
As many Americans flock to stores to complete their holiday
shopping this Christmas season, large organizations of
professional shoplifters or boosters are exploiting soft-on-
crime policies to ransack American businesses and carry out an
unprecedented spike in retail crime.
Generally, organized retail crime involves the association
of two or more persons engaged in illegally obtaining
merchandise of value from retail establishments through theft
and/or fraud as part of a criminal enterprise. This is not the
same thing as shoplifting or petty theft, both of which
obviously are illegal. This type of organized activity involves
multiple occurrences and may transpire across various stores
and State jurisdictions further complicating matters for law
enforcement agencies to combat these crimes.
We also have reports that transnational criminal
organizations or TCOs that are taking advantage of our open
borders are also engaging in retail theft. It's important to
note that these criminals do not show any bias when selecting
targets, and this crime occurs across a wide spectrum, from big
cities to small towns, in both urban and also rural areas.
It has been said that organized retail crime is overblown.
That's false. We cannot remain oblivious to the surge in
organized retail crime throughout the country impacting every
one of our districts.
As many of us have seen, retailers are not overhyping the
threats or challenges posed by the criminal activity. They are
taking steps to ensure the safety of their staff, customers,
and products. This includes measures like placing common items
like detergent and baby formula behind antitheft plexiglas and
utilizing smart shopping carts equipped with automatic locking
wheels to prevent thieves from exiting the stores with the cart
without paying.
In Washington, DC, where the progressive city council has
implemented soft-on-crime legislation that has emboldened
criminals to run rampant through the District, one CVS has
resorted to displaying tissue paper and rolls of toilet paper
as photographs, not the actual product but as photographs, to
prevent theft. In situations like this, we must look at the
immediate impact on families and consumers. This right here
directly drives away a mother looking to buy diapers and
formula at her neighborhood store or a family looking to
quickly grab over-the-counter medicine for their loved ones.
These chaotic, calculated robberies not only pose a risk to
employees, customers, and store owners, but there's a
multifaceted domino effect on our communities as well as the
workload that occurs on law enforcement.
The National Retail Federation, which will be participating
in the second panel today, serving over 230 retail asset
protection professionals and found that 90 percent indicated
that organized retail crime is more of a risk to retail
businesses now than it was just 3 years ago.
Businesses of all size and all locations, from big box
stores like Home Depot, Macy's, Gap, Walmart, Target, CVS,
Walgreens, and many others to mom-and-pop shops like
Eggemeyer's General Store in my hometown in San Angelo, Texas,
are all worried about these alarming trends and are sounding
the alarm on the rise of criminal activity tied to them.
In addition to wide-spread theft, some of these cases have
turned deadly. Just last week a security guard at a Macy's in
Philadelphia, Pennsylvania, was fatally stabbed by a man
attempting to steal merchandise. A second security guard was
also injured. According to reports, the suspect who was later
arrested has a history of retail theft, of robbery, and drug
offenses across the Philadelphia region. Moreover, at this
Macy's location alone, they filed over 250 reports of retail
theft in a year.
Then last year at a Home Depot in Hillsboro, North
Carolina, an elderly employee of Home Depot, Gary Rasor, was
assaulted by a man attempting to steal power washers. According
to reports, Mr. Rasor, who was 82 years old, was violently
shoved during the attempted theft and later died of his
injuries. Sadly, these incidents are not isolated, and similar
tragedies have occurred across the country, notwithstanding the
violence tied to organized retail crime has resulted in damage
to storefronts and other property as we've seen on the news in
many locations.
Organized retail crime is also responsible for financial
losses to retailers. As a result, they have begun closing
stores in certain locations which also creates a negative
impact on those communities that they serve and kills jobs for
thousands of Americans. According to a report by the Retail
Industry Leaders Association on the impact of organized retail
crime, nearly $70 billion worth of goods was stolen from
American retailers in 2019.
On a micro level, Walmart has stated that it loses nearly
$3 billion per year in U.S. revenue due to theft. The severity
of large-scale theft and other factors has led Walmart to close
several stores and has a raising of prices effect Nation-wide.
Reports also indicated that Walmart plans to open a police work
space within one of its Atlanta stores, a recent drastic
measure aimed at mitigating criminal activities.
Target recently announced it would be closing 9 stores
across 4 cities--New York, Seattle, San Francisco, and
Portland--due to concerns about employee and customer safety
from violence tied to organized retail crime.
Part of the challenge in addressing organized retail crime
includes the high felony theft threshold and bail reform laws
that have emboldened criminals to participate in organized
retail crime. Criminals often pilfer items below the threshold
for felony charges recognizing that such offenses are typically
not subject to prosecution in certain jurisdictions. Criminals
also know that they will be released under certain weak bail
reform laws. Upon release these criminals proceed to engage in
similar or more severe criminal activities without encountering
any consequences.
I look forward to hearing from San Diego County District
Attorney Summer Stephan, who will also be the next president of
the National District Attorneys Association, on the important
role that prosecutors play in the safety of our communities,
including addressing the challenge of organized retail crime.
I also look forward to this hearing as an opportunity for
bipartisanship, for us to come together and hopefully agree
that we do have a real issue here and, if so, what can we be
doing at this level. This surge in retail theft is more than
just teenagers looking for a thrill, but it's an abuse of soft-
on-crime policies and evidence of a deeper-rooted issue driving
crime and fear amongst our communities.
We have a distinguished panel of witnesses testifying
today, including a Federal panel of witnesses, to examine
efforts to combat the rising trend of organized retail crime.
We will also hear from a second panel of witnesses from
industry and State government about their perspective on this
serious challenge.
I would like to thank all of the witnesses with us this
afternoon, and I look forward to the discussion.
[The statement of Chairman Pfluger follows:]

Statement of Honorable August Pfluger

December 12, 2023

Good afternoon, we welcome everyone to today's important hearing on
organized retail crime and threats to our public safety.
The topic of today's hearing is the issue of organized retail
crime, which has been rising throughout the country, demonstrating a
threat to tens of thousands of retailers of all sizes and subjecting
employees and customers to real harm.
As many Americans flock to stores to complete their holiday
shopping this Christmas season, large organizations of professional
shoplifters, or boosters, are exploiting soft-on-crime policies to
ransack American businesses and carry out an unprecedented spike in
retail crime.
Generally, organized retail crime involves the association of two
or more persons engaged in illegally obtaining merchandise of value
from retail establishments, through theft and/or fraud, as part of a
criminal enterprise. This is not the same thing as shoplifting or petty
theft, both of which are also illegal.
This type of organized activity involves multiple occurrences and
may transpire across various stores and State jurisdictions, further
complicating matters for law enforcement agencies to combat these
crimes. We also have reports that transnational criminal organizations
(TCOs) that are taking advantage of our open borders are also engaging
in retail theft.
It is also important to note that these criminals do not show any
bias when selecting targets and this crime occurs across a wide
spectrum--from big cities to small towns in both urban and rural areas.
It has been said that organized retail crime is overblown. That is
false.
We cannot remain oblivious to the surge in organized retail crime
throughout the country impacting every one of our districts.
As many of us have seen, retailers are not overhyping the threats
or challenges posed by this criminal activity. They are taking steps to
ensure the safety of their staff, customers, and products. This
includes measures like placing common items like detergent and baby
formula behind anti-theft plexiglass and utilizing ``smart'' shopping
carts equipped with automatically locking wheels to prevent thieves
from exiting the store with the cart without paying.
In Washington, DC, where the progressive City Council has
implemented soft-on-crime legislation that has emboldened criminals to
run rampant through the District, one CVS has resorted to displaying
tissue paper and rolls of toilet paper as photographs to prevent theft.
In situations like this, we must look at the immediate impact on
families and consumers. This, right here, directly drives away a mother
looking to buy diapers and formula at her neighborhood CVS or a family
looking to quickly grab over-the-counter medication for a loved one.
These chaotic, calculated robberies not only pose a risk to the
employees, customers, and store owners, but there is a multi-faceted
domino effect on our communities, as well as the workload of our law
enforcement.
The National Retail Federation, which will be participating on the
second panel, surveyed over 230 retail asset protection professionals
and found that 90 percent indicated that organized retail crime is more
of a risk to retail businesses now than it was 3 years ago.\1\
---------------------------------------------------------------------------
\1\ Testimony of National Retail Federation at 1-2, Dec. 12, 2023.
---------------------------------------------------------------------------
Businesses of all sizes, from big box stores like Home Depot,
Macy's, Gap, Walmart, Target, CVS, Walgreens, and others, to mom-and-
pop shops like Eggemeyer's General Store in my hometown of San Angelo,
Texas--are worried about these alarming trends and are sounding the
alarm on the rise of criminal activity tied to them.
In addition to wide-spread theft, some of these cases have turned
deadly. Just last week, a security guard at a Macy's in Philadelphia,
Pennsylvania was fatally stabbed by a man attempting to steal
merchandise. A second security guard was also injured. According to
reports, the suspect, who was later arrested, has a history of retail
theft, robbery, and drug offenses across the Philadelphia region.
Moreover, at this Macy's location alone, they filed over 250
reports of retail theft this year.
Then, last year, at a Home Depot in Hillsborough, North Carolina,
an elderly employee of Home Depot, Gary Rasor, was assaulted by a man
attempting to steal power washers. According to reports, Mr. Rasor, who
was 82 years old, was violently shoved during the attempted theft and
he later died of his injuries.
Sadly, these incidents are not isolated, and similar tragedies have
occurred across the country, notwithstanding that violence tied to
organized retail crime has resulted in damage to storefronts and other
property.
Organized retail crime is also responsible for financial losses to
retailers. As a result, retailers have begun closing stores in certain
locations, which also creates a negative impact on the communities that
they serve, and kills jobs for thousands of Americans.
According to a report by the Retail Industry Leaders Association on
the impact of organized retail crime, nearly $70 billion worth of goods
was stolen from American retailers in 2019.
On a micro level, Walmart has stated that it loses nearly $3
billion per year in U.S. revenue due to theft. The severity of large-
scale theft and other factors has led Walmart to close several stores
and raise prices Nation-wide.
Reports also indicate that Walmart plans to open a police ``work
space'' within one of its Atlanta stores, a recent drastic measure
aimed at mitigating criminal activities.
Target recently announced it would be closing 9 stores across 4
cities--New York City, Seattle, San Francisco, and Portland--due to
concerns about employee and customer safety from violence tied to
organized retail crime.
Part of the challenge in addressing organized retail crime involves
high-felony theft thresholds and bail reform laws that have emboldened
criminals to participate in organized retail crime.
Criminals often pilfer items below the threshold for felony
charges, recognizing that such offenses are typically not subject to
prosecution in certain jurisdictions.
Criminals also know that they will be released under certain weak
bail reform laws. Upon release, these criminals proceed to engage in
similar or more severe criminal activities without encountering any
consequences.
I look forward to hearing from San Diego County District Attorney,
Summer Stephan, who will also be the next president of the National
District Attorney's Association on the important role that prosecutors
play in the safety of our communities, including addressing the
challenge of organized retail crime.
I also look forward to this hearing as an opportunity for
bipartisanship, and hopefully we can all agree that there is a real
issue here. This surge in retail theft is more than just teenagers
looking for a thrill, but an abuse of soft on crime policies and
evidence of a deeper-rooted issue, driving crime and fear amongst our
communities.
We have a distinguished panel of witnesses testifying today,
including a Federal panel of witnesses to examine efforts to combat the
rising trend of organized retail crime. We will also hear from a second
panel of witnesses from industry and State government about their
perspective on this serious challenge.
Thank you to all our witnesses for being with us this afternoon,
and I look forward to our discussion.

Mr. Pfluger. I now recognize the Ranking Member, my friend,
the gentleman from Rhode Island, Mr. Magaziner, for his opening
statement.
Mr. Magaziner. Thank you, Chairman Pfluger, for working
with us to call this hearing on the issue of organized retail
crime.
Many of us have heard from retailers concerned by organized
retail crime, and so today's hearing is for us to explore the
scope of the problem and determine best how to respond.
Crime overall continues to be at historically low levels
and has fallen even more in recent years. According to the FBI,
between 1993 and 2022, the violent crime rate across the United
States has fallen by more than half, with homicides falling 35
percent, robberies falling 76 percent, and burglaries falling
78 percent, and the trend continues to this day. The FBI
reports that violent crime decreased a further 2 percent in
2022 compared to the previous year.
However, we must always strive to do better to ensure that
all Americans are safe in their homes, their schools, and their
neighborhoods. We have heard reports of organized retail crime
becoming more prevalent, which leads us to today's hearing.
We all need to understand the nature of organized retail
crime and the best practices for ending it. I want to be clear
what we are talking about here. We are not talking about
ordinary shoplifting committed by individuals working alone. We
are talking about large organized groups who engage in
systematic theft of retail goods and the subsequent resale of
stolen goods for financial gain.
Organized retail crime does not just impact large
retailers. It also affects mom-and-pop shops and especially
retail employees. Beyond the important concerns about safety,
these crimes also raise costs for American consumers. Every
time a store is robbed of products, it has to hire more
security, replace broken windows, or install new security
systems; some of those costs are inevitably going to be passed
on to shoppers.
It is important that we get to the root of the problem of
organized retail crime to keep people safe and lower costs for
everyone across the country. This bipartisan hearing is a
chance for us to hear from both industry leaders in retail and
from Federal law enforcement agencies about their efforts to
combat organized retail crime.
I want to thank our panelists for joining today and look
forward to your remarks.
Without any objection, Mr. Chairman, I would like to yield
the final 2 minutes of my opening statement to the gentlelady
from Nevada, Ms. Titus, who has been a leader in Congress on
this issue.
[The statement of Ranking Member Magaziner follows:]

Statement of Ranking Member Seth Magaziner

December 12, 2023

Many of us have heard from retailers concerned by organized retail
crime, and so today's hearing is to explore the scope of this problem
and determine how best to respond.
Crime overall continues to be at historically low levels and has
continued to fall in recent years. According to the FBI, between 1993
and 2022, the violent crime rate across the United States fell by more
than half, with homicides falling 35 percent, robberies falling 76
percent, and burglaries falling 78 percent. This trend continues to
this day. The FBI reports that violent crime decreased 2 percent in
2022 compared to the previous year.
However, we must always strive to do better, to ensure that all
Americans are safe in their homes, their schools, and their
neighborhoods. We have heard reports of organized retail crime becoming
more prevalent, which leads us to today's hearing. We all need to
understand the nature of organized retail crime and the best practices
for ending it.
I want to be clear about what we are talking about here. We are not
talking about ordinary shoplifting committed by individuals working
alone. We are talking about large, organized groups who engage in
systematic theft of retail goods and the subsequent resale of stolen
goods for financial gain.
Organized retail crime does not just impact large retail companies,
it also affects mom-and-pop shops and especially retail employees. And,
beyond the important concerns about safety, these crimes also raise
costs for American consumers. Every time a store is robbed of products,
has to hire more security, replace broken windows, or install new
security systems, some of those costs are going to inevitably be passed
on to shoppers.
It is important that we get to the root of the problem of organized
retail crime, to keep people safe and lower costs for everyone across
the country. This bipartisan hearing is a chance for us to hear from
both industry leaders in retail and from Federal law enforcement
agencies about their efforts to combat organized retail crime.

Mr. Pfluger. The gentlelady is recognized.
Ms. Titus. Thank you, Mr. Chairman, and thank you, Ranking
Member Magaziner, for yielding and for holding this important
hearing.
I have been deeply involved in this for several Congresses
as one of the most talked-about issues in my office, from
business, from law enforcement, and from stakeholders. I
witnessed this myself as far as from me to you in a Walgreens
in my district, and we held a roundtable with some
representatives from law enforcement and business, including
Home Depot.
I agree with all that's been said before because we know
that consumers and employees worry about their own safety. They
worry about convenience when shopping, and they just worry that
they're going to get caught up in one of these schemes or
operations while they're out there during this holiday season.
In addition, this retail crime that's organized has
considerable monetary effects on the business and on our
communities. In Nevada, the Organized Retail Crime Association
estimates that in 2021 retail product theft cost our State's
economy about $82 million. No community is immune, you heard,
from the suburbs to the inner city, from big business to small
business is particularly troublesome in a real urbanized
commercial area like my district in downtown Las Vegas.
Retailers have a strong presence there. They make a large
contribution to our local economy, and they are targeted.
The bill that I've introduced, Combatting Organized Retail
Crime, is bipartisan. There are 47 Republicans, 47 Democrats,
and every Democrat on this subcommittee is a cosponsor, and I'm
very proud of that, and I want to thank them for their support.
I know this hearing will help highlight some of the
increased trends in high-level organized retail crime and that
we'll underscore the need for Federal action to allow DHS and
investigators and prosecutors to have the tools they need to go
after this organized crime and also the associations,
organizations, and activities that are tied to it behind the
scenes that many people don't even realize.
So thank you again. Thank you for the time, and I look
forward to hearing our expert witnesses.
Mr. Magaziner. I yield back. Thank you, Chairman.
Mr. Pfluger. Thank you, Ranking Member.
Other Members of the committee are reminded that opening
statements may be submitted for the record.
[The statement of Ranking Member Thompson follows:]

Statement of Ranking Member Bennie G. Thompson

December 12, 2023

Businesses--large and small--across America are increasingly
concerned about organized retail crime. On the news, we see luxury
stores being targeted by groups of individuals stealing high-value
products, but these are not the only targeted businesses. Small
businesses, which account for 99 percent of businesses across America,
are also impacted by systematic, large-scale theft or fraud by criminal
syndicates.
I have long been an advocate for small businesses. While serving on
the Committee on Homeland Security, I have consistently tried to
facilitate dialog between the small business community and the
Department of Homeland Security and other Federal agencies on how to
partner together. I have always believed that public-private
partnerships are critical to success--in many endeavors--and they are
especially critical to combatting organized retail crime.
Small business owners and employees are everyday Americans who are
just trying to serve their communities and make ends meet. Operating a
small business is hard enough--owners often do not have the bandwidth
or resources to go up against organized criminal rings looking to steal
goods. This is where the Federal Government can play a vital role.
I am heartened by the relationships that have already been forged
between Government and the retail industry to combat organized retail
crime. I am pleased that under Operation Boiling Point, Homeland
Security Investigations (HSI) partners with the National Retail
Federation (NRF), both of whom are testifying here today.
And on the matter of Federal and State cooperation, I have always
been a strong supporter of the Secret Service's National Computer
Forensics Institute (NCFI). NCFI trains and equips law enforcement
officers and other Government employees at the State and local level
with the tools to combat cyber and electric crime, which can include
retail theft. Last Congress, Committee Democrats led the
reauthorization of NCFI (H.R. 7174), which was enacted in the National
Defense Authorization Act for Fiscal Year 2023.
So, while I know that the three Federal agencies testifying before
us today already understand the need for collaboration on this issue, I
am hopeful that today's discussion will foster even stronger
relationships. From our conversations with industry representatives in
advance of this hearing, there are ways we can help combat organized
retail crime.
For example, we need increased public awareness about what
organized retail crime is and what it isn't. As the International
Council of Shopping Centers said in its written testimony, we are not
talking about single individuals stealing as a result of food
insecurity, substance abuse, or mental health issues, or for personal
use. We are talking about methodical criminal enterprises and we need
to make sure that distinction is made.
Also, we need more employee education and training. Nothing is more
important than physical safety. Objects can be replaced. Human lives
cannot. Retailers should be able to look to law enforcement for
guidance on how to protect their employees--and their customers--from
violence resulting from theft incidents.
I look forward to hearing from our two panels of witnesses today
about how we meet these needs and ensure the protection of businesses,
the shopping public, and our communities.

Mr. Pfluger. I'm pleased to have two distinguished panels
of witnesses before us today on this very important topic. I
ask that our first panel rise and please raise their right
hand.
Do you solemnly swear that the testimony you will give
before the Committee on Homeland Security of the U.S. House of
Representatives will be the truth, the whole truth, and nothing
but the truth, so help you God?
Thank you. You may be seated.
Let the record reflect that the witnesses have answered in
the affirmative.
I would now like to formally introduce our first panel:
Mr. Michael Krol currently serves as a Homeland Security
Investigations special agent in charge with the New England
field office in Boston, Massachusetts; Mr. Jason Kane currently
serves as the special agent in charge of the U.S. Secret
Service's Nashville District; and, finally, Mr. Jose Perez
serves as the deputy assistant director of the Transnational
Organized Crime, Violent Crime, and Operational Support
Sections of the FBI's Criminal Investigative Division.
Thank you for joining us today, and thank you for your
service to this Nation.
I'd now like to recognize each of the witnesses. I know you
have written statements, and we appreciate those. If you could
summarize that and keep it to 5 minutes.
Mr. Krol, you are now recognized.

STATEMENT OF MICHAEL J. KROL, SPECIAL AGENT IN
CHARGE, HOMELAND SECURITY INVESTIGATIONS, NEW
ENGLAND, U.S. IMMIGRATION AND CUSTOMS ENFORCE-
MENT, DEPARTMENT OF HOMELAND SECURITY

Mr. Krol. Chairman Pfluger, Ranking Member Magaziner,
distinguished Members of the subcommittee, thank you for the
opportunity to appear before you today to discuss Homeland
Security Investigations' global efforts to combat organized
retail crime and organized theft groups.
As the largest investigative agency within the Department
of Homeland Security, HSI has unique authorities and an
expansive investigative mandate focused on securing the
homeland from transnational crime and threats which impact our
National border and economic security.
Our 6,800 special agents are stationed in 253 domestic
field offices and in 93 international offices, while being
supplemented by nearly 4,000 State, local, Federal, and Tribal
task force officers, including 14 specialized and vetted host
country transnational criminal investigative units or TCIUs.
HSI's operational priorities serve as the foundation of our
strategic focus, combating financial crime, investigating cyber
crime, preventing crimes of exploitation and victimization, and
sharing public safety, upholding fairness in global trade, and
protecting National security.
The unlawful activity associated with organized retail
crime intertwines with many of these aforementioned priorities
and, therefore, represents an area of our investigative focus.
In 2022, retail theft was responsible for approximately $72
billion in losses according to the National Retail Federation.
In response to this, HSI initiated Operation Boiling Point 2.0
to effectively communicate the severity of organized theft
groups involved in retail crime, cargo theft, and other
systemic thefts.
Operation Boiling Point 2.0 is a multi-tiered strategy
focused on, No. 1, integration of efforts using enhanced public
and private-sector partnerships; No. 2, creating efficiencies
of scale and data collection in investigative lead
dissemination; No. 3, using this information to disrupt and
dismantle ORC and affiliated organizations; and, last, using
HSI's global reach to engage in a robust public awareness
campaign to inform and educate consumers and industry on this
threat among others.
It is widely recognized that 2lst Century poly-criminal
networks diversify their criminal portfolios to increase
profitability and influence. No longer tied to a single
criminal scheme or enterprise, it is not uncommon for organized
theft groups to be involved in or affiliated with those
networks who perpetrate financial fraud, identity theft, human
smuggling and trafficking, illicit trade, money laundering,
narcotics and weapons trafficking, among many others.
One thing remains constant. Organized theft groups, as do
all criminal networks, must obfuscate the origin of their ill-
gotten gains. The use of traditional and trade-based money-
laundering methods continue, yet digital assets and virtual
currencies can now be used with relative ease to facilitate the
immediate movement, concealment, and laundering of illicit
proceeds.
Recognizing the complexity of illicit finance, HSI recently
collaborated with the Association of Certified Anti-Money
Laundering Specialists to publish a guide for law enforcement
investigators and financial crime professionals to help combat
ORC and OTGs.
Further, HSI's cornerstone outreach interfaces with
traditional and nontraditional banking in financial
institutions to continue our long-standing efforts to educate
our partners on emerging financial threats through anti-money-
laundering training, including typologies of money laundering
associated with ORC.
Using existing infrastructure to support our efforts, HSI
relies on our National Lead Development Center to coordinate
ORC investigations across the full spectrum of law enforcement
and private-sector partners. This past year NLDC received 222
referral requests from State and local law enforcement, in
addition to private-sector partners. This information led to a
doubling of HSI investigations from last fiscal year alone.
As we continue to see cyber-enabled crime, digital assets,
financial fraud, identity theft, complex global trade
practices, and other more technical methodologies used in
organized retail crime, HSI is well-positioned to attack this
threat head-on.
Thank you again for your support of HSI and for the
opportunity to appear before you today. I look forward to your
questions.
[The prepared statement of Mr. Krol follows:]

Prepared Statement of Michael J. Krol

December 12, 2023

Chairman Pfluger, Ranking Member Magaziner, and distinguished
Members of the Subcommittee on Counterterrorism, Law Enforcement, and
Intelligence:

introduction

Thank you for the opportunity to appear before you today to discuss
the efforts by Homeland Security Investigations (HSI) to combat
Organized Retail Crime (ORC). My statement focuses on the crucial role
HSI plays domestically and internationally in identifying, disrupting,
and dismantling transnational criminal organizations (TCOs) that are
involved with ORC and related crimes.
HSI is the principal component of the Department of Homeland
Security (DHS) responsible for investigating transnational crime. In
close collaboration with public and private-sector partners in the
United States and abroad, HSI special agents diligently work to
identify and methodically build criminal cases against TCOs, terrorist
networks, and their facilitators, as well as many other criminal
elements that threaten the safety and security of our homeland. HSI
works in conjunction with State and Federal prosecutors to indict and
arrest violators, execute criminal search warrants, seize currency and
assets derived from criminal activity, and take other strategic actions
designed to disrupt and dismantle criminal organizations operating
throughout the world.
The HSI Financial Crimes Unit has led HSI's efforts to combat ORC
and is focused on building partnerships with the retail industry and
supporting HSI investigations to combat TCOs targeting retail
businesses and laundering illicit profits. In 2022, HSI initiated
Operation Boiling Point to underscore and address the severity of
organized theft groups (OTG) involved in ORC, cargo theft, and other
systematic thefts. When the Integrity, Notification, and Fairness in
Online Retail Marketplaces for Consumers Act or the INFORM Consumers
Act came into effect on June 27, 2023, HSI transitioned to Operation
Boiling Point 2.0, to better communicate and engage with the major e-
commerce platforms, and it is designed to attack ORC from an anti-
money-laundering approach in partnership with the e-commerce platforms
and the retail sector.

orc threats and related crimes

In 2022, retail theft from both internal and external parties was
responsible for approximately $72 billion in losses according to the
National Retail Federation's 2023 most recent Retail Security Survey.
HSI is targeting OTG's who engage in three types of activities: ORC,
cargo theft, and other related crimes. HSI defines these terms as:
ORC refers to ``the association of two or more persons
engaged in illegally obtaining items of value from retail
establishments, through theft and/or fraud, as part of a
criminal enterprise.''
Cargo theft is the theft or fraudulent acquisition of goods
that are part of an interstate or international shipment and
can take place at any point along the supply chain.
Other OTG activity pertains to the theft of valuable items
outside the regular supply chain, such as catalytic converters.
OTGs engage in large-scale theft which relies on criminal networks
of boosters who steal goods from retailers, cleaners who disguise the
origins of the stolen merchandise, fencers who resell the products
through brick-and-mortar fronts and e-commerce websites, and
professional money launderers who funnel the illicit profits to the
criminals orchestrating the schemes. In order to realize higher
profits, many of the stolen items are shipped to foreign markets or
sold via dark web or other gray market websites that have lower or no
standards of retail product authenticity verification. Those illicit
profits need to be laundered to be realized and used by TCOs. The
laundering of these illicit proceeds involves the exploitation of the
financial system, bulk cash smuggling, and trade-based money-laundering
schemes--a system now dominated by Chinese-based Money Laundering
Organizations (CMLOs). The CMLOs that are laundering the proceeds from
ORC are the same organizations that are laundering the illicit proceeds
from the sale of narcotics, to include fentanyl by Mexican-based drug
cartels.

hsi's role in combating organized retail crime

HSI conducts investigations targeting organized theft groups based
on the interstate and international transportation of stolen goods and
the corresponding movement of illicit proceeds from the sale of these
stolen goods. While HSI's investigative portfolio is extensive and
diverse, financial investigations are at the core of every
investigative program area. TCOs, terrorist organizations, and the
myriad of criminal networks have grown increasingly more sophisticated
in their approach to concealing their criminal acts, while also
morphing operations to the perceived anonymity of the Darknet.
Traditional money-laundering methods remain; yet, cryptocurrency can
now be used with relative ease to facilitate any type of illicit
activity. HSI's financial investigative authorities and unique
capabilities specifically enable us to identify, dismantle, and disrupt
the criminal enterprises that threaten our Nation's economy and
security. One of the most effective methods utilized to identify,
dismantle, and disrupt organizations engaged in retail crime is to
target the illicit movement of proceeds gained through their efforts.
We also target transnational criminal gangs and other TCOs committing
ORC and other crimes related to illicit trade, travel, and finance.
HSI is utilizing its National Lead Development Center (NLDC) to
coordinate ORC investigations with HSI field offices; other Federal
partners to include the United States Secret Service, the United States
Postal Service, as well as others; State and local law enforcement;
private-sector loss prevention/asset protection components; and
insurers. In fiscal year 2023, the NLDC received 222 requests for
investigation from State/local law enforcement and the private sector
on thefts resulting in a combined $51 million in ORC losses.
HSI's ORC investigations focus on the higher tiers of OTGs. These
investigations target the often-violent individuals profiting from the
thefts. HSI investigations have uncovered several TCOs involved in ORC.
One such example is the South American Theft Groups (SATGs), which
include organizations based in Colombia, Chile, and other countries.
These groups recruit members and facilitate travel into the United
States for individuals who then commit strategic thefts of high-value
electronic devices. Items are stolen, consolidated, shipped to another
location in the United States, and ultimately illicitly exported to
foreign countries. An additional example of OTGs are Romanian-organized
theft groups (ROTG) that recruit individuals from Eastern Europe to
travel to the United States to commit various types of crimes,
including retail theft and access device fraud. A recent HSI
investigation in Missouri revealed an ROTG, comprised of previously-
deported individuals, that wired illicit proceeds to Romania and other
international destinations.
As part of the DOJ's Organized Crime Drug Enforcement Task Forces
(OCDETF) Program, the International Organized Crime, Intelligence and
Operations Center (IOC-2) leverages its unique capabilities and
resources from the Special Operations Unit and the OCDETF Fusion Center
to provide comprehensive intelligence products, case support and
deconfliction to HSI offices in support of OTG investigations. In
fiscal year 2023, HSI and IOC-2 held a case coordination meeting
between HSI field offices and local law enforcement to deconflict
investigations and share typologies of SATGs operating in multiple
jurisdictions across the United States.
HSI's National Targeting Center--Investigations (NTC-I) Unit was
established in December 2013, in collaboration with U.S. Customs and
Border Protection (CBP), to enhance our shared border security mission.
HSI's collaborative presence at the National Targeting Center (NTC)
supports the entire border security continuum, from CBP interdictions
and HSI investigations, to the joint exploitation of intelligence. NTC-
I facilitates the identification and disruption of SATGs.
In fiscal year 2023, HSI created a working group with U.S. Secret
Service (USSS), U.S. Immigration and Customs Enforcement's Enforcement
and Removal Operations, U.S. Citizenship and Immigration Services, and
CBP's NTC to prevent suspected SATG and ROTG members from entering the
United States and to target those that had previously entered. In
addition, HSI, USSS, and the NTC are targeting imported shipments of
parts used to assemble ``card skimmers,'' which are commonly used by
ROTGs to commit access device fraud and steal millions of dollars from
States' Supplemental Nutrition Assistance Programs.
The National Intellectual Property Rights Coordination Center (IPR
Center) was created by HSI in 2010 and codified into law in the Trade
Facilitation and Trade Enforcement Act of 2015. The IPR Center brings
together a multitude of domestic and international partners, including
the retail industry, in a task force setting at the forefront of the
U.S. Government's response to combating global intellectual property
theft and enforcing international trade laws. The IPR Center attacks
vulnerabilities in the global supply chain to further secure the
border, facilitate legitimate trade, and dismantle criminal
organizations engaged in trade crimes. The IPR Center has over a decade
of experience investigating how TCO's exploit on-line marketplaces to
peddle counterfeit items and other illicit goods and served as a model
for HSI's Operation Boiling Point.

hsi's strategy to combat orc

Through Operation Boiling Point 2.0, HSI is targeting OTGs
utilizing theft, and in some cases fraud, as a means to profit from
criminal activity.
HSI continues to establish, foster, and maintain public and
private-sector partnerships to combat OTGs. HSI recognizes the
invaluable role of industry partnerships, to include retail, freight
transportation, banking, and other business sectors, which may be
targeted by OTGs or utilized by OTGs to facilitate their criminal
activities. HSI has also developed relationships with several regional
Organized Retail Crime Associations throughout the United States. To
highlight the importance of public and private-sector partnerships, HSI
collaborated with the Association of Certified Anti-Money Laundering
Specialists to publish a guide for law enforcement investigators and
anti-financial crime professionals to help combat ORC and OTGs.
Over the past 2 decades, HSI has established a strong record of
working collaboratively with banks. For example, HSI's Operation
Cornerstone is a comprehensive and proactive outreach initiative that
ensures financial institutions are informed of the latest money-
laundering techniques.
In terms of e-commerce and on-line marketplaces, under Operation
Boiling Point 2.0, HSI will adapt our Cornerstone outreach program to
meet the needs of e-commerce and on-line marketplaces. This will
include educating on-line marketplaces on the latest criminal trends
and providing direct access to HSI investigative support and personnel
when fraud is suspected. HSI anticipates some high-volume third-party
sellers of stolen goods will gravitate toward new or existing
marketplaces that do not comply with the recently-passed INFORM
Consumers Act. However, through the concerted efforts of law
enforcement agencies within the United States and around the world,
there are fewer and fewer dark corners of the internet where cyber
criminals can operate when denied access to legitimate platforms.
HSI continues to obtain, develop, and provide intelligence and
investigative leads to our HSI field offices and State and local law
enforcement. Through our strategic partnerships, HSI receives and
disseminates actionable leads to HSI criminal analysts and special
agents across 253 domestic field offices and 86 international offices
to identify criminal networks and develop investigations.
HSI continues to advance criminal investigations to disrupt and
dismantle OTGs. HSI recognizes the importance of collaboration with
Federal, State, and local law enforcement and prosecutors, as well as
regional task forces, to combat the ORC threat. OTGs operating
domestically and abroad may commit retail theft, cargo theft, and
related crimes across several jurisdictions, which requires
investigators to share information and pool resources to effectively
disrupt and dismantle criminal organizations impacting our communities.
The HSI domestic footprint is supplemented by approximately 3,700 task
force officers representing key strategic Federal, State, and local
partners in the fight to combat TCOs.
As the final component of this initiative, HSI launched a robust
public awareness campaign in coordination with our partners. Since its
launch, HSI has participated in over 50 events and meetings discussing
Operation Boiling Point 2.0 with over 4,000 attendees and stakeholders
from 29 States.

investigative results

In fiscal year 2023, HSI initiated 199 OTG cases, which represents
an increase of over 107 percent from fiscal year 2022. As shown in the
following table, seizures have increased over 227 percent, arrests have
increased 159 percent, and indictments have increased 189 percent
related to ORC investigations in fiscal year 2023, from fiscal year
2022 levels.

----------------------------------------------------------------------------------------------------------------
FY 2021 FY 2022 FY 2023
----------------------------------------------------------------------------------------------------------------
Cases Initiated........................................ 59 96 199
Assets Seized.......................................... $9,287,757 $4,690,823 $15,372,834
Criminal Arrests....................................... 61 149 386
Indictments............................................ 55 98 284
----------------------------------------------------------------------------------------------------------------

Operation King of the Mountain
In August 2022, HSI Charlotte worked with CVS, Walgreens, Walmart,
Publix, and Target retailers to identify an ORC ring operating in North
Carolina. The retailers provided information about the means and
methods of the ORC ring and requested HSI's assistance to disrupt and
dismantle the organization. HSI identified an individual receiving
stolen property from ``boosters'' and two known warehouse-style storage
facilities storing the stolen merchandise that was later sold on eBay
and Amazon.
HSI Charlotte executed 4 search warrants and have arrested 4
individuals including the main suspect. The operation resulted in the
seizure of 28 firearms to include four AR-15 rifles, 6 suppressors,
more than 20,000 rounds of assorted ammunition, and $167,389.31 in
stolen merchandise recovered.

Operation At the Card Wash
In September of this year a multi-year investigation lead by HSI
Los Angeles concluded after members of a TCO plead guilty to conspiracy
to commit money laundering and other charges. The investigation
identified a network of wholesale electronics distributors engaged in
trade-based money-laundering by sourcing merchandise derived from
various fraud schemes and exploiting the use of gift cards to launder
or mask criminally-derived funds. As an example, a phone scam victim is
coerced, under false pretenses, into purchasing and providing gift
cards and access codes to scammers over the phone which are ultimately
transmitted to straw-purchasers or ``runners,'' who utilize the cards
for transactions to purchase high-value consumer electronics or new
gift cards at retail stores.
The investigation led to the Federal indictment of four defendants
related to a scheme to launder gift cards purchased by scam victims.
The indictment alleged that the defendants obtained more than 5,000
gift cards from a group that called itself the ``Magic Lamp,'' and sold
gift card information via an on-line messenger application. Through the
purchases and other transactions at multiple retail stores, the
defendants and their co-conspirators sought to conceal the fact that
the gift cards had been originally funded with fraudulent proceeds.
Customs records indicated that between August 2019 and November 2020, a
business operated by one defendant exported merchandise with a total
declared value of over $13 million, consisting of iPads, cell phones,
AirPods, and Apple watches, to recipients in Hong Kong. In September,
after a 10-day trial, three defendants were found guilty of conspiracy
to commit money laundering. A January 2024, sentencing hearing has been
set at which time the defendants will face a statutory maximum sentence
of 20 years in Federal prison for each money-laundering conspiracy
count. The fourth defendant pled guilty and is currently serving a
Federal prison sentence. This case was prosecuted by the United States
Attorney's Office for the Central District of California.
These investigations demonstrate the scope of OTG activities that
victimize our communities and highlight the HSI strategic and vital
role in investigating ORC, cargo theft, and related crimes to disrupt
and dismantle OTGs. These cases also illustrate the importance of
public and private partnerships, and law enforcement coordination
across jurisdictions.

conclusion

The United States remains a desirable target for TCOs that seek to
profit from systematic theft and fraud. Through its unique authorities,
capabilities, and strategic partnerships, HSI seeks to disrupt and
dismantle OTGs that exploit the United States economy and pose a public
safety risk to our communities.
Thank you again for the opportunity to appear before you today and
for your continued support of HSI and our enduring efforts to secure
our borders and protect the American people from the criminal
organizations targeting our homeland. I look forward to your questions.

Mr. Pfluger. Thank you, Mr. Krol.
The Chair now recognizes Mr. Kane for your opening
statement.

STATEMENT OF JASON D. KANE, SPECIAL AGENT IN CHARGE,
NASHVILLE FIELD OFFICE, U.S. SECRET SERVICE, DEPART-
MENT OF HOMELAND SECURITY

Mr. Kane. Thank you.
Chairman Pfluger, Ranking Member Magaziner, and
distinguished Members of the subcommittee, thank you for
inviting me to testify before you on the current investigative
capabilities of the U.S. Secret Service and how they may be of
help addressing the trend of organized retail crime.
As one of the Nation's original investigative agencies, the
Secret Service has been charged with safeguarding the Nation's
financial systems since 1865. This includes conducting criminal
investigations to protect the American public, financial
institutions, and critical infrastructure from criminal
exploitation.
Over time these investigations have evolved from
traditional counterfeit in Civil War to crimes related to
electronic fund transfers that became popular in the 1980's.
Today we have extensive authorities to safeguard financial
payment systems from criminal exploitation even if those
specific activities are increasingly transnational in nature
and enabled by cyber space and digital currencies.
The Secret Service's primary area of focus with respect to
combatting organized retail crime are in training our State and
local partners and providing shared resources in the form of
technical tools. We aid our partners in our specialized ability
to track and seize illicit funds, often in the form of digital
assets which were used by transnational criminal organizations
to conceal and transfer their ill-gotten gains.
The Secret Service has an exceptional record of success in
disrupting transnational criminal organizations and will remain
committed to keeping pace with both technology and innovation
and the evolving tactics of cyber criminals.
Based on our efforts, we've prevented $2.6 billion in fraud
in fiscal year 2022. These losses are victim-based and
attributable crimes such as business email compromises,
pandemic-related fraud, romance scams, and stealing personal
information via dark web marketplaces.
The aid to Secret Service and our continued law enforcement
partnerships, last December Congress renewed its commitment to
the National Computer Forensic Institute by passing legislation
that allowed for its continued operation through the end of
fiscal year 2028. The legislation is to strengthen our
capabilities at the Secret Service and our law enforcement
partners to combat cyber-enabled crime, including organized
retail crime. One of the on-going efforts are the Cyber Fraud
Task Force which is directly funded by Congress to provide a
forensic working environment to support criminal cases. These
tasks forces are in 42 offices across the United States.
Through them we work closely with the U.S. Attorney's Office
and law enforcement agencies to ensure that our partners have
the most relevant information on criminal trends and tactics
used by organized criminal groups.
Our well-established and -trusted relationships with
finance institutions stemming from our origins in combating
counterfeit currency affords us the agility to aid with cases
involving organized retail crime. We are fully engaged with our
partners. This partnership is essential to accomplishing our
mission.
Organized retail crime is a crime of opportunity, and
criminals exploit this in both the physical and cyber-enabled
space. Efforts to stay ahead of transnational criminal
organizations and their capabilities are paramount to helping
deter future crimes. While organized retail crime is not a
traditional area of focus for Federal law enforcement, the
capabilities of organized groups to commit these crimes is
evident based on the reported annual losses of over $100
billion.
The immediate investigative focus of the Secret Service is
to disrupt and deter criminal activity and recovering any funds
stolen from Americans. Longer term we'll work to ensure those
who have criminally exploited our businesses are arrested and
successfully prosecuted forthwith.
Cyber-enabled crimes are often transnational and
multijurisdictional in nature which is why Federal assistance
in many times is not only warranted, it's essential.
Based on the current trends related to organized retail
crime, I will assent the following five principles should help
inform Congressional efforts to address organized retail crime.
One is resourcing. Resourcing is essential to law
enforcement's ability to effectively detect, investigate, and
arrest those committing these crimes. These must be constant
and consistent, not just a reactive measure.
Prioritizing, identifying, and seizing assets to prevent
illicit profit and recover victim financial losses. If
criminals can enjoy their profits, there will be no crime--or
more crime.
Continue to strengthen the ability of stakeholders to
prevent, detect, and investigate crimes by investigating local
law enforcement through Federal programs such as the Secret
Service's National Computer Forensic Institute. This bill is a
collaborative for relationships necessary to address organized
retail crime and know the cyber neighborhood crimes.
Partnerships between law enforcement and the private sector
are essential. We often say build trust before you need it as
this is vital for an effective response from law enforcement.
Last, ensure legal authorities that control law enforcement
activities keep pace with criminal trends.
I'm honored to represent the dedicated men and women of the
Secret Service here today. They work tirelessly on behalf of
the American people and continue to maintain our standing as
one of the world's premiere law enforcement organizations.
The Secret Service appreciates your partnership and your
guidance, and I will now welcome any questions that you have.
Thank you.
[The prepared statement of Mr. Kane follows:]

Prepared Statement of Jason D. Kane

December 12, 2023

introduction

Chairman Pfluger, Ranking Member Magaziner, and distinguished
Members of this subcommittee: Thank you for inviting me to testify
before you on the current investigative capabilities of the U.S. Secret
Service (Secret Service) and how they may be of help addressing the
rising trend of organized retail crime (ORC).\1\
---------------------------------------------------------------------------
\1\ ORC is the large-scale theft of retail merchandise with the
intent to resell the items for financial gain. National Retail
Federation, https://nrf.com/advocacy/policy-issues/organized-retail-
crime.
---------------------------------------------------------------------------
As one of the Nation's original investigative agencies, charged
with safeguarding the Nation's financial and payment systems, the
Secret Service has, since 1865, conducted criminal investigations to
protect the American public, financial institutions, and critical
infrastructure from criminal exploitation. As early as 1982, the
Secretary of the Treasury directed the Secret Service to investigate
crimes related to electronic funds transfers to keep pace with the
growing role of computers in the U.S. financial system. Today, we have
extensive authorities to safeguard financial payment systems from
criminal exploitation, even as those illicit activities are
increasingly transnational in nature and enabled by cyber space and
digital currencies.
I currently serve as the special agent in charge of the Nashville
Field Office with oversight of middle and eastern Tennessee. In my
former role as a deputy assistant director, I helped drive our
investigative focus and priorities supporting our 161 field offices. I
drafted polices for our offices to deploy, but now I implement those
polices to deter, disrupt, and ultimately prosecute actors involved in
transnational criminal organizations (TCOs).
In executing our law enforcement mission, the Secret Service
closely partners with Federal, State, local, Tribal, Territorial, and
international law enforcement agencies. We do this in part through our
network of Cyber Fraud Task Forces (CFTFs)\2\ which are strategically
placed in major cities across the United States. In criminal
investigations involving digital currency, we partner particularly
closely with Homeland Security Investigations (HSI), the Financial
Crimes Enforcement Network (FinCEN), the Federal Bureau of
Investigations (FBI), the Department of Justice, and other Federal
agencies with related responsibilities as well as State and local law
enforcement partners.
---------------------------------------------------------------------------
\2\ Section 105 of the USA PATRIOT Act of 2001 directed the Secret
Service to establish a ``a national network of electronic crimes task
forces, . . . for the purpose of preventing, detecting, and
investigating various forms of electronic crimes, including potential
terrorist attacks against critical infrastructure and financial payment
systems.'' The first Secret Service Electronic Crimes Task Force (ECTF)
was established in New York in 1995; today the Secret Service operates
42 domestic CFTFs, as part of an expanding international network that
partners Federal, State, and local law enforcement with the private
sector and academia to effectively investigate cyber crimes.
---------------------------------------------------------------------------
The Secret Service's primary areas of focus with respect to
combating organized retail crime are in training our State and local
partners, providing shared resources in the form of technical tools,
and utilizing our specialized abilities to track and seize illicit
funds, often in the form of cryptocurrencies, which are used by TCOs to
conceal and transfer their ill-gotten gains. The Secret Service has an
exceptional record of success in disrupting TCOs, and we remain
committed to keeping pace with both technology innovation and the
evolving strategies and tactics of cyber criminals. My testimony today
will explain our efforts, and the challenges we face, in addressing
organized retail crime and related criminal activity.

impact of national computer forensics institute (ncfi)

The Secret Service identified the availability of cyber-related
training and equipment at the State, local, and Tribal levels as an
issue in the early 2000's. Established in 2008, through a partnership
initiative between the Department of Homeland Security (DHS), the
Secret Service, and the Alabama District Attorneys Association, the
NCFI has trained more than 24,000 State, local, Tribal, and Territorial
(SLTT) law enforcement, prosecutors, and judicial officials. Trainees
hail from more than 4,700 agencies throughout all 50 States and 5 U.S.
territories. Since 2017, the NCFI has issued more than $122 million in
computer equipment to SLTT digital forensics examiners. This equipment
is sent back to SLTT departments and used to investigate a wide
spectrum of crime, to include retail crime.
The impact of the NCFI's training mission on SLTT law enforcement
partners is evident first-hand through the Forensic Partner Reporting
program. Graduates of NCFI's forensic examiner courses utilize Secret
Service-issued equipment to conduct examinations in a wide range of
criminal investigations across the Nation, and report back on their
work. Reporting for fiscal year 2023 is at an all-time high, reflecting
that SLTT partners conducted over 200,000 exams and analyzed more than
35 petabytes of data, which is the equivalent of 700 million four-
drawer file cabinets full of data. More than half of all exams reported
involved violent crime investigations, to include homicide, robbery,
rape, and child exploitation.
Cases today revolve around the ability to prove guilt in a cyber
environment. I would submit to you that 25 years ago cases regularly
hinged on biological DNA evidence as the pillar of a prosecution.
Today, cases also regularly rely on ``computer DNA'' or ``digital
dust'' from computer forensics to show the pattern and intent of
criminal actors and their networks. Without this type of evidence, many
criminal actors may go free or receive limited sentences as the full
degree of their culpability is not discovered. Last year, Congress
renewed its commitment to the NCFI program by passing legislation that
expanded this program and allowed for its continued operation through
the end of fiscal year 2028. This legislation has strengthened the
capabilities of the Secret Service and our law enforcement partners to
combat modern criminal activity, including organized retail crime.

cyber fraud task forces & partnerships

Our Cyber Fraud Task Forces are connected with U.S. Attorneys'
Offices and other Federal SLTT counterparts in every jurisdiction to
ensure that our partners have the most relevant information on criminal
trends and tactics used by organized criminal groups. Our well-
established and trusted relationships with financial institutions,
stemming from our origins in combatting the spread of counterfeit
currency, affords us the agility to aid with cases involving organized
retail crime. We are fully engaged with our partners, as partnership is
essential to accomplishing our mission.
We work daily with partners in the financial sector, such as FinCEN
and the National Cyber-Forensics Training Alliance (NCFTA), to identify
trends throughout the country. We issue advisories to financial
institutions as new information is developed, to include ways to
prevent and mitigate fraudulent schemes. While the fight remains, a
tangible example of our CFTF capabilities were shown during the COVID-
19 pandemic, where we seized and returned over $1.65 billion in
fraudulently-obtained Small Business Administration loans and
unemployment insurance benefits and arrested more than 670 individuals.
Last, to ensure we are an effective partner to the private sector,
we have placed renewed emphasis on public outreach. One item I have
personally learned in my tenure with this agency is that our private-
sector partners are in this fight with us. We have increased our
outreach initiatives in the form of podcasts, in-person briefings, and
our first-ever citizens academy, which was hosted by our Dallas Field
Office just a few months ago.\3\ Addressing cyber-enabled crime is a
team sport, and we rely heavily on close collaboration with
stakeholders, just as we do when we complete our protective mission.
---------------------------------------------------------------------------
\3\ https://www.secretservice.gov/newsroom/behind-the-shades/2023/
08/secret-service-pilots-citizens-academy-dallas.
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strategy

The Office of Investigations Strategy, fiscal year 2021-2027,
identifies the following three objectives to safeguard U.S. financial
systems:
1. Detect, investigate, and arrest those committing financial
crimes.
2. Identify and seize assets to prevent illicit profit and recover
victim financial losses.
3. Strengthen the ability of stakeholders to prevent financial
crimes.
It is in the second category that I believe may be of particular
interest to this committee. It is an area the Secret Service has and
continues to devote extraordinary effort to staff, resource, and train
our personnel to address. I am pleased to report this fight is one the
Secret Service takes on daily, and we have numerous examples of how our
strategies are working. Based on our efforts, we prevented over $2.6
billion in fraud in fiscal year 2022.\4\ These losses are victim-based
and attributable to crimes such a Business Email Compromises (BECs),
romance scams, and stolen personal information via Dark Web
marketplaces.
---------------------------------------------------------------------------
\4\ USSS Annual Report, fiscal year 2022.
---------------------------------------------------------------------------
Without effective law enforcement intervention, consumers will bear
the brunt of higher cost for items based on the acts of criminal
groups. These criminals are not only defrauding retailers but also
impeding the availability of commerce as retailers are unable to fight
the problem alone.

investigative efforts

The immediate investigative focus of the Secret Service is to
disrupt and deter criminal activity and to recover any funds stolen
from Americans. Longer-term, we work to ensure that those who have
criminally exploited our businesses are arrested and successfully
prosecuted. Cyber-enabled crimes are often transnational and multi-
jurisdictional in nature, which is why Federal assistance is many times
not only warranted, but it is essential.
While much of our casework does not directly involve retail theft,
we support efforts to counter ORC through our investigations involving
the illegal movement of money. Today, much of that money laundering is
facilitated through digital assets. I think back to a case involving
Liberty Reserve, which was designed to facilitate illegal transactions
and launder the proceeds of various crimes.\5\
---------------------------------------------------------------------------
\5\ Office of Public Affairs, ``Liberty Reserve Founder Sentenced
to 20 Years for Laundering Hundreds of Millions of Dollars'' (U.S.
Department of Justice 6 May 2026). Accessed 30 November 2023 at:
https://www.justice.gov/opa/pr/liberty-reserve-founder-sentenced-20-
years-laundering-hundreds-millions-dollars.
---------------------------------------------------------------------------
While we shut down Liberty Reserve in 2013, just last month, the
Secret Service worked with a cryptocurrency company to freeze $225
million worth of assets related to a transnational criminal scheme.\6\
It is the intention of the Secret Service to seize the funds associated
with illegal activity in this case and return as much as possible to
victims. In fiscal year 2022 and 2023, we returned over $570 million to
victims of crime. Our actions to address illicit financial activity
will undoubtably deal a financial blow to those engaged in ORC by
limiting their ability to use the proceeds from selling stolen items.
---------------------------------------------------------------------------
\6\ [Sic.]
---------------------------------------------------------------------------
operation urban justice

In late 2022, the Secret Service entered a prolific investigation
involving the State of California and the theft of Electronic Benefit
Transfer (EBT) benefits. The EBT program was being exploited by
organized crime groups and the direct losses at the time of case
inception was approximately $90 million. This coordinated effort sought
to target transnational organized criminals who were skimming EBT cards
from local retailers and using the stolen numbers to steal funds from
the intended beneficiaries who rely upon these subsistence benefits.
The operation itself combined the efforts of over 400 law enforcement
personnel from USSS, HSI, DOJ, and our California State and local
partners. The State was also losing around $9 million a month as the
criminal groups were exploiting the monthly benefits as they were
loaded onto the true recipient's accounts.
Operation Urban Justice was conducted on March 1, 2023, and yielded
15 Federal arrests, over $100K in cash seized, 40 encoded cards, and
numerous cell phones used for the operation which we have now used to
identify additional elements of the TCO. This effort required the use
of artificial intelligence-based technologies and data analytics to
wade through reams of financial and video data from months of
exploitation by these TCOs. The Secret Service will continue to go
after those who will use the Governmental programs designed for the
intended beneficiaries who rely upon these subsistence benefits and
hold them accountable. This is a tailored example of how we address
TCOs daily.

challenges

While the Secret Service does not have a lead role in the effort to
fight organized retail crime, this crime does have commonality with
other contemporary crimes in the use of computers, transnational co-
conspirators, and the illicit financial activity. These groups are
commonly technically savvy and know how to move their funds outside of
the purview of traditional money-laundering pathways. This is no longer
the days of Sammy ``The Bull'' Gravano laundering quarters through
laundromats; this is moving millions of dollars' worth of assets
transnationally and electronically within seconds.
One area where Congress could help is by amending 18 U.S.C. 3056
to authorize the Secret Service to investigate those involved in
criminal violations of 18 U.S.C. 1960, and related illicit financial
activity occurring in financial institutions which are regulated under
the Bank Secrecy Act, but do not meet the definition of ``Federally-
insured financial institution'' under Title 18 of the U.S. Code.\7\ In
May 2023, DHS sent the proposed amendment to 18 U.S.C. 1960 to
Congress for consideration. The Secret Service continues to engage
members of both the House and Senate, to explain the purpose and nature
of this legislation. In short, our financial systems, and our mission,
has evolved since 1865, and our authorities must keep pace so we can
effectively address new forms of illicit activity.
---------------------------------------------------------------------------
\7\ Reference the definition of ``financial institution'' in 31
U.S.C. 5312, compared to the definition in 18 U.S.C. 20, and the
phrase ``Federally-insured financial institution'' used in 18 U.S.C.
3056(b)(3).
---------------------------------------------------------------------------
conclusion

In conclusion, I am honored to represent the dedicated men and
women of the Secret Service here today. They work tirelessly on behalf
of the American people and continue to maintain our standing as one of
the world's preeminent law enforcement organizations.
The Secret Service will continue to partner with HSI to hold
criminals accountable and seize illicit gains to deter further criminal
activities and compensate victims. At the same time, the Secret Service
will continue to be on the leading edge of evolving threats targeting
the financial infrastructure, a post we have held since 1865.
I truly appreciate the chance to represent the Secret Service and
discuss some of the ways we can aid in the pursuit of cyber-enabled
crime, including organized retail crime. The Secret Service appreciates
your partnership and guidance, and I welcome any questions the
committee may have.

Mr. Pfluger. Thank you, Mr. Kane.
The Chair now recognizes Mr. Perez for your opening
statements of 5 minutes.

STATEMENT OF JOSE A. PEREZ, DEPUTY ASSISTANT DIREC-
TOR, CRIMINAL INVESTIGATIVE DIVISION, FBI, U.S. DEPART-
MENT OF JUSTICE

Mr. Perez. Good afternoon, Chairman Pfluger, Ranking Member
Magaziner, and Members of the committee. It's my pleasure to be
here today to speak to you on organized retail theft, more
specifically the FBI's Major Theft Program.
As noted, my name is Jose Perez. I'm the deputy assistant
director in the Criminal Investigative Division. Under my
investigative responsibility, I have various programs,
including the Violent Crime and Gang Program, Crimes Against
Children, and specifically for this committee transnational
organized crime, which includes our Major Theft Program.
The FBI has a long and rich history combatting organized
crime, and we continue to dedicate resources to combat that
threat. We use an intelligence-driven approach to identify,
disrupt, and dismantle the most egregious TOC actors. Criminal
organizations are diverse in trade and employ a myriad of
criminal activities, ranging from trafficking in narcotics,
firearms, and/or persons. It's a fraud and major theft.
The FBI is aware of the continually evolving trend of
organized retail threat. We prioritize efforts to combat this
threat by working with our law enforcement partners to identify
these organizations, disrupt them, and dismantle them using the
enterprise theory of investigation and employ sophisticated
investigative techniques.
Retail theft consists mostly of several State crimes that
can quickly evolve into activities used to proliferate
transnational organized crime when stolen goods are transported
across State lines or even internationally or when illicit
goods--illicit proceeds from retail crimes are used to fund
other transnational criminal activity.
To better support these investigations, the FBI partners
with State, local, and Federal law enforcement around the
country through our various task force initiatives to combat
both violent crime and organized crime. The FBI leads several
major task forces around the country that are dedicated toward
defeating these criminal organizations involved in interstate
transportation of stolen goods.
Some of the challenges in investigating organized retail
theft is that most of these crimes often appear as State
offenses, things like shoplifting, that immediately are not
reported to the FBI and may not have clear connections to
transnational criminal organizations.
To address this challenge, the FBI continually partners
with State and local law enforcement to share intelligence on
crime trends and patterns to create better networks to identify
criminal actors.
Just this past April, FBI Boston's Organized Crime Task
Force arrested 7 members of an organized theft crew. The
investigation resulted in collaboration by over 70 police
departments throughout the New England area. Several members of
the crew were arrested in connection with thefts throughout the
region, including catalytic converters stolen from over 470
vehicles, cash from automatic teller machines, and merchandise
from jewelry stores. The crew was allegedly responsible for an
estimated $2 million in losses throughout the Massachusetts and
New Hampshire area between 2022 and 2023. Several of these
defendants have been convicted, and the FBI continues to
partner with State and local law enforcement agencies in these
types of cases.
In addition to the Major Theft Program, we also dedicate
resources toward retail theft through things like our authority
to investigate Hobbs Act violations. In these cases the dollar
amount is less important than the overall impact to the
community when the theft is facilitated through violence. These
crimes might have a lower financial loss associated with them,
but the larger impact on the community, in addition to the
impact on interstate and foreign commerce, is significant.
Additionally, the FBI actively participates in outreach and
partnerships to the retail industry and private-sector
partners. We attend various conferences, such as the National
Retail Federation Conference. We maintain private-sector
outreach efforts through our office of private sector and
offices of private engagement and also through FBI headquarters
and our 56 field offices around the country. These
relationships and industry events are important to maintain
active communication, information sharing, and coordination
between FBI and retail partners.
While recent smash-and-grab robberies have garnered much
media attention, the FBI also focuses on investigating and
disrupting complex theft schemes involving targeted retail
theft of high-dollar items, such as sophisticated fraud schemes
and to steal commercial cargo loads.
We work closely with private sector to develop a strategic
cargo theft initiative and address the growth in cargo theft
and supply chain theft. In March 2023, CargoNet, an industry
association, reported a 600 percent increase in strategic cargo
theft. Some of these cargo theft schemes include identity theft
and fraud and cyber-enabled fraud such as business email
compromise.
The FBI has also initiated an initiative targeting South
American theft groups involving groups coming from Chile and
other South American countries exploiting things like visa
waiver program and visa entries to commit crimes and return
back to the countries and share some of the proceeds and sell
some of the proceeds internationally.
I appreciate the opportunity to speak to the committee
today, and I look forward to answering any of your questions.
[The prepared statement of Mr. Perez follows:]

Prepared Statement of Jose A. Perez

December 12, 2023

Good morning, Chairman Pfluger and Members of the subcommittee, and
thank you for inviting me here to talk to you about Organized Retail
Theft, and more specifically the FBI's Major Theft program.
My name is Jose Perez. I am a deputy assistant director within the
FBI Criminal Investigative Division, or CID. In my position I oversee
various investigative programs for the FBI, including Violent Crime and
Gangs, Crimes Against Children, and Transnational Organized Crime, or
TOC, which I will focus on today as that includes our Major Theft
Program.
The FBI has a long and rich history combating Organized Crime, and
we continue to dedicate resources to combat Organized Crime by using an
intelligence-driven approach to identify, disrupt, and dismantle the
most egregious TOC actors. Criminal organizations are diverse in trade
and employ myriad criminal activities ranging from trafficking
narcotics, firearms, and/or persons to fraud and Major Theft. The FBI
is aware of the continually-evolving trend of Organized Retail Theft
and we prioritize efforts to combat it by working with our law
enforcement partners to identify these organizations, dismantle them
using an enterprise theory of investigation, and employ sophisticated
investigative techniques.
While retail theft consists mostly of State crimes, it can quickly
evolve into activities used to proliferate transnational organized
crime, when stolen goods are transported across State lines or even
internationally, or when illicit proceeds from retail crime are used to
fund other transnational criminal activity. To better support these
investigations, the FBI partners with State, local, and Federal
partners around the country through various task force initiatives to
combat both violent crime and organized crime. The FBI leads several
Major Theft task forces around the country that are dedicated toward
defeating criminal organizations involved in interstate transportation
of stolen goods.
One of the challenges with investigating Organized Retail Theft is
that most of these crimes appear initially as State offenses, such as
shoplifting, that are not ordinarily reported to the FBI and may not
have clear connection to a transnational criminal organization. To
address this challenge, the FBI continually partners with State and
local law enforcement to share intelligence on crime trends and
patterns and create better networks to identify the criminal actors.
Just this past April, FBI Boston's Organized Crime Task Force
arrested 7 members of an organized theft crew. Over 70 local police
departments throughout New England contributed to this investigation.
The members of the organized theft crew were arrested in connection
with thefts across the region, including catalytic converters stolen
from over 470 vehicles, cash from automatic teller machines, and
merchandise from jewelry stores. This crew is allegedly responsible for
an estimated $2 million in losses from thefts across Massachusetts and
New Hampshire from 2022 to 2023. The defendants were charged with
conspiracy to transport stolen property in interstate commerce and
interstate transportation of stolen property. To date, 5 members of the
crew have plead guilty.
In addition to the Major Theft program, the FBI also dedicates
efforts toward Retail Theft through its authority to investigate Hobbs
Act violations. In those cases, the dollar amount is less important
than the overall impact to the community, when theft is facilitated
through violence. These crimes might have a lower financial loss
associated with them, but a larger impact on communities and greater
impact on interstate and foreign commerce.
Additionally, the FBI actively participates in outreach and
partnerships with the retail industry and private-sector partners. The
FBI attends various conferences, such as the National Retail Federation
(NRF) conference, and maintains private-sector outreach efforts through
the FBI's Office of Private Sector, Office of Partner Engagement, and
throughout our 56 FBI Field Offices. These relationships and industry
events are important to maintain active communication, information
sharing, and coordination between the FBI and retail partners.
While recent ``smash-and-grab'' type robberies have garnered much
of the media attention, the FBI also focuses on investigating and
disrupting the more complex theft schemes involving targeted retail
theft of high-dollar items, such as sophisticated fraud schemes to
steal commercial cargo loads. The FBI is working closely with the
private sector to develop a Strategic Cargo Theft Initiative and
address the growth in Cargo Theft and Supply Chain Theft. In March
2023, Cargonet (an industry association dedicated to the prevention and
investigation of cargo theft) reported a 600 percent annual increase in
strategic cargo theft. Strategic cargo theft involves the use of fraud
and deceptive information to deceive shippers, brokers, and carriers to
give loads to criminal actors instead of legitimate carriers and can
involve both identity theft and cyber-enabled fraud such as Business
Email Compromise.
Additionally, the FBI has an initiative targeting South American
Theft Groups, which involves individuals from Chile and other South
American countries exploiting tourist visas to travel in and out of the
United States to facilitate theft and transport of stolen goods
internationally. The FBI has shared substantial intelligence with law
enforcement partners around the world, and this initiative continues to
dedicate resources with various active investigations throughout the
country.
Thank you for your support in this area and for your continued
assistance in helping us combat this threat.
Thank you again for the opportunity to testify today, and I'm happy
to answer any questions you may have on this topic.

Mr. Pfluger. Thank you, Mr. Perez.
Members will now be recognized by seniority for their 5
minutes of questioning. An additional round of questioning may
be called after all Members have been recognized.
I now recognize myself for 5 minutes.
I appreciate the service and what you all do and especially
your partnership with the State and the local levels. I think I
want to start, you know, just by trends and ask each of you
quickly, are there areas, geographic areas, cities that seem to
have higher rates of organized retail crime that are being
impacted?
I'll start with you, Mr. Krol, and we'll just go down the
line.
Mr. Krol. Thank you, sir, for that question.
You know, we see the poly-criminal transnational
organizations now no longer tied to a single criminal scheme or
enterprise. What we do see is, you know, organized retail crime
groups involved in certain, you know, methods and
methodologies. I think they are driven by greed and
opportunity, not so much location and geographic region.
Mr. Pfluger. OK. Mr. Kane, Mr. Perez, quickly any areas
that you see that are being impacted disproportionately?
Mr. Kane. I would say no areas in particular. I agree with
the HSI SAC that I think they're geographical and they tend to
take the exploitation where those opportunities can be
exploited; i.e., for example, gas pump skimming which was a
huge thing several years back.
Mr. Pfluger. Yes.
Mr. Kane. I-95 seemed to be the corridor. There was no
direct location.
Mr. Pfluger. Mr. Perez.
Mr. Perez. Sir, similar comments. Our offices around the
country, we have 9 Major Theft Task Forces. These were
developed by individual field offices. They really vary and
range from Los Angeles, Memphis, Pittsburgh, to West Texas,
sir, and El Paso where we've established an Organized Crime
Task Force as well. This is deferred to by our local field
offices. I can't speak to one area more than another. We see
various trends as mentioned in one corridor. I've seen a theft
of fuel in West Texas, sir, in your area that are significant
that leads us to establish local partnerships to target some of
these unique threats.
Mr. Pfluger. What about felony thresholds? Have you seen
State by State or jurisdiction by jurisdiction or action from
DAs that have led to increases? So let's say the raising of a
felony threshold, has that had an effect on the number of
organized retail crime events that you see?
Mr. Perez. Sir, I can't speak to that.
Mr. Pfluger. OK. Any other on the panel?
Mr. Kane. No, sir.
Mr. Krol. No, sir.
Mr. Pfluger. OK. Let's go to the Secret Service. Mr. Kane,
when does the Secret Service--what does the Secret Service see
as the largest threat to maintaining a safe environment for
financial transactions, whether it be credit cards, gift cards,
U.S. currency? What does--kind-of talk me through that.
Mr. Kane. I think, obviously, with the holidays hitting,
it's high volume, and places like convenience stores and gas
stations seem to be the best because they can get a lot of
numbers very quickly.
The second kind-of on the edge of new things are what they
call quishing, which is like the scanning of QR codes which are
not actual QR codes. They actually will take you to a site and
ask you to apply information, personal information. That's a
new one.
Then gift card fraud, which is happening a little bit more
prevalently where people are taking gift cards, reencoding them
in the back, activating them very quickly with limitless
amounts of money, but then when you go and actually buy the
gift card, you're loading the dollar up. So combating that is a
little tough. It's a little bit more heavy on the retailers. At
the local level, the convenience store levels, it's just really
on the locals. Again, the person using these ATM/sliders, they
need to make sure that those devices are legitimate as best
they can. We always say give it a tug. It might come apart. You
never know.
Mr. Pfluger. Mr. Krol, we're talking about Operation
Boiling Point focused on combatting this organized retail crime
trend. How much organized retail crime investigations has HSI's
Boston Field Office conducted? Can you find any red tape or
roadblocks that have stood in the way between effective
partnerships with the State and local level?
Mr. Krol. Thank you for that question.
We do have active investigations on-going now, don't have a
historical number, but certainly those that are international
in scope and ones that involve our Federal, State, and local
partners spread throughout New England.
What I will say I don't see any red tape. What I see is
just the necessity to prioritize the myriad of crimes that we
see as Federal agents. You know, we see kind-of three tiers of
retail crime. No. 1, you're a single scope who may, you know,
steal out of necessity; No. 2, your more coordinated groups who
might not reach in interstate commerce; and then, No. 3, which
is where I think Federal agents should be, is the more
sophisticated networks, those that are involved in cyber-
enabled crime and maybe, you know, some more sophisticated
methodologies. But we do see the gap between No. 1 and No. 2
with our State, local, and private-sector partners, which serve
to your point as why we established----
Mr. Pfluger. Are these events deterring or scaring the
public? Is it something that's scaring the public and deterring
businesses from having open stores in different places?
Mr. Krol. Sir, what I can say is, you know, obviously the
awareness of the crime has been certainly something that we've
seen much more of, whether in the media or within law
enforcement. I think the awareness of the crime is something
that's going to help us to attack those networks and make sure
that we have an impact.
Mr. Pfluger. Thank you. My time has expired.
I now recognize the Ranking Member for your questions.
Mr. Magaziner. Thank you, Chairman. Thank you all again for
your public service and for coming here today.
I think one of the things that we are challenged with as we
have this conversation on organized retail crime is
difficulties with the data. You know, to Chairman Pfluger's
question about are there certain areas where this is more
prevalent to questions about is this becoming more prevalent
over time, which we're hearing from the retailers it is, and we
believe them, but the data is spotty.
So I guess I want to just ask each of you are you able to
get as agencies the data that you need from local law
enforcement, from retailers to help you anticipate the trends?
If not, are there things that we can be doing at the policy
level to help fill in those data gaps so that we can better
wrap our hands around the situation and how to deal with it?
So I'll open it up to any of you.
Mr. Krol. Thank you for that question.
Certainly to that point is why HSI established Operation
Boiling Point 2.0, you know, for pillars to establish and
enhance private-sector partnerships. You know, No. 2, we have
dissemination but also acquisition of information that's going
to help us disrupt those organized crime--organized retail
crime networks. And then, last, make sure that we're, you know,
enhancing our public awareness campaign.
I think to that point is understanding the data is
understanding the threat. For us in law enforcement, I think I
speak on behalf of Secret Service and FBI when I say the more
information we have, the better-prepared we are to address not
only existing threats but emerging threats that maybe we don't
see to that point. You know, certainly cyber-enabled crime is
something that we're significantly concerned about and I figure
network intrusions and new data breaches and that information
that may be not be public is certainly a concern to law
enforcement. I think we could be of benefit to our private-
sector partners to help them resolve and mitigate those
threats.
Mr. Magaziner. Thank you.
Mr. Kane. Sir, one of the things, we obviously with the R&C
fraud facility will train 5,000 people or law enforcement
agencies this year throughout all your districts. Those would
now become the barometers for kind-of fraud and kind-of what's
happening in those sectors. That becomes my data resource
because my CFTFs are telling me very robustly this is kind-of
occurring in our district. Here's where we should apply some
resources.
One area, you know, we've obviously talked about for us is
countering the Money Laundering Act of 2023, which is something
we suggested, which kind-of helps us, obviously, go after
unlicensed money laundering, because we believe if you can hit
the pocketbooks of bad actors, then they will, obviously, find
a new crime to participate in. That's the two things.
Mr. Perez. Thank you, sir.
I would echo similar to what my colleagues have said as far
as collaboration and communication. The FBI nationally, we've
tried to improve some framework to collect that information
from law enforcement, through our Criminal Justice Information
Service, and through our NIBRS program to collect that data
from law enforcement. But that is only as good as what's being
put into our databases, if you will. So we try to expand that
and augment that through our collaborations individually with
our field offices. The task force concept for us is tried and
true for all of Federal law enforcement where we sit in a
colocated environment with our State and local partners. At
times we'll embed with them in fusion centers or in police
departments around the country to really be on the front lines
to receive that data and better leverage that information.
Additionally, in the outreach piece, as I mentioned, we
have elements dedicated toward private-sector engagement, our
National--our Domestic Security Alliance Council, the DSAC
program, to really have direct contact and outreach with our
private-sector partners, to include the retail industry, also
the specific efforts we do out of our Major Theft Program to
have discussions, attend these conferences, and really be part
of that discussion to articulate what the--to receive what that
need is from the retail companies, to better receive that data
so we can make decisions.
Mr. Magaziner. Thank you.
With the time I have left, just one more question. As we
mentioned earlier, I mean, we're not talking about individual
shoplifters here. We're talking about, in many cases,
sophisticated organizations that are stealing these goods at
scale for resale. They're doing this to make money by selling
these goods on the black market or on-line, or what have you.
So can you talk a little bit about what your agencies are
doing at that point of resale to try to disrupt what these
organizations are doing? Because I would think that oftentimes
it's easier to catch them potentially at the resale point than
it is at the store level.
Mr. Krol. Thank you, sir, for that question.
Might I just add that the INFORM Act will certainly help us
do that to understand those that are involved in e-commerce
platforms and third-party sellers and resellers. That is
certainly something that at our innovation lab and cyber crime
center and cross-border financial crime center we're working
very closely on.
Mr. Kane. I mean, obviously, with those in the computer
forensics part, we live kind-of in the dark web marketplaces
for a lot of things. Those are great areas to kind-of, what I
call, make your case, but then we also have to forensically
prove it. So that's obviously--those two key elements for us
are kind-of helping put that point on what you just asked.
Mr. Perez. Similarly, we focus a lot on the dark net, a lot
of movement of illicit proceeds, narcotics, weapons, and stolen
goods on the dark net. We'll look at those cases. Sometimes the
resale portion, depending if it's in mass, we'll look at it and
try to identify the organization. If it's more individualized,
we can use that to begin a case and develop that intelligence
to determine where that merchandise is coming from. We look for
ways to identify those networks and disrupt them through those
patterns. The goal there is to, again, identify, work up the
chain. So sometimes identifying the money movement as well that
comes in return from some of the sale of goods really helps us
identify where these networks are.
Mr. Magaziner. Thank you.
I'm over time, so I yield back.
Mr. Pfluger. Thank you.
The Chair now recognizes the gentleman from North Carolina,
Mr. Bishop.
Mr. Bishop. Are lax local prosecutorial practices
concerning property crime contributing to the organized retail
crime that you have described?
Mr. Perez. Sir, again, I can't speak to that. I can tell
you that we work aggressively within the Federal scope, the
statutes that we have, whether it's for interstate
transportation of stolen goods or things like Hobbs Act, those
are violations that we'll investigate aggressively. At times we
can leverage State prosecution as well if for some reason we
can't charge a case Federal, so we'll work aggressively to
leverage both.
Mr. Bishop. Are lax border control policies contributing to
the development of transnational criminal organization
conducting organized retail crime?
Mr. Perez. I can't speak to that either, sir.
Mr. Bishop. Can either of you other gentlemen, can you
speak to it?
Mr. Krol. Sir, what I can say is we're certainly laser-
focused on criminal networks and those criminal networks that
affect our National border and economic security, whether they
reside internationally or domestically. I think where--you
know, between our border enforcement security task forces, our
transnational investigative units overseas, and our
international presence, we are laser-focused both on, you know,
your traditional arrest, indictment, conviction, but also your
nontraditional, which would be, you know, your cyber intrusion,
mitigation, you know, obviously and other more complex methods
to investigate transnational crime.
Mr. Bishop. Mr. Kane.
Mr. Kane. I mean, sir, we've obviously had several cases to
your point, actually a joint case with HSI in California
regarding EBT fraud, and the groups are, you know, Eastern
European obviously coming in and kind-of subverting the border
process. We had problems identifying them. So we do see it, but
I see it on a very limited scale, not to the scale that I would
say maybe the bureau and HSI sees it.
Mr. Bishop. Does the--have there been reductions in local
police forces? I have the impression that at least during the
pandemic and following the George Floyd killing and the issues
relating to that that we saw police forces decline, a lot of--a
sort-of surge in resignations of police forces locally. Is that
still the case, or has there been a recovery from that?
Mr. Kane.
Mr. Kane. I mean, sir, obviously locally I think we--as far
as resignations, I don't know. I do think there is a challenge
in recruitment for local law enforcement. There's a recruitment
challenge at our level to get people on the books, so to speak.
I can't say it's attributable to those events, though.
Mr. Bishop. Mr. Perez.
Mr. Perez. Same, sir. I'm aware nationally of some decline
in recruitment, and that's always a challenge similarly for us,
for all the Federal departments in law enforcement. I can't
speak to as to the why. I know following COVID that obviously
had an effect nationally. I can't speak to whether there's an
upswing or not, sir, currently.
Mr. Bishop. Mr. Krol.
Mr. Krol. Thank you, sir.
We recognize the troubles that our State and local partners
have in recruiting. I think that's one area where Federal law
enforcement can certainly lend assistance to our partners where
they need it. I think some of the more nontraditional methods
where assisting State and local law enforcement partners,
whether in violent crime, narcotics trafficking, weapons
trafficking, other areas, certainly in organized theft groups,
we can provide those resources to them, you know, through our
Task Force Officer Program. You know, we have 4,000 task force
offices domestically. We can help to augment their local police
departments with, you know, possibly resources, datasets, and
other information that they might not have available to them.
Mr. Bishop. I'm familiar that in Ashville, North Carolina,
for example, there's an enormous loss of police force. Cities
throughout North Carolina--I'm more familiar with that than
other cities in the country--there has been a tremendous
impairment of the size of the police force. They're way down
from their anticipated numbers.
It strikes me--and I certainly appreciate the fact that you
guys are sort-of not really in some cases wanting to attribute
causes of the problem that we face and you're dealing with it
as law enforcement, and I respect what you have to do. It does
seem to me that while we can help treat symptoms by doing more
information sharing and task force and resource provision, if
we've caused a lot of the problem by not sufficiently backing
law enforcement--and a lot of policy makers have given
inadequate support for law enforcement--if we have prosecutors
who've decided not to prosecute property crimes, if we have a
border that is uncontrolled and it gives rise to transnational
criminal organizations-led bands that go across the country and
do this kind of crime, we're probably not going to solve the
problem until we address those problems.
So that is just my observation, but I certainly appreciate
the efforts that you bring to the case every single day and all
those men and women that work under you in your agencies.
Thank you.
Mr. Pfluger. The gentleman's time has expired.
The Chair now recognizes the gentleman from California, Mr.
Correa.
Mr. Correa. Thank you, Mr. Chairman.
I want to follow up on Mr. Bishop's comments. Data
information--and if I can ask the three of you--how much of
this is organized crime versus retail crime that is
shoplifting? Do you have any guesstimates here?
Mr. Krol. Sir, thank you.
The data that we have is certainly something that we need
to work better on and to understand it with our private and
State and local partners. I can't speak to exactly the
difference between, you know, kind-of a more retail crime
versus----
Mr. Correa. I ask you that because I want to make sure
we're not operating in silos and, if we are, that we try to get
away from that.
Mr. Perez mentioned the Chilean gangs. That was an issue
that popped up in my county, in Orange County, California. My
local DA brought it up to our attention, and we brought it up
to the Feds' attention. We changed the visa program, visa
waiver program, and we hope that helps to begin to solve the
problem.
But I can't help but think that sometimes we're chasing our
own tail, and we're always a little bit too late to the party,
so to speak. So sharing information almost on a real-time basis
I think is key to figuring out the patterns, the trends, what
is emerging. I mean, from the Chile situation, we found out it
was the Romanians are also involved in this and a lot of
groups.
But, you know, looking at the retail versus the shoplifting
versus the organized crime, you've got crypto. You've got a lot
of interesting things working here. But we clearly want to
protect our communities from those losses. We clearly want to
protect the retailers as well. We want to figure out big
picture as to how to go about coming up with good solutions.
Like Mr. Bishop said, a lot of our law enforcement numbers
are down, and that's a big issue. We've got to figure out some
solutions here.
But, you know, smash-and-grab, organized crime, retail
theft, it's hard to figure out which is which. But if you don't
know which is which, then it's even harder to come up with a
good solution. I look forward to working with all of you in
trying to figure this out, get some real data so that based on
that data folks up here can come up with good public policy
with the administration and come up with real solutions in real
time.
Let me ask you another question, which is we talk about
cooperation, Federal, State, local. What about international?
Do you feel like you're getting the type of cooperation that
you need from international players out there that might be
part of the solution here?
Mr. Krol.
Mr. Krol. Thank you, sir, and appreciate that comment.
Certainly our investigative presence overseas is the
largest that DHS has, and working through our host country
transnational criminal investigative units, very important to
receiving information. As you know, sir, our authorities as
special agents in the international footprint differs than that
in the United States. So we certainly rely on their knowledge,
their investigators, their prosecutors, and others to make sure
that we're receiving the appropriate information and we're able
to act on that.
Mr. Correa. Mr. Kane.
Mr. Kane. Sir, I believe the information, international
connections right now that we have are better than they've been
in my 22 years.
Mr. Correa. So they're getting better?
Mr. Kane. They're getting better. I believe that because
now information just flows so much easier between our
countries, and then, too, the informal agreements of, like,
what we can provide and what they can provide us is back. So
certain countries, as you know, will never work with us, but
many along the way have been very good to us and especially
very good to our investigations, yes, sir.
Mr. Correa. Mr. Perez.
Mr. Perez. Sir, overall I'd say relations are good, maybe
in a better situation as well. I know we position agents
strategically. We have in our legal attache offices well over,
I believe, 60 around the world. More specific to this threat,
and we've talked about the South American theft groups, sir,
we've pre-positioned--in addition to our legal attaches, we
supplemented that office in Santiago, Chile, to add additional
bodies. We have legal attaches in Mexico. We've also
supplemented that with what we've referred to as our border
liaison officers. These are FBI agents that sit on this side of
the border and are cross-designated to operate in Mexico to
collect information and communicate more directly with our
counterparts.
Mr. Correa. I'm glad to hear you say that because it's not
your problem. It's not their problem. It's our problem. A
victim, whether it's a family that gets a family member
kidnapped in Mexico or held for ransom in Mexico usually
affects a family here in the United States as well. Again, it's
not your problem. It's our problem.
In the last 2 seconds I have, I'd say offer to work with
us--any legislative solutions, any diplomatic solutions. Let us
know. We're here to help.
Mr. Perez. Thank you.
Mr. Correa. Thank you, Mr. Chair. I'm out of time, and I
yield.
Mr. Pfluger. The gentleman yields.
The Chair now recognize the gentlemen from New York, Mr.
D'Esposito, for your questioning.
Mr. D'Esposito. Thank you, Mr. Chairman.
Good afternoon. Thank you all for your service and for
being here.
It seems that one of the primary hurdles to successful
prosecution of organized criminal groups repeatedly targeting
retail businesses is the difficulty to tie an individual or
group to multiple incidents across several jurisdictions, such
as patterns, rather than looking at each incident individually,
which fails to recognize the toll the group may have and may be
taking on a particular retailer.
I want to thank the Chairman for his work in this
committee. One of the things that we've been focusing on in the
committee that I chair, the Subcommittee of Emergency
Management and Technology, is communication and cooperation
between different agencies.
I spent a career in the NYPD, and I think that as law
enforcement professionals, we could probably say that one of
the greatest tools in our tool belt is communication with other
agencies.
So I think what's important for those that are listening
back home and for those here, what resources are available from
agencies like yours that could specifically help local and
State agencies so that we can do a better job?
Mr. Perez. Sir, again, I go back to highlighting our task
force initiatives around the country, so developing things like
our Safe Streets, Organized Crime Task Forces that have unique
threats, unique responsibilities, establishing our Major Theft
Task Forces. Then separately the OCDETF program for the
department, for the FBI, for other elements of the department
is really our core model for collaboration, communication,
deconfliction both at the Federal and State level. So we're
working with our partners in OCDETF to actually develop a
strategic initiative to help target organized retail theft to
better allow resources and funding and communication efforts at
the Federal and State level throughout the country.
Mr. D'Esposito. Thank you.
Mr. Kane. Thank you.
I'll echo IOC-2, which is a center that we--obviously, all
of the Federal agents here at the table deconflict in, that's a
great resource for Federal level. State level has some other
challenges because they don't all talk to each other. However,
a lot of them participate. NYPD does an accurate database which
kind-of allows all State agencies to talk, but our Cyber Fraud
Task Force, you know, similar to these other task forces,
again, that's how we kind-of inject tools, resources. Again,
that's funded by you. It goes directly back out to the offices.
That's how we do it, and it's been highly successful.
I was telling the gentlemen here today, 80 percent of some
of the forensic work I do is not even for my agency. It's for
State and local agencies.
Mr. Krol. Sir, thank you.
Having worked in New York City, I know NYPD's finest very
well, and thank you for your service.
Mr. D'Esposito. Thank you.
Mr. Krol. You know, I could certainly speak to our Centers
of Excellence, Cross-Border Financial Crime, our Cybercrime
Center, our National Intellectual Property Rights and
Coordination Center, and many, many others, Innovation Lab. You
know, certainly they're all great centers that provide great
resources and information to Federal agencies, and I think what
we're doing--and we need to do a better job--is making sure
that we're reaching into our private-sector and State and local
partners to ensure that they understand the resources available
to them. I think the National Intellectual Property Rights
Center that we lead is certainly a great example of the
private-sector and public partnerships that we need to use to
enhance our investigations. You know, I think until we have
those--you know, kind-of that holistic view and whole-of-
Government and private-sector view on crime, it will be tough
for us to attack this threat.
Mr. D'Esposito. So, Mr. Krol, to your point, I think that
very often we see that the resources that you guys provide,
which are amazing, are very often, I guess, from the top down.
I guess my question is how can we do a better job making sure
exactly what you mentioned? These smaller law enforcement
agencies--I mean, you go back to my district where I represent
many villages. Some of those villages have their own police
departments and deal with retail crime every single day. They
may not be afforded the same opportunities like the big ones,
like the NYPD and other big law enforcement agencies.
So not only, I guess, what can we do as Members of Congress
to make sure that our law enforcement professionals know
exactly the resources that you provide?
I guess the secondary part of that question is how can we
on both sides of the aisle work with you guys to make sure
that, No. 1, those resources are there and, No. 2, that those
smaller agencies, even the ones that are tucked in those small
towns who, unfortunately, are battling these issues right on
their main streets, how can we make sure that they have the
information they need to take advantage of the great work that
you guys are doing?
Mr. Pfluger. I would ask briefly as the time has expired.
Mr. D'Esposito. Yes. I'm sorry, Chairman.
Mr. Krol. I would just say we need to be nontraditional on
our approach, and that is possibly, you know, inserting our
special agents and their subject-matter expertise into local
police departments, much like we have our Task Force Officer
Program, 4,000 State and local task force officers. It is
educate the educator, you know, really, train the trainer. Let
them be the best resource for their local police department to
come to HSI or Secret Service or FBI or ATF, or wherever it may
be. You know, certainly we'd do that. In Rhode Island, we do
it, in Bennington, Vermont, in Rutland, Vermont, and other
areas. So I think it's a national mall that we all use.
Mr. D'Esposito. Thank you guys very much. I would love to
follow up with you guys with a conversation after this.
Mr. Chairman, I know my time has expired. I yield back.
Mr. Pfluger. The gentleman's time has expired.
The Chair now recognizes the gentlelady from Nevada, Ms.
Titus.
Ms. Titus. Thank you, Mr. Chairman.
I mentioned earlier that I had witnessed some of this
organized crime, and it was in a Walgreens. A person came up
with a backpack and just started scraping eyelashes into the
backpack. Now, eyelashes aren't power tools, I'll give you
that. But look around, there's certainly a market for it. They
don't sell it directly. They sell it to somebody at a swap meet
who sells it or they sell the drill to somebody who sells it on
the internet. So it really is a network.
I went up to the clerk and I said, Did you see what that
guy just did? She said, Yes. He comes in here about once a
week, but the companies have told us not to do anything about
it because we might get hurt or the customers might get hurt.
All of us have been in stores where you now see everything
is locked down, and you have to call the clerk to come over and
help you retrieve something. You can't just pull it off the
shelf. So it's dangerous. It's inconvenient, and it's costing
tax money as well as business profit.
I hear these questions of what can we do to help you do
your job better, and I would ask you, Mr. Krol, to talk more
about Operation Boiling Point. It seems to me it's kind-of like
fusion centers that we have in communities where all different
kinds of law enforcement and first responders and the private
sector--in my district, Las Vegas, nobody has a better eye in
the sky than gaming does to try and address this.
In my bill, H.R. 895, it's a provision to house a center to
combat organized retail crime within HSI. I wonder if you might
comment on how that would help us to bring information
together, be a one-stop shop or complement what you're doing.
Mr. Krol. Thank you very much for your long-standing
efforts in this space.
Understanding I can't speak to, you know, legislation that
is still on-going and hasn't been signed into law, what I can
say is that we have seen a similar model used many, many times
before, and that model is not new. Multi-agency command
centers, multi-agency deconfliction centers that involve the
private and public sector and law enforcement partners are
certainly the best case and best model for us to continue.
Operation Boiling Point 2.0 is really recognition of this
threat but also trying to take a little bit more proactive
stance to identify, you know, what partners we need to be in
contact with, how do we share information with them better, but
how do we gain information from possibly private sector that we
don't already have and then use that information more
effectively to target these retail crime and organized theft
groups.
Last, I think, you know, we talk about public awareness,
but really this is buyer beware. You know, the consumer needs
to be the best proponent of their money and where they're
buying products from. They're really the first line of defense
next to our State and local partners.
So I would say, you know, certainly anything we can do to
support the consumer and industry and ensure economic security,
I think that's an important piece of Operation Boiling Point
2.0.
Ms. Titus. I think the inconvenience and perhaps the danger
of going into a neighborhood where you have a store that's been
attacked a number of times, driving people to shop on the
internet more and more, and, that of course, raises other kind
of problems.
But we heard that these organized groups use the money for
drug trade but also for human trafficking.
Can you talk about that, Mr. Kane? Are you familiar with
any--or anybody talk about that as a connection to this?
Mr. Kane. Ma'am, most of the crimes that were under our
purview usually don't lend itself to human trafficking. That's
probably more in one of my colleague's----
Ms. Titus. OK. Either one.
Mr. Perez. Ma'am, we do have a human trafficking program. I
can't speak to any connection specifically to organized retail
theft.
As I mentioned earlier, criminal organizations for us are
diverse. So they're always going to look for an opportunity to
make money, whether that's retail theft, trafficking in
persons, drugs, guns, whatever allows them the ability to make
money.
I haven't seen a direct correlation between the two, but
really that speaks to the need for what we've been talking
about collectively which is continued collaboration,
collection, sharing of intelligence, and collaboration amongst
all law enforcement partners.
Ms. Titus. I yield back.
Mr. Pfluger. The gentlelady yields.
The Chair now recognizes the gentleman from Arizona, Mr.
Crane.
Mr. Crane. Thank you, Mr. Chairman. I appreciate it.
I want to say thank you to the gentlemen on the panel for
your careers in law enforcement.
I did notice, though, when Chairman Pfluger asked if any of
you saw any trends in the explosion of organized retail crime,
none of you responded with any trends that you guys were
noticing. That struck me as interesting because I know that you
guys are all really smart or you wouldn't be here.
Isn't part of being an effective member of law enforcement
having the ability to spot trends and pattern recognition?
Mr. Krol.
Mr. Krol. Yes, I certainly appreciate your concern and
recognize your question.
Of course, we focus on emerging threats and existing
threats, and truly to respond to those is something that we do
every day. I think the cyber-enabled crime up front is one
we're certainly dealing with right now. Network intrusion and
data breaches and, you know, especially items, identity,
licenses, financial information sold on the dark web is
something that concerns most of us. I would say that would
certainly be a trend that we would look to.
Mr. Crane. OK. Thank you.
Do you think having maybe a billionaire like George Soros
spending $40 million of his own money, supporting leftist
prosecutors and DAs who are soft on crime might have something
to do with it? Is that a trend that might have something to do
with the insanity that we see in American cities right now?
Mr. Krol. Thanks for your question, sir.
I'd respectfully withhold comment on that one.
Mr. Crane. Smart.
Mr. Kane.
Mr. Kane. Soros wouldn't have the context to be able to
provide an intelligible answer that would----
Mr. Crane. OK. Mr. Perez, do you think that might be a
trend that has something to do with the lawlessness that we see
going on in American cities right now?
Mr. Perez. Sir, I can't comment on that.
Mr. Crane. OK. How about lowering the felony thresholds, as
Mr. Pfluger brought up? Do you think that has anything to do
with it? Same answer?
I respect the fact that you gentlemen are--got to be
careful. I get it. But you think that might be a trend that has
something to do with the out-of-control retail crime that we
see going on across the United States?
Mr. Perez. Sir, I can't comment on that. As I mentioned
earlier, the Federal statutes that allow us to investigate
these crimes are ample and we investigate them aggressively.
Mr. Crane. OK. Well, to be honest, though, Mr. Perez, the
Federal statutes really have nothing to do with whether or not
you're able to spot some of these trends that everybody in the
country knows and understands. Everybody knows what's going on.
It's so obvious.
Let me give you guys a little research that I just did up
here right now. This is from Forbes. Target blames organized
crime for closing 9 stores across the United States. Guess what
cities they were in? New York, Seattle, Portland, San
Francisco, Oakland.
Any trends there? We all know.
Thank you. I yield back.
Mr. Pfluger. Will the gentleman yield?
Mr. Crane. Yes.
Mr. Pfluger. Mr. Perez, picking up on this line of
questioning, does the inclusion of a consequence of a penalty,
of a prison sentence, of a fine, deter criminal activity?
Mr. Perez. Sir, that's an opinion. I don't know that I
could speak to that.
Mr. Pfluger. You're with the FBI.
Mr. Perez. Yes, sir.
Mr. Pfluger. If there's a severe penalty, does that prevent
crime from happening?
Mr. Perez. I don't know if it prevents crime from
happening. I can tell you that at times we'll leverage what
would be stiffer sentences in the Federal system to garner
maybe better cases or some type of cooperation----
Mr. Pfluger. Yes.
Mr. Perez [continuing]. That leads us to really get--garner
better intelligence.
Mr. Pfluger. Mr. Kane, do penalties have an impact on
deterrence of criminal activity?
Mr. Kane. I think it has a deterrent on cooperation or
pursuing further cases, absolutely.
Mr. Pfluger. OK. I think the point of this is trying to
pinpoint why organized retail crime is happening. It's
affecting the safety of our communities. When I read the Day
One memo from District Attorney Bragg that says he's directing
his assistant district attorneys not to prosecute several
crimes including trespassing, resisting arrest, engaging in
prostitution, and other things, and that armed robbery should
not be prosecuted as felonies, does that have an impact on
organized retail crime in New York City?
Mr. Krol.
Mr. Krol. Sir, thank you for that question.
You know, what I would say is I would echo their comments
is that, you know, certainly greed has a huge factor. I would
say that the length of potential, you know, jail time certainly
has an impact on a criminal's mens rea, if you will. But
outside of that, I can't really speak to the--what a prosecutor
would prefer to see.
Mr. Pfluger. OK. The gentleman's time has expired.
He yields back.
I'd like to thank the witnesses for your valuable
testimony. At this point in time, seeing no other Members to
question, the first panel is dismissed. Thank you for your time
today.
I now invite the second panel to take their seats.
As a administrative note, we know there are votes that are
coming up. So we're going continue to roll straight into this.
We'll give you a second to switch out and take your notes. OK.
I'm pleased to have a second distinguished panel of
witnesses before us today on a very--this very important topic.
I ask that our witnesses please rise and raise your right
hand.
Do you solemnly swear that the testimony you will give
before the Committee on Homeland Security of the U.S. House of
Representatives will be the truth, the whole truth, and nothing
but the truth, so help you God?
Thank you. You may be seated.
Let the record reflect that the witnesses have answered in
the affirmative.
I would now like to formally introduce our second panel.
Mr. David Johnston serves as the vice president of asset
protection and retail operations for the National Retail
Federation. In this role, he leads initiatives in member
programs focused on asset protection and store operations,
facilitating engagement across the industry, and promoting best
practices and policy initiatives around crime, violence, loss,
and issues challenging the profitability of retail store
operations.
Mr. Johnston has over 3 decades of global loss prevention
and corporate security expertise and experience.
Mr. Scott Glenn serves as vice president of asset
protection for Home Depot. In this role Mr. Glenn is
responsible for Home Depot's security systems, threat
assessments, and corporate security.
Prior to his time at the Home Depot, Mr. Glenn spent 9
years with the Sears corporation where he served as corporate
vice president of asset and profit protection and chief
security officer and has served on a board for the Loss
Prevention Foundation, Loss Prevention Magazine, and Retail
Industry Leaders Association.
Mister--excuse me. Ms. Abby Jagoda is vice president of
public policy for the International Council of Shopping
Centers. Ms. Jagoda has been involved in public policy
initiatives on behalf of the marketplaces industry since 2013,
manages ICSC's public policy agenda related to organized retail
crime, among other policy issues of interest to the
marketplaces industry.
Prior to her time there, Ms. Jagoda served as a public
policy advisor at Blank Rome Government Relations as a co-op
fellow in the offices of Senator Edward M. Kennedy and
Congressman Barney Frank.
Last but certainly not least, I'd like to introduce Ms.
Summer Stephan who serves as district attorney for the county
of San Diego and is the current president-elect of the National
District Attorneys Association.
In addition, DA Stephan holds national leadership positions
which include co-chair of the National Association of Women
Judges Human Trafficking Committee.
I thank all of our witnesses for joining us today and for
your time.
Mr. Johnston, you are now recognized for your opening
statement of 5 minutes.

STATEMENT OF DAVID JOHNSTON, VICE PRESIDENT, ASSET
PROTECTION AND RETAIL OPERATIONS, NATIONAL RETAIL
FEDERATION

Mr. Johnston. Thank you, Chairman Pfluger, Ranking Member
Magaziner, and distinguished Members of the committee for
inviting me to testify on behalf of the National Retail
Federation and the retail industry on the issue of organized
retail crime.
We've submitted a longer statement for the record, and my
testimony will summarize that submission.
NRF is the world's largest retail trade association,
representing Main Street retailers and National chain brands.
As an industry, retail contributes $3.9 trillion to annual GDP
and supports 1 in 4 U.S. jobs. That's 52 million working
Americans.
Before joining the NRF, I spent 36 years as an asset
protection professional. From apprehending shoplifters from a
major city department store to holding various roles with a
national retailer, my previous position was leading the
corporate security and asset protection teams for a multi-brand
global restaurant organization. I have witnessed first-hand the
evolution and progression of theft across the retail industry.
Shoplifting and organized retail crime is not new. However,
the landscape of today is unprecedented and unmatched. The
frequency of theft, the openness and brazenness of the
criminals, the violence, and the quantities and type of
merchandise stolen are truthful indicators of criminal activity
beyond amateur or opportunistic shoplifting for need. These are
markers toward the proliferation and evolution of organized
retail crime.
ORC networks orchestrate, influence, and create demand for
those committing theft and fraud in our retail environments.
Shoplifting, cargo theft, burglaries, smash-and-grabs, and
various frauds are just a means to their end.
Varying in scope and scale, these networks range from
loosely-organized, local and regional groups to highly-
sophisticated hierarchies operating at a transnational level.
These criminal groups thrive on enabling others to commit
their crimes. They prey on the homeless, the addicted, and even
the victims of human trafficking. They profit from the
reselling of stolen goods on-line, rechannelling and
redistributing goods back into our marketplace and the
transportation of stolen goods and proceeds beyond our border.
We believe that these groups use organized retail crime as
a gateway crime with profits funding more nefarious activities
including drugs, weapons, and human trafficking. These groups
must be the focus of our local, State, and Federal efforts.
The impact of organized retail crime and its underlying
crimes extends far beyond retailers' profitability. Retailers
continue to spend billions of dollars to protect their goods,
their workers, and consumers including measures that have
impacted the shopping experience.
Customers have experienced shortened store hours or
restricted product availability. Small businesses and national
brands have closed locations, creating community tax revenue
loss and the inability of its residents to easily obtain goods.
Despite what some people say, ORC is not a victimless
crime. Violence continues to escalate as several retailers have
already recorded upwards of more than a hundred percent
increase in assaults in violent acts over the past year alone.
Employee injuries and deaths have occurred as recently as last
week in the city of Philadelphia.
Retailers have increased violence prevention training,
mental health support, and security presence to keep their
employees safe. The fear of violence in some communities have
impacted employee retention and hampered labor efforts in an
already tight labor market.
Criminals involved with ORC continue to take advantage of
jurisdictions with higher felony thresholds, lesser penalties
for theft, and communities lacking law enforcement resources.
Even when law enforcement engages, coordination and
investigation across jurisdictions are often a challenge.
As a far-too-common example, one of our members is
currently dealing with a group of 70 individuals traveling to
more than 190 of their locations, committing over 350 incidents
of shoplifting and fraud. Although some were apprehending, the
majority remain at large due to investigative challenges with
various law enforcement and differing prosecutorial
requirements across multiple States.
The Combatting Organized Retail Crime Act will support
retailers against such criminal organizations. The creation of
a Federal interagency center within Homeland Security
Investigations will bring together information sharing and
investigative support to Federal, State, and local and Tribal
agencies. Changes to the U.S. criminal code provide increased
enforcement tools to help reduce cross-jurisdictional crimes.
With Federal coordination, collaboration, support, and
resources, we can bring the fight to these organized groups
across our Nation.
As I close, please consider three key points. First,
without a doubt, the issue of organized retail crime has a
serious impact on retail and will continue to worsen without
appropriate action.
Second, this is not a retail-only issue to solve. It
requires all-of-Government, whole-community approach.
Finally, Congress took an important step in passing the
Informed Consumers Act last year.
On behalf of the retail industry, I urge and encourage you
to take the next step forward with the passage of Combatting
Organized Retail Crime Act.
Thank you for your time and consideration.
[The prepared statement of Mr. Johnston follows:]

Prepared Statement of David Johnston

December 12, 2023

The National Retail Federation (NRF) respectfully submits this
statement for the record for the December 12 hearing entitled ``From
Festive Cheer to Retail Fear: Addressing Organized Retail Crime.''
Thank you, Chairman Pfluger and Ranking Member Magaziner, for holding
this hearing to examine the issue of organized retail crime.
Organized retail crime (ORC) undermines the very fabric of American
communities. Through NRF surveys, retailers have reported increases in
incidents of organized retail crime and more concerningly the level of
violence tied to these crimes, starting before the pandemic and
continuing through today. Preventing these crimes in order to protect
the safety of our workers and our customers is retail's No. 1 priority.
We urge Congress to prioritize legislation that will support and
enhance the on-going efforts of Federal, State, and local law
enforcement to blunt the rise in organized retail crime. We applaud
Representative Titus as an original sponsor and Ranking Member
Magaziner for his support of the Combating Organized Retail Crime Act
(H.R. 895).
NRF passionately advocates for the people, brands, policies, and
ideas that help retail succeed. From its headquarters in Washington,
DC, NRF empowers the industry that powers the economy. Retail is the
Nation's largest private-sector employer, contributing $3.9 trillion to
annual GDP and supporting 1 in 4 U.S. jobs--52 million working
Americans. For over a century, NRF has been a voice for every retailer
and every retail job, educating, inspiring, and communicating the
powerful impact retail has on local communities and global economies.
We routinely convene thousands of retail asset protection and loss
prevention professionals through our Loss Prevention Council, ORC/
Investigators' Network and conferences. This summer, we hosted our
annual NRF PROTECT conference in Texas, where ORC was a major topic of
discussion for our retailers and law enforcement partners in
attendance. We surveyed 232 retail asset protection professionals at
the conference, and 90 percent indicated that ORC is more of a risk to
retail businesses now than it was 3 years ago. In addition to guiding
our data gathering and policy development, these retail professionals
support one another by sharing best practices. They form Organized
Retail Crime Associations that build alliances among State and local
law enforcement and the private sector. Their experiences, feedback,
surveys, and data inform NRF's testimony here today.
Despite some recent press articles that look to downplay ORC or
argue about data, it is abundantly clear from retailers' experience
with ORC that the criminal activities we witness in stores across the
Nation and the incidents of violence tied to them are on the rise. We
continue to believe that ORC is a ``gateway crime'' and investigations
have shown the profits from these crimes are often linked to far more
nefarious crimes. Profits derived from retail theft, cargo theft, and
sophisticated ecommerce fraud are far greater than reported. What we
have come to understand about ORC is that theft in our stores is merely
the tip of the iceberg. Unfortunately, many individuals in the
community see incidents of theft and shoplifting as victimless petty
crimes, and even some law enforcement and prosecutors dismiss these
incidents as trivial. ORC is anything but a victimless crime, as we
continue to see a rise in violence and lost sales tax revenue for the
communities where these crimes occur. What many of us do not see lies
further beneath the surface of highly-publicized smash-and-grab
incidents captured on national and local news.

background and history of organized retail crime

There are a lot of questions about what exactly organized retail
crime is. ORC is not the same as shoplifting or limited to the smash-
and-grab activity prevalent today. The term was first identified by
loss prevention professionals and law enforcement in the 1970's. It is
more important to understand that retailers are not able to
specifically identify a criminal activity as ORC at the time of an
incident. Whether it is shoplifting, burglary, ecommerce fraud, or
something else, the retailer may be able to identify some elements of
ORC at the time of the incident that will be further developed based
upon an investigation.
NRF defines ORC as theft or fraud activities conducted with the
intent to convert illegally-obtained merchandise, cargo, cash, or cash
equivalents into personal financial gain. It also must involve theft or
fraud of multiple quantities, conducted in concert by two or more
people. ORC typically involves multiple occurrences and may occur
across several stores and jurisdictions.
Organized retail crime frequently involves orchestrated efforts by
criminal enterprises to steal merchandise from retailers on a large
scale. These enterprises often employ sophisticated techniques, such as
organized shoplifting, fraudulent returns, hijacking of cargo
shipments, and the use of counterfeit or stolen credit cards. The
stolen goods are then resold through various channels, including on-
line marketplaces, ecommerce and other websites, peer-to-peer
marketplaces, flea markets, pawn shops, back into the legitimate supply
chain, and even at legitimate retail establishments.
Below are recent examples of organized retail criminal group
activities that I have received from retail loss prevention leaders who
are members of NRF's LP Council. Because there are on-going
investigations into these groups, I cannot directly attribute these to
specific companies and locations, but these examples are illustrative
of the types of ORC activity that we are seeing today across the
country.
A group of Eastern European subjects have been seen across
the United States boosting large quantities of merchandise,
most often beauty products, using skirts specifically designed
for theft. These ``boosting skirts'' have bags and pouches sewn
into them to hold large quantities of merchandise. They have
also been known to steal athletic merchandise and footwear.
Over 170 locations have been impacted by a growing total of
more than 168 incidents with losses reported above $449,583 to
date. Over 70 individuals have been tied to this activity and
these groups, with several subjects traveling across State
lines to commit their crimes.
A known booster crew of multiple individuals has been under
investigation in Utah since 2019. Through multiple
surveillances, it was observed that this group was boosting 7
days a week with a minimum of approximately $1,000 of
merchandise stolen daily. Favoring handbags, the shoplifters
would steal other goods from other retailers (11 different
retailers).
Using GPS tracking devices sewn inside a handbag, law enforcement
alongside retailers were able to follow stolen product to a
fencing location. Further police investigation, including the
use of a confidential informant, identified two fencing
locations; both had structured CCTV systems and
countersurveillance techniques to protect the fencing
locations.
When warrants and searches of the fences commenced, law enforcement
were able to arrest 7 individuals, close 2 fencing operations
and identify 10 additional retail victims. Estimated impact
involving 11 retailers was valued at approximately $1.4
million.
For several years we have had a group that travels from the
West Coast to the East Coast for a 6-8-week period, stealing
ink cartridges up and down the
I-95 corridor. Investigations determined that this group
operates an on-line ink cartridge store. They fly to Boston
every year, renting a vehicle for the purpose of committing
these thefts. They travel up and down the East Coast, stopping
at several retail stores daily. The stolen product is shipped
back to California.
The group consisted of two females and one male, who have not yet
been identified. Several individual complaints were filed
across various jurisdictions, however with their movement State
to State, coast to coast, it has been challenging to get State
or Federal prosecution or collaboration against the event.
Approximate known loss via CCTV with 48 incidents was around
$80,000. One individual was recorded re-entering Mexico at the
border.
A group of males travel between 4 States committing identity
theft by opening credit card accounts. These suspects obtain
green card information, create a false green card and then
utilize the on-line approval process to open false credit
cards.
They then purchase merchandise with the newly-issued credit card,
purchasing predominately gold jewelry (65 percent of
purchases). If confronted by associates, they may become
violent.
To date, our company has lost over $280,000 involving 52
transactions. One suspect identified was previously convicted
of committing similar credit fraud against another retailer.
Law enforcement continues to investigate.
Shoplifting one or a few items for personal use--often a crime of
opportunity--is very different from organized retail crime. But there
is overlap. Retailers identify three different types of shoplifters:
opportunistic, amateur, and professional. Some individuals may steal to
support themselves or family members. Other individuals who are
addicted to drugs often steal merchandise to resell or trade in order
to feed their habit. Consequently, these same individuals make
appealing targets for ORC enterprises to recruit as boosters to support
their criminal enterprises. While these social challenges deserve an
empathetic solution, we firmly believe legislative policy can be
tailored to focus on investigations and prosecutions of those leading
and profiting from organized retail crime, while providing an effective
deterrent to shoplifting.
When taken as a percentage of total retail sales in 2022, retail
shrink accounted for $112.1 billion in losses, up from $93.9 billion in
2021, according to the 2023 National Retail Security Survey. Retailers
reported that ORC remains a significant concern due to heightened
levels of violence. More than two-thirds (67 percent) of respondents
said they were seeing even more violence and aggression from ORC
perpetrators compared with a year ago. As retail crime continues to
evolve in scope and sophistication, so are retailers' prevention
efforts. Retailers have increased budget, use of third-party security
personnel, and use of technology and other threat prevention solutions,
as well as increased employee workplace violence training.
Everyone sees the videos of brazen thefts at local stores and
shopping centers, committed by several individuals working in concert.
But a significant majority of losses from organized retail crime goes
unnoticed by the public. For example, sophisticated criminals have
developed techniques to switch UPC bar codes on merchandise, so they
ring up differently at checkout, commonly called ``ticket switching.''
Criminals use stolen or cloned credit cards to obtain merchandise or
produce fictitious receipts to return products back to retail stores
for store credit, which may be given in the form of gift cards that can
then be resold at a discount from the total value of the card (i.e.,
netting the criminal pure profit for what looks like a good deal to the
unsuspecting consumer).
In many instances, organized retail crime groups target several
retail stores in 1 day, moving from State to State, across
jurisdictional lines, stealing and reselling merchandise. The groups
will typically have a shopping list and understand the felony threshold
levels in the jurisdictions where they are committing these crimes.
These groups steal thousands of dollars' worth of merchandise in each
instance with the intent to resell it for profit. These profits often
finance other illicit activities, such as illegal drugs or weapons
sales, or fund terrorist and human-trafficking networks overseas.\1\
The profits from reselling stolen merchandise can also be managed to
launder and conceal financial gains from other illegal activities.
Organized retail crime is a gateway to other nefarious criminal
activities.
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\1\ https://www.acams.org/en/media/document/29436.
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A smash-and-grab theft could just be an opportunistic event by a
small group of people, or it could be part of a coordinated series of
thefts. Only through observation and investigation can retailers and
law enforcement confirm if a specific theft event is a component of
organized retail crime activities. Without a doubt, organized criminal
activity involving the frequent theft of retail goods has resulted in
the formation of a market in our communities where individuals can
unload and convert stolen merchandise into cash. Over more than a
decade, many communities have failed to address what was long viewed as
victimless property crimes, which has now resulted in people feeling
more comfortable--even entitled--to steal in order to meet their
personal needs. Societal changes, from the pandemic (face coverings) to
the way we shop (on-line, mobile ordering and delivery) to how we
police communities, have created opportunities for enterprising
criminals. Retailers are doing all they can to protect their
associates, customers, and assets. We need government at every level to
take actions that curtail the ability and opportunity for these
criminal organizations to profit from stolen merchandise, and to send
the signal that this type of criminal activity will no longer be
tolerated.
During an interview with ABC News, Raul Aguilar, deputy assistant
director for Homeland Security Investigations, stated that organized
retail crime ``absolutely is a threat.'' Mr. Aguilar also noted,
``These criminal networks, they may be full-time drug traffickers, but
they see an opportunity to work with a crew that's already stealing.
And because it's hundreds of millions of dollars, [the money they make]
can easily be diverted for other kinds of activities.''\2\
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\2\ ABC News: https://abcnews.go.com/US/top-dhs-official-warns-
absolute-threat-public-safety/story?id=99742349.
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orc is not a victimless crime

Retail theft is not a victimless crime. It impacts jobs, consumers,
and communities in several ways. Increased violence involving theft has
caused injury to employees and consumers, the unfortunate death of some
retail associates, and a fear of working or shopping in high-crime
locations. This makes it difficult for retailers to retain or find
labor to support consumers.
Each item stolen and resold represents lost sales tax revenue to
support communities and States, where retailers generate the most tax
revenue for local governments and the second-most for the State. Lost
tax revenue impacts a community's ability to fund services including
law enforcement, health care, or parks and roads.
Retail is a very narrow net-profit-margin industry. Increased
losses due to theft and additional expenditures to protect goods reduce
a retailer's ability to maintain a profitable business, as retailers DO
NOT have insurance for retail theft. Even if such insurance existed, it
would be unaffordable. The resulting actions may lead to increased
prices, fewer jobs or opportunities to provide more pay and benefits,
or a store closure. Closing stores impacts consumers who lose
convenient access to goods and communities that lose income and
property taxes.
As noted, retailers' foremost concern with ORC activity is the
safety of retail workers and their customers. Individuals and groups
committing these crimes have used threats and acts of violence,
including the use of weapons like bear mace, to aid theft. Some have
set fires in stores to create a distraction. Extremely concerning is
the depressing fact that several retail workers have been killed during
recent theft incidents--including trained security personnel as well as
retail workers serving in customer-facing roles.\3\ Just last week
there was an incident in Philadelphia where a retail security guard was
stabbed and killed while protecting the store and its employees.
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\3\ http://d-ddaily.com/archivesdaily/2022-Q4-Fatalies-Report.htm.
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As more acts of blatant and deadly thefts take place in stores, the
consequences are apparent for retailers and consumers alike. Both store
associates and customers are being harmed and threatened. Shoppers are
now seeing everyday items like toothpaste and dish soap behind lock and
key. Retailers know it is an inconvenience for customers. The anti-
theft security measures can lead to lost sales from customers who must
wait for an employee to unlock a cabinet so they can access a product.
As the theft of merchandise continues, the cost of securing those items
skyrockets. Retailers already operate on very slim margins and can only
absorb so much cost to remain profitable. Retailers are boosting their
budgets for loss prevention and technology, with more than half of
retailers reporting they are increasing budgets toward personnel,
technology solutions, and equipment to combat ORC. With ORC incidents
surging across the country, these additional security investments are
passed along to consumers in the form of higher prices, fewer choices,
and less convenience.
Of great concern to consumers is that this type of criminal
activity can put their health and safety at risk. For example,
consumers are at risk when stolen consumable products, such as over-
the-counter medications and infant formula, are put up for resale.
Pilfered products may not be kept under ideal or required storage
conditions, which threatens product integrity. And these organized
criminal enterprises will re-package and re-label stolen products to
falsely extend the product's expiration date or disguise the fact that
the merchandise has been stolen. There have been numerous cases
involving the theft of infant formula that was found not to have been
properly stored.
Retailers generate millions of good-paying jobs that are the
foundation for successful careers, but NRF members report that
incidents of violence and intimidation that accompany shoplifting have
increased to a point where retail workers are indicating unease with
reporting for work. There are currently 543,000 job openings in retail
and a clear shortage of workers.\4\ Stores that experience frequent,
visible ORC incidents, particularly those that involve threats or
assault against retail workers, may experience reduced morale and
higher staff turnover. Younger workers and their parents are citing the
ORC they see on the news as a primary concern about the relative safety
of jobs in retail stores or shopping centers. According to extensive
polling conducted by Lotis Blue Consulting, retail associates' feeling
that their health and safety are valued is a significant driver of
decisions (No. 3 out of 30) to stay with their employer. All else being
equal, employees were 67 percent more likely to stay with their
employer if they felt their health and safety were valued, which is an
increase of 10 percent from 57 percent in 2022. The point is the
dramatic increase in this figure coincides with the wave of crime in
retail establishments.
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\4\ St. Louis Federal Reserve Bank: https://fred.stlouisfed.org/
series/JTS4400JOL. Preliminary, seasonally adjusted data as of October
2023.
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Americans are increasingly concerned with the harm that organized
retail crime is causing in their communities. In May 2023, NRF released
the results of a survey \5\ of over 5,000 U.S. consumers focused on the
issue of retail crime. It found that 55 percent of consumers believe
retail crimes such as shoplifting and looting of stores have increased
in their community since the onset of the pandemic in 2020. The survey
also found that 64 percent of consumers are concerned about gang-led
shoplifting, and this increases to 75 percent among consumers who live
in urban communities. Three-quarters (75 percent) have personally
shopped in stores where products are kept in locked cabinets to prevent
theft. Finally, more than half (51 percent) say that law enforcement
and the courts are too lenient on those who steal from stores.
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\5\ National Retail Federation: https://nrf.com/media-center/press-
releases/exclusive-nrf-survey-shows-majority-consumers-believe-retail-
crime-has.
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quantifying the impact of orc

Unfortunately, comprehensive crime data on ORC at the national
level does not exist and many law enforcement agencies do not
specifically track ORC as a separate category of crime. Statistics for
certain crimes that overlap with ORC activity, such as shoplifting,
larceny, theft, robbery, and commercial burglary, have seen increases
in major urban areas of the country. Congress should consider ways to
require specificity and detail with respect to multiple categories of
property crime, including the reporting of organized retail crime, as
part of the Uniform Crime Reporting system.
For 30 years, NRF has surveyed retailers on loss prevention,
organized retail crime, shoplifting, and other security risks annually
to publish its National Retail Security Survey (NRSS). This survey of
retail loss prevention and security executives about risks, threats,
and vulnerability aims to serve as a benchmark for the retail industry
and to inform the public about the impact of ORC on the industry. In
April 2023, NRF released a new report, developed in partnership with
the company K2 Integrity, entitled ``Organized Retail Crime: An
Assessment of a Persistent and Growing Threat.'' The report provides a
detailed assessment of U.S.-based ORC enterprises, their tactics and
techniques for theft and resale together with linkages to other types
of organized criminal activity.
The NRSS and K2 Integrity reports found that ORC groups rely on
advance planning to ensure the success of their theft operations. This
includes studying store layouts, camera locations, and exit locations.
It includes knowing the specific store policies for stopping or
interfering with suspected thieves. Specifically, the K2 Integrity
report discovered and identified:
ORC groups largely target everyday consumer goods--which
offer a favorable balance between ease of theft, monetary
value, and ease of resale--based on analysis of 116 ORC groups
that found 81 percent of these groups exclusively stole general
consumer goods.
Analysis of 132 ORC groups that conducted booster operations
between 2014 and 2022 found that 16 percent used at least one
violent tactic--defined as smash-and-grab, use of firearms or
other weapons, battery, flash mob tactics, or threats of
violence against store employees or customers. Fifteen of the
21 violent ORC groups analyzed for the study began operations
in 2021, which suggests the uptick in the use of violent
tactics during theft operations is a recent development.
ORC groups rely on advance planning to help ensure the
success of booster operations. ORC groups that target physical
stores build intimate knowledge of store layouts, and some ORC
groups exploit the largely similar layouts of National chain
stores to develop replicable booster operations across multiple
store locations. In some cases, ORC groups plan operations that
cover a large area and employ booster crews to travel long
distances to conduct thefts. The median retail value of
merchandise a booster steals prior to arrest is about $5,000.
The median ORC fencing operation handles about $250,000 in
stolen merchandise prior to disruption by law enforcement
authorities. ORC fencing operations rely on on-line
marketplaces as a resale channel. About 45 percent of ORC
groups for which fencing information was available used on-line
marketplaces for resale operations. The actual proportion is
likely higher given that on-line ORC fencing operations are
more difficult for authorities to detect compared with physical
resale channels. ORC fences that conduct on-line resale
operations appear to be shifting their activities away from
third-party on-line sellers and toward peer-to-peer venues that
rely on direct engagement among buyers and sellers to complete
transactions.
ORC groups will be likely to expand the scale of their
operations in response to sustained inflation or an economic
slowdown that causes an uptick in underemployment and
unemployment. Increased economic hardship would present ORC
groups with a larger pool of individuals potentially
susceptible to recruitment for booster operations, thus
providing ORC groups with the labor required to scale
operations to serve potential growth.
There are significant deficiencies in the availability of
consistent and consolidated data regarding ORC. The fragmentary
and disorganized state of data on ORC across national, State,
and local authorities, and the lack of standard centralized
information on ORC from the retail industry, present
difficulties to building a nuanced understanding of ORC's
national and regional prevalence, and operational trends.
Efforts to standardize and increase data collection on ORC
would help build understanding of key information gaps about
ORC that existing primary and secondary sources are unable to
fill.
There is a basic pattern to how retail theft gangs are organized.
First, there are ``boosters'' who are front-line thieves that steal
directly from retail stores. They are often given a list of specific
goods and quantities from a ``crew boss'' or ``fence.'' Crew bosses
recruit and lead a group of boosters and communicate tactics and
techniques to avoid loss prevention policies at retail stores. Fences
are the intermediary that receives the stolen merchandise from the
boosters and crew bosses. They may own or operate a front company, a
warehouse, an ecommerce website, or establish a presence in an on-line
marketplace. Fences employ ``cleaners,'' who are responsible for
cleaning the stolen products. This includes removing anti-theft
technology, altering expiration dates or repackaging the merchandise so
it looks new and not stolen.
In more complex organizations, there may be professional money
launderers, as well as shell company operators who divert large
quantities of stolen goods to wholesalers, liquidators, other
legitimate retail businesses or pawn shops, or back into the retail
supply chain. The operators who divert stolen goods may ship overseas
to countries where American products are highly prized. Some of the
most profitable organized retail crime groups that were stopped by law
enforcement have shown ties to international criminal networks involved
in identity theft, fraud, drug trafficking, and human trafficking.\6\
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\6\ Homeland Security Investigations and Houston Police Department
arrest three Houston-area residents, suspected ties to $65 million
transnational organized retail crime.
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The property crimes Americans witness on the nightly news, or in
person, are a small portion of larger criminal enterprises with global
impact. Tactics range from basic shoplifting of large quantities of
goods, to brazen smash-and-grab events, to sophisticated schemes
exploiting gaps in security, to ``Mission Impossible''-style burglaries
in the middle of the night.\7\ The profits derived from ORC are
supporting a multitude of criminal activities across State and
international borders. The consequences of these crimes are leading to
higher prices that consumers pay, along with store closures and loss of
job opportunities. Worst of all, retail workers are sometimes being
killed.
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\7\ Los Angeles Times: https://www.latimes.com/local/lanow/la-
times-best-buy-alleged-burglars-steal-apple-products-20190709-
story.html.
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policy recommendations

The National Retail Federation strongly supports and urges Congress
to pass the Combating Organized Retail Crime Act (H.R. 895) and provide
appropriate resources for implementation. This bipartisan legislation
will create an interagency Organized Retail Crime Center located within
Homeland Security Investigations (HSI) and include participation by
other Federal law enforcement agencies. The Center would align counter-
ORC activities by developing national-level ORC intelligence,
facilitating information sharing across Federal, State, local, and
Tribal agencies, and supporting multi-agency investigations. It will
serve as a hub of expertise for training and technical assistance for
State, local, and Tribal law enforcement agencies. The bill will also
make changes to the U.S. criminal code to provide investigators and
prosecutors increased enforcement tools to blunt organized retail crime
activity. We believe that H.R. 895 appropriately places emphasis on
these crimes and differentiates them from shoplifting for personal use,
so that State and Federal law enforcement can support investigations
that bring organized criminal activities to prosecution. We also
believe that the establishment of this new Center can be undertaken
within the scope of existing appropriations for HSI and other
participating agencies. We applaud the 90-plus House Members who have
co-sponsored this legislation.
Homeland Security Investigations has significant experience in
assisting law enforcement in bringing cases against some of the biggest
organized theft groups. They have developed Operation Boiling Point \8\
to target domestic and transnational criminal groups profiting from
ORC, cargo theft, and similar crimes. This experience ensures HSI can
lead the interagency task force established in H.R. 895 and bring to
bear greater investigatory and intelligence-gathering assets of the
Federal Government. State and local police departments throughout the
United States are under-staffed and sometimes have trouble dedicating
resources to thefts and burglaries tied to complicated organized theft
gangs. Federal intelligence sharing and investigation support will make
a tremendous difference on the front lines of ORC.
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\8\ Department of Homeland Security, Operation Boiling Point:
https://www.ice.gov/features/op-boiling-point.
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NRF strongly supported the INFORM Consumers Act, which Congress
passed in 2022 and took effect in July. This legislation addresses the
frequent resale of stolen merchandise by third-party sellers utilizing
on-line marketplaces. It requires on-line marketplaces to verify the
identity of individuals that sell a higher volume of goods. It
appropriately protects the privacy of legitimate small businesses
seeking to build their enterprise. This critical new law will begin to
curb the resale of stolen merchandise and we appreciate Congress
addressing this critical issue. However, curbing the resale of stolen
merchandise is just one aspect of organized retail crime, and more must
be done to protect our people, stores, and communities.

conclusion

Preventing organized retail crime and protecting their employees
and customers will remain the top priority for all retailers Nation-
wide. Expenditures against retail theft have factored into retail
budgets throughout the enterprise including construction, store
operations, merchandising, information technology, loss prevention, and
staffing and training. This is an enormously important and expensive
effort for the retail industry. The continuing growth of organized
retail crime and the damage it causes to communities dictates that
something needs to be done to control the theft and resale market for
stolen goods.
If this criminal activity was solely a retail industry issue,
retailers would have solved it by now. These crimes affect every single
one of us. Passing H.R. 895 will further establish and memorialize the
public-private partnerships necessary for information sharing among
retailers, law enforcement, and financial institutions at the national
level. While retailers will continue to invest billions of dollars in
protecting their people, customers and assets from organized retail
crime, the problem cannot be solved by fighting these cases one by one
at the local level. It is difficult for retail investigators and law
enforcement to bring a case of ORC to a successful prosecution.
Criminals understand this and are threatening our workers, exploiting
our businesses and flouting our laws. Today in the United States,
organized retail crime pays, and it pays well. It is viewed as less
dangerous for its perpetrators than more illicit crimes. We must change
this equation and we ask Congress to support and pass H.R. 895, the
Combating Organized Retail Crime Act, along with appropriate resources.
The National Retail Federation deeply appreciates the subcommittee
for examining organized retail crime today. Thank you, Members of the
subcommittee, for your time today. We stand ready to work together to
advance the Combating Organized Retail Crime Act, as well as other
legislative proposals that will support our communities in preventing
ORC and ultimately protect our people and customers.

Mr. Pfluger. Thank you, Mr. Johnston.
The Chair now recognizes Ms. Stephan for your opening
statement of 5 minutes.

STATEMENT OF SUMMER STEPHAN, DISTRICT ATTORNEY, SAN
DIEGO COUNTY, CALIFORNIA, TESTIFYING ON BEHALF OF
THE NATIONAL DISTRICT ATTORNEYS ASSOCIATION

Ms. Stephan. Thank you, Chairman Pfluger, Ranking Member
Magaziner, and honorable Members of the subcommittee. My name
is Summer Stephan. I'm San Diego County district attorney.
Mr. Pfluger. Can you turn on your microphone? Thank you.
Ms. Stephan. Should I start over?
Good afternoon, Chairman Pfluger, Ranking Member Magaziner,
and honorable Members of the subcommittee.
My name is Summer Stephan, and I'm the elected district
attorney of San Diego County and also the president-elect of
the National District Attorneys Association.
I've devoted my entire professional life to serving our
communities and keeping it safe, 33 years. That's longer than
I've been alive not doing this. This is why this issue is very
important to me.
It is not just an economic issue. If you go to the ground
level and actually talk to the employees in the stores, you
will sense the fear and the trauma and how much impact this has
on human beings. There's hardly anyone who doesn't have a
family member working in the retail industry. To subject an
industry where they don't sign up for a world of law
enforcement, where there are daily threats, they sign up for
what should be a safe industry. Instead, it's turned into the
Wild West.
From my ground-level view, I appreciate bringing the voice
of the victims to this committee and for your attention to this
really, really important issue.
You've heard the reports. The reports of the loss of jobs
and also the reports about the increase in violence are the
most important and impactful.
I have made combatting retail theft and organized retail
theft a priority in my office because of what I've seen, the
impact it has on my community. I wanted to send a very clear
message that we have the rule of law, that we will use every
tool in our possession to bring justice and accountability.
Because of that, I've formed a specialized team that has
gone after this issue, organizing along with our State and
local police officers, in order to identify the perpetrators.
There are three key challenges. First, that the evolution
of this criminal industry involves more networks that are more
organized and therefore are better able to hide their identity,
so usually masked up. They even have their license plates
covered up. There's a lot of premeditation that goes into it,
which means that our investigation efforts have to be more
sophisticated.
Second, we have a very inadequate legal framework, meaning
we have very weak laws that deal with this--with these issues.
This has helped this kind of crime become less accountable.
The third key challenge is coordination, that there wasn't
in the past good coordination between the retail industry,
between local law enforcement, prosecutors, and the State- and
Federal-level coordination.
Here are just some examples in San Diego County to show you
how prolific this is. By the way, we've prosecuted 76
defendants for organized retail theft, and we track organized
retail theft in our system separate from regular theft.
Seventy-six defendants, only 3 cases that I'll mention are more
than a million and a quarter. An Ulta store theft of $700,000
of multiple stores, $435,000 in Victoria's Secret, $230,000 for
the Sunglass Hut store. How many sunglasses can one person
need?
The prosecution was made possible by a new law that passed
in 2019 that targets specifically organized retail theft and
allows us to aggregate, something that we're not able to do for
regular theft.
By the way, Chairman Pfluger, your State was able, as you
know recently, to put together a task force similar to what we
have in San Diego.
We also work with the California Highway Patrol because
most of these organized thieves travel from county to county
and they don't stick to one county, also making their detection
difficult.
We supported the INFORM Act, but the INFORM Act is not
funded. So we encourage that there be funding specifically in
order to better enforce the INFORM Act.
Also, we support the coordination center that many Members
of this committee has asked for us because being able to bring
together the resources in one coordination center is a proven
tool that is effective.
Working with the NDAA, it has been a pleasure to see the
coordinated efforts come to fruition including a national walk-
through where we walked through a hundred stores with other
prosecutors' offices to see for ourselves the problems.
Thank you very much for this opportunity. We stand ready to
assist and answer any questions.
[The prepared statement of Ms. Stephan follows:]

Prepared Statement of Summer Stephan

Tuesday, December 12, 2023

Chairman Pfluger, Ranking Member Magaziner, and Members of the
subcommittee: My name is Summer Stephan, and I am the elected district
attorney for San Diego County, CA, and the president-elect of the
National District Attorneys Association (NDAA).
I've devoted my entire professional life to protecting my community
from crime and violence. And I'm here to give you a prosecutor's
perspective on the vital role we play in addressing the serious
challenge and destructive impact of retail theft and organized retail
crime. Organized retail theft poses a significant threat to businesses,
employees, consumers, communities, and the overall economic stability
of our Nation.
From my ground-level view of looking in the eyes of employees in
the retail industry, many are feeling unsafe and traumatized by these
crimes. The impact is felt in both large retail and also small
businesses. I view organized retail theft as an economic crime that
threatens human beings and lives. This is why I'm honored to testify
here today to bring you the voice of the victims. Retail theft and
organized retail crime is not a victimless crime and I'm grateful for
your deep investment and commitment as exemplified by this hearing.

background

Reports by industry associations show that billions of products
have been stolen from U.S. retailers and that the losses continue to
mount year after year. Another insidious impact of this crime is the
report of jobs lost in the retail industry. From a prosecutor's
perspective, also compelling are the reports of an increase in violence
and aggression by the criminals committing these crimes.

key challenges

I have made combating retail theft and organized retail crime a
priority in my office. I wanted to send a clear message to businesses,
their employees, customers, and our community that we will follow the
rule of law and bring accountability and justice. I formed a
specialized team of prosecutors and investigators to fight organized
retail theft and work with businesses and law enforcement to build
stronger cases.
We quickly identified three key challenges:
First is the evolution of more sophisticated criminal networks.
Organized retail theft is no longer just the work of isolated petty
criminals. Instead, it has evolved into highly sophisticated
operations, often conducted by well-organized networks and coordinated
across multiple locations making identification and prosecution much
more challenging.
Second is an inadequate legal framework. Existing laws and
penalties in many States are not sufficient to deter or appropriately
punish criminals engaged in organized retail theft. Many States,
including California, have passed laws that increased the dollar amount
of theft to be charged with a felony to $950 or $1,000 and eliminated
enhanced consequences for recidivist and habitual offenders. Law
enforcement and retailers agree that the increase in retail theft-
related incidents has been the direct result of changing laws to
lighten penalties for shoplifting. The message that these deficient
laws send is that this is the Wild West with no rules or
accountability.
The third key challenge is coordination. In the past, the lack of
coordination and information sharing among retailers, law enforcement
agencies, and other stakeholders hindered the ability to combat
organized retail theft effectively. A continued collaborative and
multi-faceted approach is necessary to address this issue
comprehensively.
Here are some examples from San Diego County on the scope and
sophistication of the retail theft, helpful legal frameworks, and
enhanced coordination that we utilized to bring justice and
accountability, which may offer a path forward for regions impacted
across the United States.
In a 1-year period, my office filed criminal cases involving
organized retail theft against 76 defendants resulting in prison or
jail terms for the majority of the criminals who have been convicted.
In February of this year, two men were sentenced to 44 months in
prison for a series of brazen, organized retail theft crimes where
multiple Sunglass Hut store locations were targeted resulting in a
reported loss of more than $230,000. Hundreds of pairs of sunglasses
were stolen from 9 Sunglass Hut store locations, some of which were
targeted more than once.
Another theft ring stole more than $350,000 in Victoria's Secret
merchandise over a 7-month period.
We successfully prosecuted another retail theft crew for 42 felony
counts for breaking into ULTA Beauty, Nordstrom Rack, and other stores.
Those thieves caused over $700,000 in loss to businesses.
This prosecution was made possible by a law passed in 2019 that
allows aggregation on different theft dates and different stores but
only as to organized retail theft which requires several elements to be
met but doesn't apply to theft in general.
It's a tactic that's now being adopted across the Nation.
Almost all States now have partnerships between law enforcement and
retailers, indicating a Nation-wide response to this type of crime.
In fact, recently, Chairman Pfluger's home State of Texas joined
the growing list of States that have created State-wide task forces to
investigate and prosecute suspects involved in organized retail crimes.
At least 34 States now have organized retail crime laws. It's
important that these laws include increased penalties for those
involved in these criminal activities and provisions that enable law
enforcement to better investigate and prosecute offenders.
My office has met with retailers, business association
representatives, retail industry employee representatives, law
enforcement, and others to discuss the scope of the problem in San
Diego County. We communicated steps law enforcement is taking to stop
and prosecute these types of crimes and discussed possible future
prevention strategies.
Partnering with the U.S. Chamber of Commerce to educate their
members on how to build better relationships with their law enforcement
and prosecutors has been a positive solution.
We have partnered with the California Highway Patrol's (CHP)
Organized Retail Crime Task Force and as a result, several successful
prosecutions have occurred. This proved valuable because these
organized syndicates operate across county lines. CHP investigators
build big cases for us to prosecute by acting as liaison between
retailers and my office. This effort is also supported by the Organized
Retail Crime Alliance which includes retailers, law enforcement, and
prosecutors working together.
They gather reports and video evidence, conduct surveillance,
execute search warrants, return stolen product to retailers, and write
complete investigative reports with spreadsheets of thefts and loss
amounts so we can prosecute defendants for as many thefts in one case
as possible.
There are additional promising enhanced legal frameworks on the
horizon.
Congress recently passed the INFORM Act, which requires on-line
marketplaces, like Amazon and eBay, to collect, verify, and disclose
certain information from high-volume sellers and provide consumers with
means to report suspicious activity.
This is a step in the right direction to stop organized criminals
from selling stolen goods on on-line marketplaces. It removes the
anonymity of the seller and makes it easier for law enforcement to find
these on-line sellers of stolen goods and prosecute them.
This law directly addresses the interstate aspects of organized
retail theft--something I know this committee is concerned about.
But it's key that there is funding for enforcement of the INFORM
Act so the Federal Trade Commission (FTC), Attorney General, Federal,
and county prosecutors can identify on-line sellers of stolen goods and
take action to hold them accountable.
Also, I appreciate Representatives Magaziner, Titus, D'Esposito,
and Correa for the co-sponsorship of H.R. 895, the Combating Organized
Retail Crime Act of 2023--which would expand Federal enforcement of
criminal offenses related to organized retail crime and establish an
Organized Retail Crime Coordination Center within the Department of
Homeland Security. We know that an investment in technology consistent
with this proposed law can be a game changer.
Recently we used a similar model in San Diego to combat elder scams
through an Elder Justice Task Force.

policies and partnerships to change behavior on a national level

There is some positive news to share in our fight to combat retail
theft and organized retail crime that stands out as a model for
stronger collaboration.
In August 2022, the National District Attorneys Association (NDAA)
and the Retail Industry Leaders Association (RILA) announced the first-
of-its-kind national partnership to combat retail crime.
Earlier this Spring, the two organizations also announced the
launch of its Vibrant Communities Initiative, an innovative pilot
project to address root drivers of habitual theft, violence, and other
unlawful activity. This initiative brings together prosecutors,
retailers, law enforcement, social service organizations, policy
makers, and the business community to increase information sharing,
assist in the prosecution of habitual and violent offenders.
In September, NDAA and RILA convened a National Store Walk Month
where prosecutors Nation-wide walked retail stores with management
teams providing both parties with an exchange of insights and
comprehensive understanding of challenges. Almost 100 walks occurred.
My specialized Organized Retail Crime team participated in store
walks at Home Depot, Dick's Sporting Goods, Target, Walmart, Lowes, and
Ulta Beauty. That particular Ulta store in San Marcos, California, that
I visited was 1 of 21 area Ulta stores that last year, fell victim to
smash-and-grab crews. In just 1 month, the thieves stole $127,000 of
expensive perfumes from those stores. I also toured Sunny Perfumes; a
small business that has also been targeted by retail thieves. The
owner, Sunil, shared with me that he's spent thousands of dollars
repairing smashed windows and adding metal shutters for security and
has had to move his more expensive perfumes to the back while leaving
cheaper perfumes more accessible.
We can't lay the blame at the feet of retailers on this issue,
expecting them to lock up even more products away from customers and
take a further business loss. Instead, collaborative approaches are
leading us to a more comprehensive understanding of the challenges at
hand and we're cultivating a united, efficient response to combat them.

approaches to accountability

When it comes to prosecuting these cases, we simply need to restore
the rule of law and have balanced accountability that fits the crime.
Prosecutors should continue to pursue justice by assessing and
differentiating a youthful offender that had a lapse of judgment as
compared to what we see in organized retail theft or habitual theft,
which involves premeditated criminal behavior and lawlessness.

action must be taken

In addition to common-sense legislation; increased coordination and
collaboration; and strategic, focused prosecutions, public awareness
can be effective.
The Federal Government can consider launching a public awareness
campaign to educate consumers about the consequences of purchasing
stolen goods on-line or at swap meets, and the role they can play in
reducing organized retail theft. A well-informed public can act as an
additional deterrent to these criminal activities.
NDAA and RILA recently launched a joint website that is very
successful in raising awareness by providing additional resources on
focus areas and public policy, news, blogs, and events.
I appreciate the opportunity to speak to you about these important
and complex issues. The office of the district attorney of San Diego
County and NDAA stand ready to assist as we look for ways to tackle
organized retail crime and retail theft that threatens the vibrancy of
our communities.

Mr. Pfluger. Thank you, Ms. Stephan.
The Chair now recognizes Mr. Glenn for your opening
statement of 5 minutes.

STATEMENT OF SCOTT GLENN, VICE PRESIDENT, ASSET
PROTECTION, THE HOME DEPOT

Mr. Glenn. Good afternoon.
Chairman Pfluger, Ranking Member Magaziner, and Members of
the subcommittee, on behalf of the Home Depot and our 470,000-
plus associates, I thank you for the opportunity to speak to
you today about retail--organized retail crime and its growing
impact on the retail community.
My name is Scott Glenn, and I'm the vice president of asset
protection at the Home Depot. We operate over 2,000 big-box
retail stores in the United States, and my job is to ensure the
protection of our associates, customers, and assets.
I'm here today to talk about why ORC is an increasing
problem to our customers and associates and how we can work
together to stop this threat.
A critical step that Congress can and should take to help
stop--to stop this brazen theft is to pass the Combatting
Organized Retail Crime Act. Many have asked if retailers and
the media are overhyping the problem. The fact is that
retailers were faced with many challenges over the past few
years, and ORC is one that's clearly sustained. Its impact has
caused the Home Depot and many of our peer retailers to take
measures that we would not even have considered years ago.
Today we're locking up valuable product, employing off-duty
police and security officers, and even putting police cars on
the front aprons of our stores, along with many other tactics
that we wouldn't have used in the past.
Despite these efforts, the problem continues. We've even
tragically lost a few associates to this issue as was noted in
the opening statement.
So in short, the answer's no. Retailers are not
exaggerating the problem. We know first-hand in our stores the
impact has grown incrementally. While at some level theft is a
cost of doing business, the recent rise in ORC and its
consequences are what bring me here today.
There's the myth that ORC rings happen only in big cities.
Unfortunately, criminals don't discriminate when it come to
targeting stores, and ORC is happening everywhere in urban and
suburban environments and everywhere in between.
Generally, the intent of ORC bad actors is to resell and
monetize produce as quickly as possible. Our law enforcement
partners often find these crimes linked to other more sinister
activities such as drug, gun, and even human trafficking.
I want to be very clear that we're not talking about petty
shoplifting. We're talking about theft for need--for greed, not
theft for need and in many cases theft to fund on-going
criminal enterprises.
This large-scale, multi-jurisdictional activity that is
carefully choreographed, sophisticated criminal rings are
recruiting individuals from vulnerable populations to steal.
As I stated, my top priority is customer and associate
safety. Since 2020, we've seen a significant uptick in our
store and asset protection associates coming into violent
contact with bad actors. These individuals are becoming
increasingly aggressive. They are dangerous and often care
little about any consequence other than getting out of store
with as much as possible. Our associates have been threatened
with knives, guns, and other physical attacks.
I believe there's three primary root causes for this
increase: First, the availability of drugs, particularly
opioids and fentanyl, and specifically their availability has
driven a need for easy and fast cash.
Second, the rise of third-party marketplaces allows
criminals to anonymously resell stolen or counterfeit goods. We
see this happening even on reputable platforms what has made it
easy to monetize product and sell them at scale. To fight this,
the Home Depot strongly supported the Informed Consumers Act.
The last contributor is an increasing lack of resources of
support for local, State, and Federal law enforcement
opportunity--assistance. Retailers need help in disrupting
these criminal activities.
But let's talk about solutions. The Home Depot is working
hard to address all three underlying causes. First, we've grown
our investigative team by over 180 percent since 2016. In
stores, we're using technology and physical deterrence. These
include everything from increased security personnel, to secure
lock-up enclosures, to smart shopping carts, to machine
learning and data analysis.
We've also launched a program called Game Plan where we
invite local law enforcement and politicians to visit our
stores and see this technology and tactics in action and to
help educate proactively and build relationships.
To address on-line concerns, we've added resources and
implemented technology tools to identify bad actors using the
cover of on-line marketplaces.
A Federal task force would allow us to expand upon the
progress made at local and State levels and give us all a
greatly-needed Nation-wide partner.
The Home Depot strongly supports the bipartisan Combatting
Organized Retail Crime Act introduced in the House by
Representatives Buck, Titus, Joyce, and Lee and in the Senate
by Senator Cortez Masto and Grassley and supported by several
Members of this subcommittee including Representatives
Magaziner, D'Esposito, Correa, Gonzales, and Goldman.
As a professional in the field of protecting customers and
associates, I ask that all Members of Congress work together to
ensure that the Combatting Organized Retail Crime Act becomes
the law of the land to help stop these senseless crimes in our
communities.
I thank you for the opportunity to tell our stories and
look forward to answering questions.
[The prepared statement of Mr. Glenn follows:]

Prepared Statement of Scott Glenn

December 12, 2023

Chairman Pfluger, Ranking Member Magaziner, and Members of the
subcommittee, on behalf of The Home Depot and our 470,000 associates, I
thank you for the opportunity to speak to you today about organized
retail crime, which I'll refer to as ORC, and its growing impact on the
retail community.
My name is Scott Glenn, and I am the vice president of asset
protection for The Home Depot. We operate over 2,000 stores in the
United States and my job is to ensure the protection and security of
our associates, our customers, and our assets.
I'm here today to talk about why ORC is an increasing threat to
customers and associates that walk into retail stores every day, and
how we can work together to stop it.
A critical step that Congress can take to help us stop this brazen
theft is to pass the Combatting Organized Retail Crime Act.
Many have asked if retailers and the media are overhyping the
problem.
The fact is that retailers were faced with many challenges over the
past few years, but ORC is one that has clearly grown over time, and
its impact has caused The Home Depot and many of my peers to take
measures that we would not have considered years ago.
We've been locking up product, employing off-duty police officers
and security guards, and putting police cars at the front of our stores
along with many other tactics. Despite these efforts, the problem
continues, and we have tragically even lost associates to these
encounters.
So in short, the answer is no, retailers are not exaggerating the
problem of theft. We know first-hand that the impact has grown
significantly. While at some level, theft is a cost of doing business,
the recent rise in ORC and its consequences are what bring me here
today.
We have seen an alarming rise in the frequency and aggressiveness
of organized and professional criminal groups stealing from our stores.
There is a myth that these ORC rings happen only in big cities.
Unfortunately, criminals and bad actors don't discriminate when it
comes to targeting stores, and organized retail crime is happening
everywhere--in urban and suburban areas and everywhere in between.
Generally, the intent of ORC actors is to resell and monetize the
product as quickly as possible. Our law enforcement partners often find
these crimes linked to other more sinister activities such as drug,
gun, and even human trafficking.
I want to be very clear that we are not talking about petty
shoplifting--not theft for need but theft for greed. And in many cases,
theft to fund on-going criminal enterprises.
This is large-scale, multi-jurisdictional activity that is
carefully choreographed. Sophisticated criminal rings are recruiting
individuals from vulnerable populations to steal.
They regularly sell the product through on-line third-party
platforms quickly and anonymously. At The Home Depot, a significant
number of all ORC cases involve an on-line marketplace.
As I stated, my top priority is customer and associate safety.
Since 2020, we have seen a significant uptick in our store and asset
protection associates coming into violent contact with criminal actors.
These individuals are becoming increasingly aggressive. They are
dangerous and often care little about any consequence other than
getting out of the store with as much product as possible. Our
associates have been threatened with knives, guns, and other physical
attacks.
We believe there are three primary reasons for this increase.
First, the availability of drugs, opioids, and fentanyl
specifically and increased availability has driven a need for easy and
fast cash.
Many of those we call ``boosters'' in these operations are simply
pawns for higher-level fences and criminal organizations to commit
their crimes.
Organized retail crime is often connected to other illicit
activities. According to Homeland Security Investigations, organized
theft groups also engage in cyber crime, money laundering, drug
trafficking, terrorism financing, weapons trafficking, and
transnational organized crime.
Second, the rise of third-party marketplaces allows criminals to
anonymously resell stolen or counterfeit goods. We see this happening
even on reputable on-line platforms, which have made it easy to
monetize goods and sell them at scale.
To fight this, The Home Depot strongly supported the INFORM
Consumers Act, a bipartisan bill led by Representatives Schakowsky,
Castor, and Bilirakis that went into effect in June of this year.
The last contributor is an increasing lack of resources and support
needed by local, State, and Federal law enforcement to assist
retailers, our associates, customers, and broader communities to
disrupt criminal networks.
Many police departments across the country are perpetually and
significantly understaffed and this results in less support for
retailers and the broader community.
We see policies such as increased felony thresholds and lack of
aggregation as creating an environment where little can be done by
retailers alone to address the issue.
But let me talk about solutions.
The Home Depot is working hard to address all three underlying
causes. First, we have grown our investigative team over 180 percent
since 2016 and have increased our overall budgets by tens of millions
of dollars.
In our stores, we are using technology and physical deterrents.
These include everything from increased security personnel to secure
lock-up enclosures, to smart shopping carts, to machine learning and
data analysis tools.
We've also launched a program called ``Game Plan,'' where we invite
local law enforcement and politicians to visit stores and see our
technology and tactics in action, in order to educate and build
relationships proactively.
To address on-line concerns, we have added resources and
implemented tools to identify bad actors using the anonymity of on-line
marketplaces.
While these marketplaces are a convenient outlet for the second-
hand consumer market, legitimate resellers would not be selling
branded, new-in-box products at prices better than national retailers.
The platforms simply need to do more in terms of accountability to
mitigate illegitimate sales and outright fraud.
We work in close partnership with local, State, and Federal law
enforcement to build case files and help dismantle these networks
through public-private coordination and task forces.
We have worked closely with more than a dozen State attorneys
general who have established task forces over the past 2 years to
better protect their communities and businesses.
Let me give you an example of this type of partnership. During a
recent investigation in Little Rock, Arkansas, a booster, the
individual who steals the product for a ringleader, admitted to
stealing over $1 million dollars of product from Home Depot and selling
it on Facebook Marketplace.
He used this cash to buy and distribute large amounts of fentanyl.
Our investigators worked with Homeland Security and the Little Rock
Police Department, and our evidence was used to conduct controlled
sales to the fence. The suspects were ultimately arrested and charged
under a Federal indictment.
A Federal task force would allow us to expand upon the progress
made at local and State levels, like this case in Arkansas, and give
all of us a greatly-needed Nation-wide partner.
The Home Depot supports the bipartisan Combatting Organized Retail
Crime Act (S. 140/H.R. 895), introduced in the House by Representatives
Buck, Titus, Joyce, and Lee, and in the Senate by Senators Cortez-Masto
and Grassley.
I'm pleased to see that the House bill has over 90 bipartisan
cosponsors. The bill would create the Organized Retail Crime
Coordination Center bringing together Federal, State, and local law
enforcement and private-sector experts to share information and
collaborate on strategies to keep our stores safe and secure.
The bill would allow us to expand upon the progress made at the
local and State levels and address cases that reach certain thresholds
or cross State lines.
As a professional in the field of protecting customers and
associates, I ask that all Members of Congress work together to ensure
that the Combatting Organized Retail Crime Act urgently becomes the law
of the land to help stop these senseless crimes in our communities.
Thank you for the opportunity to tell our story, and I look forward
to answering your questions.

Mr. Pfluger. Thank you, Mr. Glenn.
The Chair now recognizes Ms. Jagoda for your opening
statement.

STATEMENT OF ABBY JAGODA, VICE PRESIDENT, PUBLIC
POLICY, INTERNATIONAL COUNCIL OF SHOPPING CENTERS

Ms. Jagoda. Chairman Pfluger, Ranking Member Magaziner, and
distinguished Members of the subcommittee, I'm pleased to
appear before you today with our partnering organizations and
leaders to discuss the strategies of the International Council
of Shopping Centers, or ICSC, in combatting organized retail
crime, or ORC.
ICSC's nearly 50,000 North American members represent
marketplace professionals including owner-developers of retail
centers, as well as retail tenants, investors, economic
development, and legal professionals. ICSC promotes industry
advancement for the spaces where people shop, dine, work, play,
and gather as foundational and vital ingredients of communities
and economies.
Today's retail centers are no strangers to change. Many in
this room might remember with fondness their first job, their
first date, or providing your wish list to the mall's Santa
Claus. Where you once might have found department stores or
food court dining, you might now discover fitness centers,
breweries, animal shelters, or pickleball courts. But despite
these changes, traditional retailers remain the overwhelming
majority of shopping center tenants, and 70 percent of them are
small businesses.
Sadly, retail property owners are facing an unprecedented
number of ORC incidents. ORC involves the illegal acquisition
of retail merchandise in substantial quantities through both
theft and fraud as part of an unlawful commercial enterprise.
As Ranking Member Magaziner noted, it's important to
distinguish ORC from traditional shoplifting or a single
individual breaking the law.
Traditional shoplifting is part of a largely spontaneous
and self-serving activity, typically executed by individuals
who need merchandise for personal use they simply cannot
afford. Those small-scale shoplifters should not avoid
prosecution. ICSC recognizes that many of these individuals
need to be treated separately from those who operate as part of
a larger commercial enterprise focused on making a profit
through the resale of stolen goods.
ORC puts a more serious strain on business owners,
particularly small businesses, in multiple ways including
shopper and employee safety, reputational risk, and financial
stability.
ORC syndicates focus on the theft and resale of high-value
branded items that are in demand from shoppers from designer
handbags to name-brand laundry detergent. When these goods are
resold using an on-line marketplace or other means of sale,
most consumers are unaware that they're purchasing stolen
goods.
While high-profile smash-and-grab robberies and Nation-wide
cases involving major retailers garner headlines this holiday
season, the problem is pervasive, impacting shopping centers,
large and small, in all regions of the country.
One major enclosed mall owner reports that retail crime
theft incidents of over a thousand dollars have nearly doubled
over the past 8 years. Violent crime including aggravated
assault, battery, and armed robberies have nearly tripled at
those retail centers. This is just what property owners know.
Many retail employees have stopped reporting incidents to
local authorities, including on-site security, because they
question whether police response will be timely or effective or
because they fear retaliation from thieves and their handlers.
This pattern contributes to a lack of prosecution of ORC cases
and leads to difficulties in allocating public and private
resources to combat ORC.
Here's some pragmatic steps that Congress and law
enforcement can take to address ORC. First, building on the
success of State and local ORC coordination centers, Congress
can pass legislation to create a Federal interagency ORC task
force. As my colleagues noted, there's broad bipartisan support
for CORCA including many Members of this committee.
CORCA can make a meaningful impact on ORC by activating
this Federal coordination center, while also ensuring criminal
penalties address the reality of how ORC enterprises operate.
Second, the Federal appropriations process can also provide
Federal law enforcement and agencies the resources and a
mandate to investigate and prosecute ORC rings more
effectively. Appropriators funded similar and successful HSI
initiatives to combat IP theft with the creation of The
National Intellectual Property Rights Coordination Center, and
we understand CORCA authors sought to replicate that success
and use it as a model for the Federal ORC coordination center.
This coordination center is a natural next step to build on
the effectiveness of HSI's Operating Boiling Point 2.0 and the
accomplishments of the State and local ORC task forces.
Despite the rise in e-commerce in recent years, brick-and-
mortar stores remain the main sales channel for most goods and
services purchased in the United States. However, the rise in
ORC has contributed to the reasons why some retailers have
chosen to close store locations, and those close closures
should not be taken lightly. They result in the significant
loss of jobs, diminished State and local sales tax, loss of
property tax collected, and food and prescription drug deserts.
On behalf of ICSC, I thank the subcommittee and my fellow
witnesses for their interest and attention to this issue.
[The prepared statement of Ms. Jagoda follows:]

Prepared Statement of Abby Jagoda

December 12, 2023

Chairman Pfluger, Ranking Member Magaziner, and distinguished
Members of the subcommittee, I am pleased to appear before you today
with our partnering organizations and leaders to discuss the strategies
of International Council of Shopping Centers, Inc. (ICSC) and its
members in combatting organized retail crime, or ORC.
ICSC's nearly 50,000 members in North America represent marketplace
professionals, from retail center owner/developers to retailers to
financiers and investors, the legal community, economic development
officers and academics. ICSC promotes industry advancement and elevates
the marketplaces and spaces where people shop, dine, work, play, and
gather as foundational and vital ingredients of communities and
economies. Seventy percent of shopping center tenants are small
businesses.\1\
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\1\ ICSC data.
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Today's retail centers are no strangers to change. Many in this
room likely remember with fondness their first job, their first date,
or providing your wish list to the mall's Santa Claus. Where once you
might have found department stores and food court dining, you might now
discover fitness centers, breweries, animal shelters, or pickleball
courts. But despite the changes, traditional retailers remain the
overwhelming majority of shopping center tenants.
Sadly, retail property owners are facing an unprecedented number of
ORC incidents. ORC involves the illegal acquisition of retail
merchandise in substantial quantities through both theft and fraud as
part of an unlawful commercial enterprise. It is important to
distinguish ORC from traditional shoplifting--or a single individual
breaking the law. Traditional shoplifting is often done in response to
food insecurity, substance abuse, or other mental health issues. It is
largely spontaneous and self-serving. Though small-scale shoplifters
should not avoid prosecution, ICSC recognizes that many of these
individuals need to be treated separately from those who operate as
part of a larger criminal enterprise focused on making a profit through
the resale of stolen goods. ORC puts a more serious strain on business
owners, particularly small businesses, in multiple ways, including
customer and employee safety, reputation, and financial stability.
While high-profile ``smash-n-grab'' robberies and Nation-wide cases
involving major retailers garner the headlines this holiday season, the
problem is pervasive, impacting retailers and centers large and small
in all regions of the country. One major enclosed mall owner reports
that retail crime theft incidents of over $1,000 have nearly doubled
over the past 8 years. Violent crime, including aggravated assault,
battery, and armed robberies have nearly tripled at those retail
centers. And this is just what property owners know: many retail
employees have simply stopped reporting incidents to local authorities,
including on-site security, because they fear retaliation from thieves
and their handlers. This behavior contributes to lack of prosecutions
of ORC cases, and leads to difficulties in allocating public and
private resources to combat ORC. This pattern of strained communication
speaks to the necessity of formalized coordination among all
stakeholders.
Thirteen States have passed legislation to create ORC task forces.
We know State and local measures can be effective means of combatting
ORC, but a comprehensive approach including Federal law enforcement
would be more effective.
Here are some pragmatic steps Congress and law enforcement can take
to address ORC. First, building on the success of State and local ORC
coordination centers, Congress can pass legislation to create a Federal
interagency ORC taskforce. There is broad bipartisan support for H.R.
895 the ``Combating Organized Retail Crime Act of 2023'' (CORCA). CORCA
can make a meaningful impact on ORC by activating a Federal
coordination center, while also ensuring criminal penalties address the
reality of how ORC enterprises operate. We thank Ranking Member
Magaziner, and committee Members Titus, D'Esposito, and Correa for
their co-sponsorship of this important legislation.
Second, the Federal appropriations process can also provide Federal
law enforcement agencies the resources and a mandate to investigate and
prosecute ORC rings. Appropriators funded a similar and successful HSI
initiative to combat IP theft with the creation of the National
Intellectual Property Rights Coordination Center. We understand CORCA
authors sought to replicate that success and use it as a model for the
Federal ORC Coordination Center.
Despite the rise in e-commerce in recent years, brick-and-mortar
stores remain the main sales channel for most goods and services
purchased in the United States.\2\ However, the rise in ORC has
contributed to the reasons why some retailers have chosen to close
store locations. Store closures should not be taken lightly: they
result in a significant loss of jobs, diminished State and local sales
tax, loss of property tax collected, and food and prescription drug
deserts. For instance, one grocery store typically creates $2.4 million
in annual State and local sales tax and has an average of 133 jobs; a
general merchandise store yields approximately $5.2 million and has an
average of 188 jobs.* Store closures impact the entire ecosystem of a
retail center and the community that it serves.
---------------------------------------------------------------------------
\2\ Placer.ai https://www.placer.ai/library/uncovering-behaviors-
and-characteristics-of-todays-
consumer?form_type=Uncovering+Behaviors+and+Characteristics+of+Today%E2%
80%99s- +Consumer.
* ICSC data.
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On behalf of ICSC I thank the subcommittee and fellow witnesses for
their interest and attention to this issue.

Examples of Successful ORC Task Force Activity

California.--Since the inception of California's ORC Task Force in
2019, there have been more than 1,850 investigations into retail crimes
in California that have resulted in over 1,250 arrests as of August
2023.* Led by California Highway Patrol, the key to the ORCTF's success
is the partnership with retailers, property owners, local law
enforcement, and district attorneys, to effectively disrupt organized
retail theft rings and prosecute organized retail crimes. In the first
5 weeks of the Los Angeles County Sheriff's Department's Organized
Retail Theft Task Force, teams made 89 arrests and $370,000 worth of
stolen goods was recovered.
Texas.--Comptroller Glen Hagar chairs an ORC Task Force consisting
of a combination of representatives from retailers--Amazon, eBay, H-E-
B, and several others--along with several law enforcement and State
agencies.* The United to Safeguard America from Illegal Trade (USA-IT)
organization says retail thefts in Texas totaled nearly $4 billion last
year and cost State and local governments more than $343 million.
New England.--The New England Organized Retail Crime Alliance
(NEORCA) is a group of retailers who collaborate with law enforcement
aimed at reducing property crimes, keeping shoppers safer and lessening
their chances of becoming victims. An information-sharing platform was
established to allow NEORCA members to share information on ORC.*
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* ICSC data.
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New York.--Last month, the chief of police in Syracuse said that
the city has seen a 55 percent spike in shoplifting since 2021--and
that's a conservative estimate because it doesn't account for
unreported incidents. The Retail Council of New York State says that
store owners lost $4.4 billion in 2022 from theft alone.* New York City
reports about a 50 percent increase in retail theft complaints across
the city since 2018.*
Arizona.--In early October, Phoenix Police announced that from
September 12 to 15, 248 warrants were cleared, 64 people were arrested
and 5 guns were seized as part of a multi-agency investigation into
organized retail crime.
Washington.--In 2023, Washington State's Attorney General created a
centralized Organized Retail Crime Unit to coordinate, investigate, and
prosecute multi-jurisdictional retail crime State-wide. This
centralized unit has been praised by retail workers union and the
business community alike, and just last month announced the first
criminal prosecution by the newly established Organized Retail Crime
Unit.*
Illinois.--Attorney General Kwame Raoul has distributed out almost
$5 million to nearly 2 dozen communities, including Oak Brook, Gurnee,
Naperville, and Orland Park. The Illinois Organized Retail Crime Task
Force funded 25 police departments throughout the State. The task force
pays for everything from overtime to license plate readers and
surveillance systems that allow police to see what's happening before
they even arrive.*

Examples of Investments by Property Owners in Securing Shoppers,
Workers, and Products

To thwart ORC operations, owners of retail centers have made
substantial investments in advanced operational analytics, biometric
data, license plate readers, heat maps, and other sophisticated
technologies to help stem the tide of ORC without negatively impacting
the customer experience. The reality is that some retailers have had to
sacrifice the shopper experience by locking products behind Plexi-glass
barriers. This technique, while ensuring product security, has had the
effect of deterring customers from shopping in person.
Despite these investments, technology can only do so much because
addressing the retail crime problem will require policy change. These
investments are also conditioned on the effectiveness of prosecution.
The Loss Prevention Research Council (LPRC), based at the
University of Florida, explains the below use of technology:

``Advanced case management and investigations enable collaboration
within and between organizations because loss prevention practitioners
can enter suspect information into a common database which can then be
reviewed by others within the organization, or at other partnering
organizations. This allows them to build cases (i.e., link multiple
incidents to the same case). This is desirable because large cases (in
terms of dollar amount) are more attractive to prosecutors and
therefore more likely to be prosecuted. These offenders are also the
ones creating the greatest losses to retailers.
``Other technologies include license plate readers that enable
retailers to enroll license plates into a system and then receive
alerts when a vehicle associated with retail crimes enters parking
lots. The same is true of face-matching systems. These systems are
being narrowly used for forensic purposes--that is, when an individual
is found to be committing retail crimes, they are enrolled in face-
matching software. Then a retrospective search is conducted using
available footage (e.g., past 30 days of retained footage)--this
enables them to identify and investigate the times the suspect(s) were
in their stores. Futhermore, this technology enables real-time alerts
if retailers choose to use this option--once a suspect is identified
and enrolled, retailers can receive alerts when that individual enters
a store. Retailers are being very cautious to limit these programs and
only use them for crime prevention and investigations.
``Another solution is RFID. RFID enables item-level serialization of
merchandise and other assets. Retailers know what is sold at the POS--
if they know what merchandise leaves the store, they can reconcile
transactions with merchandise leaving the store and identify likely
thefts. This is not possible with current EAS systems because they do
not enable item-level serialization. RFID can enable retailers to
identify what is leaving a store, how many items, and exactly when
those items left the store. These systems can be integrated with CCTV
systems to capture footage of likely suspects. One of the most time-
consuming aspects of retail crime investigations is reviewing video, so
this can drastically reduce the amount of time required to identify a
suspect.
``However, once the RFID tag has left the building, it is still able to
transmit a signal if it is pinged with a reader. Therefore, retail
investigators and law enforcement can enter suspected fencing locations
with a handheld RFID reader in a backpack and pick up all of the RFID
tags associated with theft incidents. In other words, solutions like
this help to link stolen merchandise at fencing and processing sites
with the store where the theft occurred. This would also be useful for
identifying that merchandise that is acquired during a controlled buy
was stolen; for example, retailers will purchase merchandise on-line in
hopes of determining whether the seller is selling stolen merchandise--
RFID would streamline this process. For more solutions that I believe
are promising or that have evidence of effectiveness, see (https://
losspreventionmedia.com/technology-alone-will-not-solve-the-problem/
).''

ECONOMIC FALLOUT OF STORE CLOSINGS

When stores start closing due to rising ORC, the effects are loss
of jobs, loss of State and local sales tax-generated, loss of property
tax collected and a blight on the community. One grocery store
typically creates $2.4 million in annual State and local sales tax and
has an average of 133 jobs; a general merchandise store yields
approximately $5.2 million and has an average of 188 jobs, a single
drugstore generates nearly $1.2 million with an average of 27 jobs and
a single apparel store, $423,000 with an average of 32 jobs. If store
closings start increasing, sales tax and job losses quickly multiply,
and the problems escalate.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Mr. Pfluger. Thank you.
The Chair will now recognize Members in order of seniority
for their questions.
I at this time recognize myself for questions.
Ms. Stephan, thank you for your testimony.
Do weak penalties embolden organized retail crime and
organized retail criminals?
Ms. Stephan. Based on my experience and the experience of
my team, we believe it does. One of the facts that we rely on
is we didn't even see organized retail crime or the smash-and-
grabs, these brazen type thefts of hundreds of thousands of
dollars until California passed a law that elevated the level
for a felony crime to $950. It also----
Mr. Pfluger. If I may, can I ask: Has that had an impact on
what happened in Los Angeles, the $300,000 of ransacking that
happened at a Nordstrom, the thousands of dollars that happened
at a Nike store in Los Angeles?
Ms. Stephan. Well, we are the second-largest county in
California. So I assume that our experience--and fifth-largest
county in the United States--would have some bearing on other
counties.
Mr. Pfluger. Yes.
Ms. Stephan. I mean, that law, the California law is across
every county in California. It--the key problem is it didn't
allow for first time or second time. There's no aggregation.
You can steal every day of the week just under $950, and it's
the same penalties.
Mr. Pfluger. So criminals are coming back every day of the
week, and they're stealing.
Ms. Stephan. And it's still a misdemeanor.
Mr. Pfluger. They're not being prosecuted.
Ms. Stephan. Well, they're being prosecuted in San Diego--
--
Mr. Pfluger. OK.
Ms. Stephan [continuing]. Because we believe but it doesn't
mean that it can be a deterrent because it's always going to be
a misdemeanor.
Mr. Pfluger. Uh-huh.
Ms. Stephan. They're not going to remain in custody.
Mr. Pfluger. You know what's interesting? Sorry to cut you
off. But our previous witnesses on the Government panel
wouldn't talk about the thresholds. They wouldn't talk about
deterrents. But what I'm hearing from y'all's testimony is that
deterrent matters.
I'll go to Mr. Johnston at this time. Are your member
companies scared? Are their employees scared? Do--does that
have an effect on the consumers being scared to go into retail
stores because of this?
Mr. Johnston. Yes, thank you for your question, Mr.
Chairman.
Yes, this is not a victimless crime. Employees, consumers,
communities, we are all victims of organized retail crime.
Our retailers have reported, as I alluded in my oral
testimony, many of them have seen increases of 100 percent or
more over last year, which many have also--those were all-time
highs to begin with last year, injuries, deaths.
So employees are fearful. No employee should wish to go to
work in fear for their job. No employee should have to quit or
leave a job for fear.
Mr. Pfluger. Well, I agree with that. Just today here in
northwest District of Columbia, it was reported on Wisconsin
Avenue that 5 to 6 guys with guns ordered everyone in a Verizon
store to the floor and robbed that store for, you know, the
phones and the other technology that was in it.
Mr. Glenn, I'm so sorry for the losses that Home Depot has
had. That's just horrific. Are your employees at Home Depot
scared for their lives when they go to work because of the rise
in organized retail crime?
Mr. Glenn. Thank you for the question. I appreciate the
chance to answer that.
What I would say is, is that I think we've been at the
forefront of trying to protect our associates and take the
appropriate steps to make them feel as if they're entering a
safe environment. We start at the parking lot. We bring it
inward. We train other associates. We overtrain our associates
on deescalation, to be great witnesses, to not engage with bad
actors.
So while there is a broader, you know, fear out there in
the environment, I think that we've done a nice job of making
our associates feel good.
Mr. Pfluger. Mr. Johnston, I asked the previous witnesses
if they see trends. Are there cities in the United States that
have a higher level of organized retail crime?
Ms. Stephan testified that in San Diego that they're
prosecuting but maybe not in Los Angeles County. Do you see
trends across the United States, cities where it's higher,
higher levels of incidents?
Mr. Johnston. We do have an annual survey that goes out to
our retail members that one of the questions is where do they
often see the highest levels of organized retail crime, and we
do provide a top ten list. It is based on their responses. It
is based on their experiences and their internal data.
But that is not to say that, along with my fellow panelists
and the previous panel, organized retail crime groups, they
prey on wherever and however they can obtain their goods and
their dollars.
Mr. Pfluger. But if, as Ms. Stephan was saying, if you have
a nonaggregated penalty day in and day out, $950, doesn't that
add to a criminal's mindset that they're going to take
advantage of that if they know they're going to only be
prosecuted for a misdemeanor instead of a felony?
Mr. Johnston. I would agree with that. Our retailers do see
that aggregation can play a large role in deterrence where, you
know, an individual act, an organized retail crime is not a
singular act. It's conducted in multiple acts, multiple
perpetrators in an organized effort.
So aggregation can be of great support and assistance in
this matter.
Mr. Pfluger. Thank you.
Ms. Stephan, last question. Alvin Bragg's Day One policy
that took armed robbery from in some cases from a felony to a
misdemeanor, does that embolden criminal activity?
Ms. Stephan. I believe that every prosecutor should follow
the rule of the law, and the law says that robbery is a felony.
Mr. Pfluger. Thank you.
I yield back.
I now recognize the Ranking Member for his line of
questioning.
Mr. Magaziner. Well, thank you all very much again for
being here.
I want to dive into some of the recommendations that you
all have presented to the committee, and let's start with the
coordination centers which several of you referenced and have
been piloted in different parts around the, places around the
country.
I'll open this up to any of you. Can any of you comment on
the experience of your organizations with coordination centers?
What's worked? What's not? What are the best practices that we
should be mindful of as we look to expand this model across the
country?
So I don't know. Mr. Glenn, would you like take a crack at
it?
Mr. Glenn. We have had conversation with HSI about
participating with them on the coordination centers, but to
this point we have not.
Mr. Magaziner. OK.
Ms. Stephan. I believe in coordination centers based on our
experience in San Diego County. We use it for every pressing
issue. For example, we use it to track school threats very
successfully where we're able to know exactly whether a threat
has been resolved and whether we're able to make that school
safe.
We use it in elder fraud where we finally are able to track
that we had $49 million stolen to elder fraud in San Diego in 1
year.
So we look forward to having that staple type of effort in
order to gather accurate data. The best way to come up with
solutions is to really know the size of the monster that you're
dealing with.
Mr. Magaziner. Then, Mr. Glenn, one of the root causes of
the rise of organized retail theft that you highlighted is the
availability of easy platforms for resale, particularly on-
line.
Again, I'll open this up to any of you. What should we as
Congress be thinking about when it comes to the resale aspects
of this? Should there be tougher requirements for these on-line
platforms to know their customers, to know who is selling these
goods, particularly, you know, large amounts of bulk goods that
are highly likely to have been procured through retail theft?
Mr. Glenn. Yes, thank you for the question.
You know, in a perfect world, long before it's being
resold, we would not actually experience the loss.
I think the Informed Consumers Act was a great first step,
but we also know that there's some opportunities with
enforcement. We also know there's opportunities with education,
and we need to continue to kind-of round out the needs and the
abilities of using the INFORM Act to kind-of help that
defencing resale opportunity and actually put some teeth into
it from a prosecution perspective.
Mr. Magaziner. Does anyone else have a perspective on that?
Ms. Stephan. The INFORM Act is a great tool, but it needs
the people with expertise in order to make the cases.
In the old days we had the pawn shops. So we put together
that you need to show ID and other things. So everything went
on-line, and really this is why COVID shutdowns made more
shoppers go on-line. So this became extremely profitable.
But we need the FTC and law enforcement to be able to have
the technology, the tools to work with those platforms in order
to bring accountability.
Mr. Magaziner. Thank you.
So I think we all agree that this is an issue that's worthy
of our attention in Congress and that we all want to work
together to try to help you in combatting organized retail
theft. That's why I am proud to have signed on as a cosponsor
to Representative Titus and Representative Buck's Combatting
Organized Retail Theft Act, and I certainly encourage all of my
colleagues to take a look at the bill and do the same.
It deals with the aggregation issue and penalties in the
U.S. code but also gives Homeland Security and DOJ some
additional tools on the investigative and data sharing side
that I think are very important, as well.
But with the last moment that I have here, people are
watching. Those of you from industry who are leaders in this
space have adopted some practices at your level, as well, to
help protect your employees and your customers.
So I just want to give any of you one last opportunity if
there are any best practices that you have put into place that
you would like to highlight that might be useful for others who
are watching to see, as well.
Mr. Glenn. Thank you for the question.
What I would tell you is that our process and our policy at
the Home Depot is to make our associates understand the risk,
first and foremost. It's an education process.
No. 2, provide them with the tools for deescalation, really
making sure that they understand how to extricate themselves
from these types of scenarios.
No. 3, to be great witnesses. Teaching people to be great
witnesses to what's happening around them can help us then
close these cases down because we actually bring all this
information in together into a kind-of a processing database
for us, and we use that information to work with law
enforcement.
Mr. Magaziner. Thank you all.
I'll yield back.
Mr. Pfluger. The gentleman yields.
The Chair now recognizes the gentleman from New York, Mr.
D'Esposito.
Mr. D'Esposito. Well, thank you, Mr. Chairman.
Thank you all for being here and for the work that you do.
Madam District Attorney, I'm paraphrasing, but I believe
when the Chairman asked a question, your response was that a
district attorney must do everything in their power to uphold
the law. If someone, for example, is charged with robbery, it
should be a felony and thus prosecuted as such.
Obviously, that question came about because of the rogue DA
that we have in New York City, specifically in Manhattan, and I
know Mr. Magaziner had just mentioned that when it comes to
retail theft, we all are trying to work together.
I would say that many of us are trying to work together,
but there's actually a Member of this subcommittee who is a
very big supporter of that rogue DA. Mr. Goldman is a big
supporter of Mr. Bragg in Manhattan.
There is no question that we are trying to work together.
But when we see cities like New York City, a city that I wore
the uniform in, I was proud NYPD detective for my entire
career, those cities are suffering because of policies put in
place by Democrats. That's without question.
We have in the State of New York the Governor who was a
Democrat, the State legislature, both the assembly and the
Senate, Democrat-controlled, put into place criminal justice
reform, bail reform. At no point at any time did they have any
conference with people in law enforcement who were actually on
the street, making sure that they were living out their oath to
protect and serve. At no point did they have conversations with
the men and women who wore the uniform, who were wrestling
illegal firearms from people's hands. Those conversations never
happened.
They did it because they believed that they were going to
reform our criminal justice system. I will say that as someone,
again, who has spent a career in law enforcement, there are
reforms needed. But they aren't reforms that needed to be
painted with a broad brush.
So I want to thank you for saying what you said and making
us all realize that when someone is elected district attorney,
it doesn't give he or she the ability to rewrite in New York's
case the penal code and get to pick and choose what crimes they
prosecute.
This has led in places like New York and not just the city
but in places like my district in the southwest corner of Long
Island where you now walk into places like CVS and when you
walked in with your family and you grabbed that little basket,
because you didn't want to do a lot of shopping, you just
wanted to do a little, so you had the basket, no more baskets.
Why? Because people were taking those baskets, filling them
up with whatever it is they wanted, and walking right out the
door?
Why? Because of the laws that were put in place by the
other side of the aisle, there was really no repercussions and
it literally took the handcuffs out of law enforcement's tool
belt and put the handcuffs on prosecutors.
So what I'm asking here today is: What can we do? I mean,
what is it that Members of Congress, what can we do to work
with local law enforcement agencies besides changing the
justice reform? What have you seen that has been successful in
your area that we can do to curtail some of the disasters that
we're seeing?
Ms. Stephan. I think what you're doing here by example,
coming together around smart legislation, which has bipartisan
support, is a great step.
But for me in San Diego, whenever I'm fighting battles, I
emphasize that public safety, the safety of our children, our
businesses, our communities, small and large, that is not a
political issue. That's a human issue. That's a human rights
issue. Nothing will thrive without safety. You take out our
police, you take out our law enforcement, you take out our
prosecutors, or you make them for sale to anybody, then you
take out the safety.
With that, there is just no going back. You cannot thrive
as a neighborhood. So I want--I always elevate the voice of the
victims. There's nothing more powerful than hearing from the
people affected and being on the ground, because that is just
avoids all politics and that's how I handle my region.
Mr. D'Esposito. You've been a district attorney for how
long?
Ms. Stephan. This is my second term.
Mr. D'Esposito. OK.
Ms. Stephan. So 5 years.
Mr. D'Esposito. You've obviously been a prosecutor.
Ms. Stephan. Thirty-three years.
Mr. D'Esposito. Thirty-three years.
I would assume that at no point in prepping for a trial or
anything like that and I, at least in my career in the NYPD,
one question that is never asked by those when they're
responding to a
9-1-1 call is what political party are you from.
Ms. Stephan. Exactly. No police report ever shows that.
Mr. D'Esposito. Thank you.
I had some questions, but my time has run out for Mr. Glenn
from Home Depot. If we could chat after that, that'd be great.
Mr. Chairman, I yield back.
Mr. Pfluger. Thank you.
The gentleman's time has expired.
The Chair now recognizes the gentleman from California, Mr.
Correa.
Mr. Correa. Thank you, Mr. Chair. I want to thank the
witnesses for being here today.
Stephan, I just want to say I did a lot of work with the
California DAs Association when I was in the State legislature.
So in the few seconds that I have, few minutes, I want to
ask you, start out. I got a lot of quick questions for you.
First of all, you, like your approach, this should not be a
partisan issue. This is about victims. This is about protecting
our community.
So first question to you is: Would we be better off funding
or defunding the FBI, get rid of the FBI?
Ms. Stephan. Sir, we need excellent institutions and----
Mr. Correa. Like the FBI.
Ms. Stephan [continuing]. And in San Diego, we work with
the FBI.
Mr. Correa. Thank you very much.
Then some people in this House that have advocated for
that.
Second of all, I want to ask you specifically. In San
Diego, you're the district attorney in San Diego. I'm very good
friends with our Orange County DA, Todd Spitzer. So right now
you said in California $970 is the threshold. Anything below
that is a misdemeanor? Anything above that is a felony? Is that
correct?
Ms. Stephan. Nine hundred fifty dollars, yes.
Mr. Correa. Nine hundred fifty dollars.
Ms. Stephan. Yes. No matter how many times.
Mr. Correa. So it doesn't aggregate. So you go in every day
and do $949, $949, $949, it's still a misdemeanor.
Ms. Stephan. That's right, sir.
Mr. Correa. Has there been any discussions with our
legislators in California to change that so maybe there's an
issue of aggregation there that could be taken into
consideration?
Ms. Stephan. There have been discussions, but it has to go
back into a proposition before the voters.
Mr. Correa. So this was a proposition passed by the
California voters.
Ms. Stephan. Yes.
Mr. Correa. Not the legislature itself.
Ms. Stephan. That's right, sir.
Mr. Correa. OK. This is interesting.
So let's see what we can do when it comes to that issue,
moving forward.
Mr. Glenn, you're president of Home Depot. Yes?
Mr. Glenn. Vice president.
Mr. Correa. One of my favorite toy stores. One of my
favorite toy stores.
Mr. Glenn. Yes, sir.
Mr. Correa. I noticed the--you put in self-checkout
counters now. Has that helped or hurt the situation in anyway?
Mr. Glenn. You know, thank you for question.
I don't know that there's been any data that ties self-
checkout to organized retail crime. It is certainly something
that we are keeping an eye on and looking at the data.
But we don't see--the type of crime that we're talking
about are these more broad-based, aggressive rollouts of carts
full of product. It's coming in and breaking open the locking
containers and just swiping the shelves and running out the
door with 10, 12 individuals. That's what we see as more the
organized retail crime in our stores.
Mr. Correa. Thank you very much.
Ms. Jagoda, good to see you, ma'am.
I wanted to--you have said essentially shopping centers and
the challenges that we have with a lot of these shopping
centers, your anchor tenants, so to speak, moving out, closing
down because of the losses in some cases.
So the question is: Who are the victims here? Who suffers
when you have a major shopping center losing tenants?
Ms. Jagoda. Thank you, Congressman, for that question.
You know, ICSC represents retail facilities of all shapes
and sizes in all regions of the country, from large enclosed
malls to grocery-anchored centers to everything in between.
You're right. We have seen an unusual amount of store
closures in geographic areas that have experienced high numbers
of ORC cases. When stores start closing due to the effects of
ORC, we see loss of jobs. We see loss of State and local sales
tax generated and loss of property tax generated. Of course,
it's a blight on the community.
A single grocery store typically creates $2.4 million in
annual State and local sales tax and has an average of 133
jobs. Really if stores--store closings start increasing as a
result of ORC, not only will sales and property tax collection
decrease, schools and first responders will be the ones that
suffer most.
So in addition to that shopper experience being diminished,
you're going to see effects on other public services, as well.
Mr. Correa. So it's not just, you know, not just a loss
directly to a retailer but really to the whole community in
terms of tax revenue, the ability to support local services.
Like you said, you know, in my district right now I see it
every day, shopping centers losing major tenants. The whole
area just does not look well, and a challenge is trying to
bring in retail to support that community.
But I want to thank you, thank all of you for being here
today.
Ms. Stephan, I'd like to have a sidebar with you later on
and, Mr. Glenn, with you, as well.
Thank you.
Mr. Chair, I'm out of time.
Mr. Pfluger. The gentleman yields back.
This will be the last Member to question.
The Chair now recognizes the gentleman from Arizona, Mr.
Crane.
Mr. Crane. Thank you, Mr. Chairman.
I'd like to start by introducing a couple of letters into
the record, one from CHEP and one from Retail Industry Leaders
Association.
Mr. Pfluger. Without objection, so ordered.
[The information follows:]

Letter From CHEP USA
December 12, 2023.

The Honorable Mark Green,
Chair, House Committee on Homeland Security, U.S. House of
Representatives, Washington, DC 20515.
The Honorable Bennie Thompson,
Ranking Member, House Committee on the Judiciary [sic], U.S. House of
Representatives, Washington, DC 20515.
The Honorable August Pfluger,
Chair, Committee on Homeland Security, Subcommittee on
Counterterrorism, Law, Enforcement, and Intelligence, U.S.
House of Representatives, Washington, DC 20515.
The Honorable Seth Magaziner,
Ranking Member, Committee on Homeland Security, Subcommittee on
Counterterrorism, Law Enforcement, and Intelligence, U.S. House
of Representatives, Washington, DC 20515.
Re: Hearing on The Rise in Organized Retail Crime and the Threat to
Public Safety

Dear Chair Green, Ranking Member Thompson, Chair Pfluger, Ranking
Member Magaziner, and Members of the Committee: On behalf of CHEP, a
Brambles company, I write to thank the committee for holding today's
hearing on the critical issue of organized retail crime. In addition to
the many important topics discussed during today's hearing, I would
also like to draw attention to a specific facet of the problem that
tends to be overlooked--the theft of wood pallets, reusable containers,
and other supply chain logistic equipment.
By way of background, CHEP manages the world's largest pool of
reusable pallets and containers. In the United States, facilitated by a
sophisticated network of over 400 operating sites, more than 300
million CHEP pallets enter the supply chain each year transporting
consumer goods, fresh produce, beverage, retail, and general
manufacturing products to American households nationwide. CHEP pallets
feature a proprietary design intended to last up to 10 years and carry
more than 2,000 pounds of product per pallet. CHEP's pallets are
painted in the company's industry known, easily identifiable
trademarked blue color and marked ``Property of CHEP .'' The durability
of CHEP's pallets promotes the ``share and reuse'' of these platforms
among multiple participants across the supply chain. Our business model
offers customers a more cost-efficient, reliable, and sustainable
alternative to the use of disposable single-use alternatives or
managing their own shipping equipment system.
Pallets, reusable containers, and other supply chain logistic
equipment are essential components in the Nation's supply chain and
have been designated as critical infrastructure by the Department of
Homeland Security. These items serve as an invisible backbone to the
U.S. economy, playing an invaluable role in moving goods and materials
from one location to another. Without this necessary equipment, growers
would be unable to move produce from field to table, raw materials
would fail to reach the factory, and finished consumer goods would be
missing from store shelves.
Unfortunately, over the last several years, driven by rising lumber
prices and supply chain constraints, our products have been stolen in
increasing numbers and frequency. Once stolen, items may be broken
down, sold for scrap, sold into the black market or used to facilitate
other illicit activities. While pallet theft occurs similar to most
organized retail crime--where stolen pallets are sold through an
intermediary or ``fence''--organized retail crime operations have also
utilized stolen pallets to move stolen goods.
Regardless of how they are used, stolen pallets have left the
supply chain, undermining the benefits of its reusability and creating
an additional cost for manufacturers and consumers. Further, stolen
pallets removed from CHEP's controlled circular operations model are
not subject to CHEP's rigorous inspection and rehabilitation protocols,
which guarantee the integrity of CHEP pallets before they reenter the
supply chain. Without these regular inspections, stolen pallets that
are resold present a grave risk to unsuspecting buyers and consumers
that their structural integrity may be compromised.
In recent years, CHEP has invested substantial resources, including
twenty-four full-time investigators and hundreds of truck drivers, in
an effort to educate consumers and recover stolen pallets using its own
resources. However, we have increasingly found that many individuals
willingly continue to steal, purchase, and possess CHEP pallets in
spite of the very obvious nature of their CHEP ownership. In these
situations, CHEP, like many other stakeholders in the supply chain and
retail ecosystem, endeavors to partner with law enforcement to assist
in recovery and prosecution of wrongdoers. While this partnership has
produced notable successes in some areas of the country, expanding
these successes will require a better understanding of the threat
organized retail crime poses to supply chain infrastructure and
expanded resources that allow for improved coordination between the
private sector, and State, local, and Federal law enforcement. This
hearing provides a welcome forum for discussion on how to expand and
strengthen these partnerships.
I commend the committee for its commitment to tackling organized
retail crime. As this significant threat to public safety and our
nation's supply chain persists, CHEP stands ready to assist in future
inquiries and hopes that you may consider incorporating efforts to
combat the theft of pallets, reusable containers, and other supply
chain logistic equipment in future hearings and committee activities.
Thank you again for your leadership on this vital issue.
Sincerely,
Shawn P. Galey,
Vice President & Chief Legal Officer.
______

Letter From the Retail Industry Leaders Association
December 12, 2023.
The Honorable August Pfluger,
Chairman, Committee on Homeland Security, Subcommittee on
Counterterrorism, Law Enforcement, and Intelligence, 2-176 Ford
House Office Building, Washington, DC 20515.
The Honorable Seth Magaziner,
Ranking Member, Committee on Homeland Security, Subcommittee on
Counterterrorism, Law Enforcement, and Intelligence, H2-117
Ford House Office Building, Washington, DC. 20515
Re: Committee hearing: From Festive Cheer to Retail Fear: Addressing
Organized Retail Crime

Dear Chairman Pfluger and Ranking Member Magaziner: The Retail
Industry Leaders Association (RILA) appreciates the Subcommittee's
interest in organized retail crime (ORC) and the need to shine a bright
light on the criminals and organizations that continually put retail
employees, customers, and communities at risk. This is an issue that
deserves constant attention and needs a multifaceted response at the
local, State, and Federal level.
RILA is a trade association of the world's largest, most
innovative, and recognizable retail companies and brands. We convene
decisionmakers, advocate for the retail industry, and promote
operational excellence and innovation. Our aim is to elevate a dynamic
retail industry by transforming the environment in which retailers
operate. RILA members include more than two hundred retailers, product
manufacturers, and service suppliers, who together employ over 42
million Americans and account for $2.7 trillion in annual sales and
hundreds of thousands of stores, manufacturing facilities, and
distribution centers domestically and abroad.
Organized retail crime has been beguiling retailers for decades and
has become a highly profitable and sophisticated criminal activity. It
has moved from sidewalks to pawn shops to online marketplaces over the
past decade. Unfortunately, organized retail crime has become more
frequent, violent, and retail employees are suffering significant harm,
including death, while the communities they serve are also
deteriorating. ORC is not an urban or rural problem, it is not a
Republican or Democratic problem, it is not an East or West problem, it
is affecting every State and cities large and small across the Nation.
Stepping back, according to Loss Prevention Magazine, ORC involves
the association of two or more persons engaged in illegally obtaining
retail merchandise in substantial quantities through both theft and
fraud as part of an unlawful commercial enterprise. The primary
objective of these professional crime rings is to steal from local
retail stores for the purpose of turning retail products into financial
gain, rather than for personal use. Typically coordinated under well-
planned procedures and rules, organized retail crime can operate on a
local, regional, national, or international scale.
RILA, its member companies and other interested parties--law
enforcement, district attorneys, manufacturers, brands, consumer groups
and community groups--have worked collaboratively over the last 3 years
to build and layer a strategy to mitigate ORC that includes targeted
initiatives, legislation, and partnerships to disrupt these dangerous
criminal enterprises at every level of government.
In 2020 RILA established the Buy Safe America Coalition (BSAC),
which represents a diverse group of responsible retailers, consumer
groups, manufacturers, intellectual property advocates and law
enforcement officials who support efforts at all levels of government
to protect consumers and communities from the sale of counterfeit and
stolen goods. The mission of BSAC is to protect legitimate businesses,
employees, consumers, and communities against criminals using third-
party marketplaces to sell dangerous, defective, and stolen goods to
unsuspecting consumers by passing the Integrity, Notification, and
Fairness in Online Retail Marketplaces for Consumers Act \1\ (The
INFORM Consumers Act or INFORM). This legislation had broad bipartisan
support and in December 2022, Congress passed and the president signed
INFORM putting in place a law requiring online marketplaces to collect
and verify information about their sellers, suspend sellers that do not
comply, disclose key information to consumers shopping online and
giving new enforcement tools to the Federal Government and State law
enforcement.
---------------------------------------------------------------------------
\1\ Public Supporters of INFORM Consumers Act. 1st Dibs, 3M, 100
Black Men of America Inc., AFL-CIO, Amazon, Automotive Anti-
Counterfeiting Council, Association of Home Appliance Manufacturers,
Alliance for Automotive Innovation, American Apparel & Footwear
Association, Best Buy, Birkenstock, Business Roundtable, Buy Safe
America Coalition, Communications Cable and Connectivity Association,
Consumer Healthcare Products Association, Consumer Reports, Coalition
of Law Enforcement and Retail, CVS Health, Dick's Sporting Goods, DSM,
eBay, Etsy, Faith for Black Lives, Fashion Accessories Shippers
Association, Floor & Decor, Footwear Distributors and Retailers of
America, The Fraternal Order of Police, Gap Inc., Gemini Shippers
Group, GSK, HP, Halloween & Costume Association, The Home Depot,
International Council of Shopping Centers, International Housewares
Association, JCPenney, Juvenile Products Manufacturers Association,
League of Latin American Citizens, Levi Strauss & Co., Lutron, Lowe's,
Mercari, Motor & Equipment Manufacturers Association, Misses Kisses,
National Association of Chain Drug Stores, National Association of
Manufacturers, National Association of Wholesaler-Distributors,
National Coalition of 100 Black Women Inc., National Electrical
Manufacturers Association, National Retail Federation, Neiman Marcus
Group, The New Sheriff's Association, Nordstrom, OfferUp, OpSec, The
Coalition to Protect America's Small Sellers (PASS), Personal Care
Products Council, Philips, Pinterest, Poshmark Inc., Power Tools
Institute, Plumbing Manufacturers International, Public Citizen, Red
Bubble, Retail Industry Leaders Association, Rite Aid, Specialty
Equipment Market Association, Stockd, Target, The Fashion Jewelry &
Accessories Trade Association, Tech Net, The Toy Association, TIC
Council, Transnational Alliance to Combat Illicit Trade, Ulta Beauty,
U.S. Chamber of Commerce, Vizient, Walgreens.
---------------------------------------------------------------------------
INFORM became effective in June 2023, empowering the Federal Trade
Commission (FTC) and State attorneys general to investigate and
penalize marketplaces and sellers for failing to follow the strict
verification and collection mandates in the law. It allows the State
attorneys general and the FTC to fine a marketplace for non-compliance
up to $50,120.00 per infraction. It will be important for Congress to
conduct oversight and for the FTC to enforce this important law, to
ensure consumers are protected from buying stolen, counterfeit,
altered, damaged and harmful products.
INFORM was a great first step by Congress to tackle this serious
problem. It is our hope that Congress will take further action and pass
the bipartisan, bicameral Combatting Organized Retail Crime Act
(CORCA)\2\ that creates a centralized organized retail crime task force
within Homeland Security Investigations. The task force will increase
coordination among Federal law enforcement agencies--Department of
Justice, Secret Service, Postal Service, Drug Enforcement along with
other law enforcement agencies--to investigate and prosecute these
criminal ORC enterprises.
---------------------------------------------------------------------------
\2\ H.R. 895 Combating Organized Retail Crime Act of 2023.
---------------------------------------------------------------------------
The lack of coordination and collaboration among and between
Federal law enforcement agencies is hindering the capture and
prosecution of criminal networks targeting local retailers. These
syndicates are not only harming legitimate businesses and retail
employees, they are using their ill-gotten profits to fund other
nefarious criminal activities. According to Association of Certified
Anti-Money Laundering Specialist (ACAMS)\3\ report Detecting and
Reporting the Illicit Financial Flows Tied to Organized Theft Groups
(OTG) and Organized Retail Crime, ORC ``is a low-risk, high-reward
business line for transnational criminal organizations' portfolios,
that presents a significant financial and public safety risk.'' The
report highlights how the ill-gotten profits from ORC are redirected
and used to fund human trafficking, terrorism, and drug trafficking.
---------------------------------------------------------------------------
\3\ ACAMS Report.
---------------------------------------------------------------------------
RILA has not only been focused on finding and enacting solutions at
the Federal level, we have worked at the State and local level too.
RILA works with our State retail trade association partners who took
action against organized retail crime by working with State
legislators, Governors and attorneys general to pass State INFORM
Consumers Act laws in 13 States--Alabama, Arkansas, California,
Colorado, Georgia, Illinois, Iowa, Louisiana, Michigan, North Carolina,
Ohio, Oklahoma, and Pennsylvania--and just as important retailers and
the State associations worked to establish and fund organized retail
crime task forces which are targeted to prosecute criminal networks.
Right now, 16 States have set up ORC task forces--Arizona, California,
Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Michigan,
Nevada, New Mexico, Oklahoma, Oregon, Texas, Utah, and Washington. More
are expected to be created in the next year.
As RILA continues to work with lawmakers, we are also creating
strong partnerships directly with prosecutors, law enforcement,
community organizations and social services at the local level to
effectuate change and counter the cycle of illegal activity that harms
consumers and honest businesses. RILA has found that cooperation,
collaboration, and information sharing is key to combatting organized
retail crime, habitual theft, and other disorder in and around retail
environments. RILA identified the need to create open lines of
communication with local district attorneys to facilitate learning,
address persistent challenges and unite in a shared goal of reducing
retail crime and restoring vibrancy to communities across the country.
To that end RILA and the National District Attorneys Association
(NDAA) formed a first-of-its-kind partnership between retailers and
prosecutors: Combatting Crime for Safer Communities. The partnership
serves as a conduit for educating prosecutors on the scope and impact
of ORC and habitual theft, identifying best practices for retailers to
support prosecutions, and examining emerging criminal schemes and more.
The success of the RILA/NDAA spawned the National Store Walk Month
in September 2023. This initiative invited member retailers to host
local district attorneys in stores to experience first-hand retailers'
efforts to prevent, deter, and dismantle ORC and other criminal
activity, foster understanding, exchange insights and work
synergistically to reduce retail crime. Over 80 DA offices from 26
States participated in our first wave of store walks.
Finally, RILA and NDAA are working on a long-term project to build
on the connections forged between retail and law enforcement to address
systemic challenges that drive criminal activity called the Vibrant
Communities Initiatives (VCI). The RILA/NDAA Vibrant Communities
Initiative arose out of an urgent need to address rising organized
retail crime, habitual theft, violence, vagrancy, and blight in and
around retail stores. Communities across America are plagued with
underlying social challenges--drug addiction, mental illness,
homelessness--that exacerbate retail crime.
Collaboration between all community stakeholders is what retailers
believe will lead to sustainable change. VCI brings together district
attorneys, police departments, social services organizations, and other
community leaders to identify effective approaches to deterring theft,
reducing recidivism, diverting young offenders while also addressing
the role of addiction, homelessness and mental health's impact on
criminal activity. RILA and the NDAA kicked-off VCI in two pilot
communities--Yolo County (CA) and King County (WA). The goal is to find
universal solutions and best practices that are transferrable to other
towns and cities across the country to address both the root causes of
criminal activity and the solutions for deterrence.
Addressing the myriad root causes of habitual and violent theft is
key to curbing the trend over the long-term. A comprehensive approach
requires prosecution for violent offenders and habitual offenders who
make a living re-selling stolen products; diversion and second chance
opportunities for young people who make wrong decisions; and thoughtful
collaboration when it comes to addressing societal issues such as
homelessness, addiction, and mental health challenges.
As millions of Americans have undoubtedly seen on the news, retail
establishments of all kinds have seen a significant uptick in brazen
retail crime incidents in communities across the Nation. This
continuing trend has made retail businesses a target for increasing
theft, harmed legitimate businesses who are forced to compete against
unscrupulous sellers, and has greatly increased consumer exposure to
unsafe and dangerous counterfeit products.
The retail industry is committed to changing the tide on retail
theft. All reasonable and legitimate solutions are welcomed. We look
forward to continuing to work with the Chairman, Ranking Member and the
Members of the Subcommittee on Counterterrorism, Law Enforcement, and
Intelligence along with other interested parties within Congress, the
administration, Federal law enforcement, State legislatures, police
departments, State attorneys general, and social services to help deter
retail crime and its negative impact on every community across the
country.
Sincerely,
Michael Hanson Sr.,
Executive Vice President, Public Affairs, Retail Industry Leaders
Association.

Mr. Crane. Thank you.
I want to start with Mr. Johnston.
Earlier, sir, you said that your organization has a top ten
list. Can you go ahead and let us know what those are?
Mr. Glenn. Thank you for the question, sir.
I do not have those off the top of my head. I can provide
those answers to you at a later date.
Mr. Crane. Do you happen to know any of them, sir, since
you're testifying here before Congress as the representative?
Mr. Johnson. Congressman, in no particular order, Los
Angeles, San Francisco, New York, Memphis, Oakland, Chicago,
Illinois.
Mr. Crane. Yes, imagine that. Just like the last panel,
similar trends that we're looking for, pattern recognition.
What do those have in common, sir?
I mean, I get it. You guys got to be careful. But if you
want Congress to help, we got to be honest about these things.
These are all Democrat-run cities. These are--all of them have
policy changes.
Just like Ms. Stephan was talking about, somebody who's
done this her whole life, who knows that crime doesn't care
about your political affiliation, it doesn't care about your
skin color. It affects everybody.
How about you, Mr. Glenn? You represent Home Depot. When
these stores go under and they lock their doors and bar up
their windows and they leave town, does it affect just
Republicans or White people, or does it affect everybody?
Mr. Glenn. No, sir, it affects everyone.
Mr. Crane. Yes, it's pretty sad, isn't it?
Mr. Glenn. Yes, sir.
Mr. Crane. It's pretty sad.
But like a lot of things in this country, unfortunately
this is another self-inflicted wound. The worst part about it
is you sit here in these panels, and you talk to the folks
before you who are all leaders in the FBI, law enforcement.
They can't even tell what you the trends are. It's no wonder we
can't solve these problems because we can't even have serious
conversations anymore.
Ms. Stephan, did I say that right, ma'am? You said we
didn't even see the smash-and-grab type events until the law
changes. Ma'am, when you see these type of, you know, retail
crimes increase, do you also see other crimes, other violent
crimes like murder, robbery, et cetera? Do you see those
increase, as well?
Ms. Stephan. You know, San Diego's one of the safest urban
counties in America. So we work very hard on solving crime,
murders. We have about a hundred murders a year which is one
too many for me but extremely low for the fifth-largest county
in the United States.
So we see trends, but we work together in task forces to
shut them down to make sure that our community's safe. We just
don't leave anyone to chance.
So as we saw these trends in organized retail crime, we
brought together the task forces. We worked on solving them
with retailers coming together, putting the images from their
videos in one room, coming together to solve this issue
coordinating.
This is why I was excited about testifying, hoping that
other regions will follow the example that we are setting, that
my team I'm proud of is setting.
Mr. Crane. Yes. Well, I'm not surprised at all, ma'am, that
you have, that your city has the track record that it does. I
actually spent a lot of time in San Diego. I was stationed
there for about a decade. I did, for the most part depending on
what neighborhood I was in, did feel relatively safe. So thank
you, ma'am, for what you do.
I hope that there are other folks in law enforcement and,
you know, DA's offices all over the country that are watching
this and can learn from your example, because one thing I can
tell you is you don't seem too interested in partisan politics.
You seem interested in justice, protecting the people that
elected you, appointed you, want you to protect them.
I appreciate you for doing that. I can't say that about
every DA, every prosecutor in the country. I think it's
despicable. I think it's absolutely despicable.
Just like I questioned the panel before you that we have
individuals that are pumping millions and millions and millions
of dollars into prosecutor races and DA races all over the
country to try and weaken law enforcement in those areas,
that's despicable. It's disgusting. Americans all over the
country of all creeds, ethnicities, races, religions are paying
for it.
Thank you.
I yield back, Mr. Chairman.
Mr. Pfluger. The gentleman yields.
I'd like to thank all of our witnesses on both panels today
for the valuable testimony and the Members for their questions.
The Members of the subcommittee may have some additional
questions for the witnesses, and we would ask the witnesses to
respond to these in writing.
Pursuant to committee rule VII(D), the hearing record will
be held open for 10 days.
Without objection, the subcommittee stands adjourned.
[Whereupon, at 4:40 p.m., the subcommittee was adjourned.]

A P P E N D I X I

----------

Statement of American Beverage Licensees (ABL)

December 12, 2023

ABL is a trade association representing the retail tier of the U.S.
alcohol industry. Its members include thousands of bars, taverns, and
package liquor stores that sell beer, wine, and spirits in States
across the country. As an important cog in the hospitality industry
economic machine, direct retail beverage alcohol sales in the United
States create more than 2.03 million well-paying jobs and generate over
$27.9 billion in Federal taxes and $20.0 billion in State and local
taxes.\1\
---------------------------------------------------------------------------
\1\ https://ablusa.org/americas-beer-wine-spirits-retailers-create-
2-03-million-jobs-122-63-billion-in-direct-economic-impact/.
---------------------------------------------------------------------------
ABL thanks the Chairman, Ranking Member, and subcommittee for
holding this hearing. Over the past few years, instances of organized
retail crime (ORC) in retail, and in package liquor stores
specifically, have raised concern among beverage retailers. ORC is
defined by Homeland Security Investigations (HSI) as ``the association
of two or more persons engaged in illegally obtaining items of value
from retail establishments, through theft and/or fraud, as part of a
criminal enterprise.''\2\
---------------------------------------------------------------------------
\2\ https://www.ice.gov/features/op-boiling-point.
---------------------------------------------------------------------------
The National Retail Federation notes that ``Liquor is one of the
most stolen items in the food and beverage sector. It is one of the
most common, ahead of baby formula, cheese, meat and coffee . . . high-
end liquor is among the top 10 targets for shoplifters across all
retailers.'' NRF adds, ``One of the reasons alcohol is one of the most
popular items stolen is because it's rarely in high-security areas,
it's expensive, and easy to conceal. It also commands a high resale
value . . . alcohol theft costs retailers approximately $46.8 billion
in shrink every year.''\3\
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\3\ https://www.ineoproducts.com/blogs/industry-banter/being-
proactive-about-liquor-theft.
---------------------------------------------------------------------------
ABL continues to hear from its retail members who are worried that
ORC offenders are increasingly interested in stealing beverage alcohol.
One ABL board member has been robbed 3 times at his store in
Memphis,\4\ and the high-profile robberies of liquor stores in
Philadelphia \5\ earlier this year have elevated the issue in the
retail alcohol community. Attorneys whose practices encompass beverage
alcohol laws note that ``there has been a significant uptick in large-
scale (alcohol) larceny in recent months.''\6\
---------------------------------------------------------------------------
\4\ https://www.localmemphis.com/article/news/crime/busters-liquor-
store-robbed-third-time-this-year/522-d85eb104-5e71-4ba8-b1b4-
46cc9fcefb0a.
\5\ https://whyy.org/articles/philadelphia-looting-teens-ransaked-
stores-lululemon-foot-locker/.
\6\ https://www.alcohollawadvisor.com/2023/11/how-industry-members-
can-prepare-for-alcohol-theft/.
---------------------------------------------------------------------------
Beverage business owners, many of whom operate small, family-owned
and operated package liquor stores, are being forced to consider
``hardening'' their retail stores, which necessarily will make them
less appealing to customers who often look forward to the trip to the
package liquor store to discover new products or purchase their
favorite brands. In addition to standard measures including installing
bollards, metal shutters and camera systems, other options for
deterring or preventing theft include fogging systems or hiring
security guards, though in some jurisdictions, those guards are limited
in what they can do. The fact that they are hired in some instances to
protect store employees is a depressing commentary on the current
situation.
But even hiring security guards has its drawbacks. As one liquor
store owner from Texas shared, ``It's a sad state of affairs when you
have to sit back and weigh the cost of hiring outside security versus
what dollar amount you are losing to theft to see which one is more
affordable.'' Another mentioned the psychological impact of hiring
outside security. ``When we do have an altercation . . . or have to
hire armed guards, the customers in the community hear about it and
think it's not a safe place to shop. Therefore, we lose even more.''
Public safety is at the heart of licensed beverage retailers'
businesses as they are the gatekeepers of age-restricted products and
keep them out of the hands of those who are under age. The organized
retail theft of alcohol undercuts the very systems that States have in
place to create accountability, chains of custody, and proper public
and private oversight of beer, wine, and spirits so that they are not
available to minors.
There is concern across the alcohol industry--including in the
supplier and wholesaler tiers--that an unaddressed increase in
organized retail theft of liquor will lead to the transfer of premium
brands and products from the retail floor to behind counters, into
glass cases or under lock-and-key, resulting in a loss of incremental
sales. Retailers might also feel compelled to purchase, stock, and
store less inventory of products that are strategically targeted by
criminal enterprises, which subsequently has negative effects on the
supply chain.
ABL supports the Combatting Organized Retail Crime Act of 2023
(H.R. 895; S. 140)\7\ and urges Congress to pass this important
legislation that expands Federal enforcement of criminal offenses
related to organized retail crime. ABL also supports the further
coordination of and engagement of Federal, State, and local law
enforcement; prosecutors; and retail merchants through task forces and
other organization.
---------------------------------------------------------------------------
\7\ https://www.Congress.gov/bill/118th-congress/senate-bill/140/
related-bills.
---------------------------------------------------------------------------
Today's hearing is an important step forward. Beverage retailers
are open to working with their fellow merchants, legislators,
regulators, law enforcement, and prosecutors to better address
organized retail crime.
The following is a sample of recent media reports of incidents that
have the criteria of being acts of organized retail crime.
CALIFORNIA: Arrested In South OC Target Thefts, Stolen
Liquor Recovered (August 10, 2023).--``Four suspects were
arrested in Mission Viejo on suspicion of stealing roughly
$2,658 in liquor from Target, the Orange County Sheriff's
Department reported . . . Deputies found the suspect's vehicle
in the surrounding area with two more people inside of it.
After conducting a traffic stop, deputies found an additional
50 bottles of alcohol valued at $2,658. Three of the four
suspects face burglary charges, and four all suspects face
conspiracy, organized retail theft, false identification to a
peace officer, possession of narcotic paraphernalia and
possession of burglary tools charges.''
COLORADO: VIDEO.--Public outraged after thieves target an
Aurora liquor store twice in one night (October 10, 2022).
CONNECTICUT: 4 early Friday Milford business break-ins under
investigation (October 23, 2022).--Four Milford businesses were
broken into over a span of 4 hours early Friday morning. It's
too early in the investigation to determine whether these
incidents are related, according to police. KS Mart on 548
Naugatuck Ave. was broken into at around 4:38 a.m., followed by
Puff City on 874 Boston Post Rd. around 6 a.m. Just 10 minutes
after, Voila Wine and Liquor Store on 975 Bridgeport Ave. was
broken into. And Fairway Liquor Mart on 597 Bridgeport Ave. was
hit around 6:40 am.
GEORGIA: VIDEO.--Surveillance video shows men pry open
liquor store door, remove ATM, steal Don Julio tequila (June
12, 2022).
ILLINOIS: VIDEO.--Chicago robbery ends in $10,000 worth of
liquor taken from River North store (October 27, 2022).
MARYLAND: Video showcases latest episode of MoCo ``organized
retail crime'' (July 21, 2023).--``Police on Thursday released
footage of six thieves conducting a burglary July 1 at a liquor
store in the White Oak area of Silver Spring. It was the latest
episode in Montgomery County of what's been termed `organized
retail crime.' Communiques from Montgomery County Police have
referenced at least 21 commercial burglaries this year, a trend
identified as `organized retail crime.' Since July 13, police
have announced arrests in 11 of the thefts.''
MICHIGAN: Detroit man arraigned for alleged $80,000
organized retail theft (September 18, 2023).--``A Detroit man
was arraigned on organized retail fraud charges for allegedly
stealing $80,000 of merchandise from Sam's Clubs in Michigan .
. . In April, Michigan State Police and Sam's Club
investigators began observing a group entering Sam's Club
locations and conducting `push-out' thefts, whereby people push
carts loaded with merchandise out the front door without
paying. Tansil allegedly stole bottled liquor, electronic
equipment and seafood from Sam's Clubs in Auburn Hills, Grand
Blanc, Lansing and Ypsilanti and planned to resell the
products.''
MICHIGAN: VIDEO.--Thieves use sledgehammers to smash into
Orion Township liquor store, steal $80K (November 12, 2021).
NEW YORK: 2 people wanted for taking off with $200,000 worth
of high-end liquor from Jericho store (October 27, 2023).--
``The owner of a Nassau County liquor store says $200,000 worth
of high-end bottles of alcohol was taken from his store in a
burglary Sunday night, with the suspects returning a second
time Monday morning for more . . . The owner said that
surveillance video shows those unknown people burglarize his
store around 10:15 p.m. and return overnight for hours to take
even more items . . . There have been multiple liquor store
robberies on Long Island recently. Nassau police confirm
they're investigating two separate incidents from earlier in
October. At this time, they cannot confirm if any or all of the
incidents are related. Detectives say two men broke into the
Wine Society liquor store in Greenvale on Oct. 9 and took off
with bottles of alcohol . . . Three people broke into Raeder's
Wines and Liquors in Albertson on Oct. 10 and took multiple
bottles . . . Suffolk police are also investigating a burglary
at a Smithtown liquor store. Officers say $25,000 worth of
alcohol was taken from the Wine Guy on Oct. 5.
OREGON: Portland liquor store owners ask State for help
curbing rise in robberies, thefts (September 25, 2022).--
``Burglaries, when someone breaks into the store after hours,
are up more than 500 percent since 2018. As for armed
robberies, at least four have been reported this year . . . On
top of the more threatening crimes, liquor store owners are
seeing people brazenly steal multiple bottles at a time. About
2 months ago, Hollywood Beverage found that a group of people
stole 18 bottles at once . . . Meanwhile, Miner took his
concerns to the State last week and asked for some type of
financial relief or help in curbing these crimes. The OLCC
responded by joining The Oregon Retailer Crime Association to
learn more on how to address retail crime . . . This string of
theft isn't happening exclusively in liquor stores--it's
impacting small businesses across the city.''
PENNSYLVANIA: Over 50 arrested after mobs ransacked
Philadelphia stores. Dozens of liquor outlets are shut down
(September 27, 2023).--``Dozens of people faced criminal
charges Wednesday after authorities said groups of young
people, apparently working together, smashed their way into
stores in several areas of Philadelphia, stuffing plastic bags
with merchandise and fleeing. Police said they made at least 52
arrests. Burglary, theft, and other counts have been filed so
far against at least 30 people, three of whom are minors,
according to Jane Roh, spokesperson for the Philadelphia
district attorney's office.
TENNESSEE:
BUSTER'S ROBBED 1st Time--Thieves steal over $10K in
alcohol from Memphis liquor store, police say (August 5,
2022).--Thieves busted into Buster's liquor store Friday
morning, stealing thousands in alcohol. According to the
Memphis Police Department (MPD), officers responded to a
burglary at Buster's Liquors & Wines, 191 Highland St.,
just after 3:30 a.m. Several suspects broke into the
business and stole over $10k in alcohol, police said.
FOX13's cameras captured smashed out window and broken
liquor bottles outside the store. VIDEO
BUSTER'S ROBBED 2nd Time--Nearly 10 suspects rob,
vandalize Buster's liquor store (June 7, 2023).--Buster's
on Highland was broken into and robbed of several items at
around 1:30 a.m. on Wednesday. According to the office
manager, about 10 vehicles were involved. A truck backed
into the business, and 12 people went in and burglarized
the store. An employee told WREG the suspects stole several
items. ``They went exactly to the Tequila sections that
they wanted,'' an employee said. ``They went to the Jack
Daniels. They went to the Crown Royale. They went to the
Moet. They knew what they were looking for.'' . . . ``The
damage is worse than what happened before because there's
some structural damage,'' the employee said. ``The last
time it was just mostly glass breakage and maybe one
shelf.'' The liquor store was burglarized last August.
Suspects reportedly stole over $10,000 of liquor, including
Hennessey and Don Julio. A $25,000 award was offered to
help find those responsible. Memphis police say the stolen
alcohol was advertised on Facebook and sold out of a South
Memphis apartment. VIDEO
BUSTER'S ROBBED 3rd Time--Buster's liquor store
burglarized for 3rd time within a year, one suspect
detained (August 17, 2023).--Buster's Liquors & Wines was
burglarized Wednesday night, and one of the suspects was
detained. Reports say 5 suspects backed a pick-up truck
through the glass window of the business. They brought
garbage cans on wheels with them to make it easier to steal
items. In all, they caused $20,000 worth of damages and
stole $5,000 in merchandise . . . Buster's was targeted in
June when 10 suspects backed a truck into the business and
stole multiple items. Before that, it was hit in August
2022. Over $10,000 worth of merchandise was taken and
allegedly sold out of a South Memphis apartment. VIDEO
Tips From Public Attributed to Arrests Linked to More Than
50 Liquor Store Raids (September 19, 2022).--``A recent
`summertime' string of wine and liquor store robberies took
place in Memphis, Tennessee. Over 50 businesses were
targeted, Local Memphis reported. Recent arrests have been
made thanks to tips submitted to Memphis CrimeStoppers. To
date, only a handful of arrests have been made with the
tips leading to at least a dozen suspects. Rewards of up to
$25,000 have been offered--a combination of fundraising by
the Memphis Area Liquor Retailers and `the regular
CrimeStoppers felony rewards,' Local Memphis stated.
More indicted in retail theft rings, Mulroy says (December
12, 2023).--``Another 12 people have been indicted in
connection with organized retail theft rings, Shelby County
District Attorney Steve Mulroy said Tuesday. That brings
the total number of people indicted in Operation Broken
Bottles to 27, he said. The operation is targeting smash-
and-grab theft operations. Smash-and-grab theft rings have
hit retail businesses across the city recently. Some, such
as City Gear and Buster's Liquors, have been hit multiple
times. It's causing some business to consider closing in
Memphis, Mulroy said. ``This situation is intolerable and
we won't stand for it,'' he said.''
WASHINGTON, DC: DC liquor store owner says she is leaving
due to rising crime (October 25, 2023).--``Angela Allred says
shoplifting comes with the territory of owning a business, but
after 7 years she says the theft is brazen, violent, and more
common. `Now people are just running in the store, grabbing it,
and then leaving, and as they are leaving, they're actually
laughing at us because they know there is nothing we can do,'
Allred told WUSA9. Allred says her shop, Imperial Wine and
Spirits located on 12th Street NW, is targeted almost daily.
She says the most recent incident was Tuesday in broad daylight
when a man stole a $50 bottle of rum right in front of her.''

A P P E N D I X I I

----------

Questions From Chairman August Pfluger for Michael J. Krol

Question 1a. Felony thresholds vary from State to State, ranging
from $200 in New Jersey to $2,500 in my home State of Texas. To
illustrate the difference, if a criminal were to steal clothing worth
$250 in New Jersey, they would be charged with a felony. If that same
criminal were to steal the same items at the same price in Texas, they
would be charged with a misdemeanor. Some States have increased their
felony thresholds over the past decade with dire consequences. For
example, in 2014, the State of California raised its felony threshold
from $400 to $950. This has led to a surge in criminal activity, often
in the form of organized retail crime.
Yes or no, do you believe raising felony thresholds encourages
criminals to engage in organized retail crime without fear of the
consequences?
Answer. Felony thresholds are a matter of State law, and Homeland
Security Investigations (HSI) does not collect data regarding the
impact that changes in State law have on criminal activity. Such
thresholds may be one of many factors weighed by individuals and
organizations contemplating criminal activity.
Question 1b. Yes or no, do you believe that the increase in
organized retail crime has caused U.S. businesses to close and
endangers the public?
Answer. Organized retail theft can endanger the public when
criminals disregard public safety. Public endangerment occurs in
instances where criminals dangerously flee a retail establishment with
stolen goods or utilize stolen vehicles to smash through store windows.
HSI acknowledges that stores have announced their closures following
incidents of organized retail theft, but HSI does not assess why
businesses have closed.
Question 2a. Combating theft and fraud is a never-ending battle as
retailers try to stay one step ahead of the thieves that prey on their
business and increase the costs to all of us.
From what your agencies are seeing, are organized criminal groups
leveraging emerging technology such as, the expanding on-line
marketplaces, cryptocurrency, or artificial intelligence to support
organized retail theft or the fencing and laundering of the proceeds?
Answer. Yes, HSI has investigated cases in which organized groups
are using on-line marketplaces to sell stolen goods. In some instances,
criminals have also exploited vulnerabilities in corporate point-of-
sale systems to facilitate the return of stolen merchandise for cash.
HSI also has seen organized groups use stolen merchandise for
international or trade-based money laundering.
Question 2b. Are you aware of any emerging technologies like facial
recognition or artificial intelligence that have been developed or
deployed by retailers or State, local, Tribal, and Territorial law
enforcement agencies to combat organized retail crime? If so, please
elaborate in detail.
Answer. HSI is collaborating with State and local law enforcement
partners and private-sector retailers to combat organized retail crime
(ORC); however, we do not have full visibility on all methods being
utilized to identify ORC suspects.
Question 2c. Are organized criminal groups using social media to
recruit individuals to engage in organized retail theft or by using
social media platforms' on-line marketplaces to fence stolen goods? If
so, please elaborate in detail.
Answer. HSI has identified individuals utilizing social media to
recruit individuals willing to participate in ORC. HSI also has seen
instances in which social media is used to lure individuals unwittingly
into large-scale ORC operations.
Question 3. One of the primary hurdles to successful prosecution of
organized criminal groups repeatedly targeting retail businesses is the
difficulty to tie an individual or group to multiple incidents across
several jurisdictions rather than looking at each incident
individually, which fails to recognize the toll a group may be taking
on a particular retailer.
How is Federal law enforcement assisting State, local, Tribal, and
Territorial law enforcement agencies and the retail industry with this
challenge and is there currently coordination and information sharing
taking place between your Federal agencies to tie these groups
together?
Answer. HSI through its National Lead Development Center (NLDC) is
engaged in close coordination and communication with Federal, State,
and local law enforcement agencies and retailers on ORC. The NLDC
intakes ORC leads and looks for patterns, trends, and commonalities to
link the ORC investigations over multiple districts to coordinate the
appropriate prosecution.
Operation Boiling Point is the HSI response to Organized Threat
Groups (OTGs) profiting from ORC, cargo theft, catalytic converter
theft, and other theft-related crimes harming the Nation's economy and
security. The HSI Financial Crimes Unit (FCU) continues to partner with
CLEAR (Coalition of Law Enforcement and Retail), the Retail Industry
Leaders Association, the National Retail Federation, the Transported
Asset Protection Association, the Association of Certified Anti-Money
Laundering Specialists, and several other law enforcement agencies,
companies, and organizations involved in this effort. The NLDC also
coordinates with the FCU and loss prevention and asset protection
representatives from industry on intelligence analysis, lead
dissemination, and case support for HSI field offices.
HSI field offices work closely with law enforcement partners to
combat OTGs in the communities we serve. Many of these investigations
begin with information sharing between HSI and local law enforcement
agencies. HSI also provides financial analysis to identify the
organizations behind the thefts and trafficking of stolen goods. HSI
has led coordination meetings involving multiple State and local
jurisdictions investigating the same ORC subjects/groups to share
information and evidence.
HSI provides education and outreach about ORC schemes, trends, and
applicable laws to Federal, State, and local law enforcement partners,
as well as private-sector retail partners. HSI Detroit, for example,
has partnered with members of the retail industry and local law
enforcement to investigate ORC, and participates in a working group
comprised of Federal, State, and local law enforcement in southeast
Michigan to combat overseas theft groups. Intelligence information is
shared within the working group, as well as through local intelligence
distributions. After committing these thefts, criminal actors may move
to other States, eluding State or local prosecution. As a result, HSI
Kansas City has initiated collaborations with local and State entities,
including State Attorneys General, to enhance the tracking and
prosecution of ORC activities.
In July 2023, retail partners and members of Federal, State, and
local law enforcement gathered at HSI New Orleans to announce an
Organized Retail Crime Alliance (ORCA) for the 4-State region of
Louisiana, Arkansas, Mississippi, and Alabama (LAMA). HSI New Orleans,
which oversees HSI operations in Louisiana, Arkansas, and Mississippi,
has been leading the LAMA ORCA to foster multi-jurisdictional
collaboration to identify, disrupt, deter, and dismantle the criminal
organizations that seek to exploit the retail industry. The partnership
promotes increased communication and collaboration between law
enforcement and the retail sector, including use of a common
information-sharing platform. Additional information regarding the LAMA
ORCA is available via: https://www.laretail.org/lama-orca.
Separately, in 2023, HSI New Orleans established an additional team
called the Organized Retail Crime Task Force (ORCTF) to assist with the
information being received from LAMA ORCA. The HSI New Orleans multi-
State ORCTF is comprised of Federal, State, and local law enforcement
officers, who collaboratively target the most egregious organized theft
groups. Specifically, the LAMA ORCA enables retailers to nominate
significant theft groups, referred to as Priority Regional Theft Groups
(PRTGs), for focused attention. Subsequently, the PRTGs are designated
by law enforcement because the retailers are the victims possessing
substantial data and intelligence to illuminate the groups, which in
turn, informs the decisions of law enforcement and their designation
for PRTGs.
Question 4. When we discuss organized retail crime and the
individuals or groups of individuals who are committing large-scale
theft, it is often unclear who we're referring to exactly. There are
reports suggesting these individuals are supported and operating at the
behest of Mexican cartels, Russian crime syndicates, or other
transnational criminal organizations. We have also seen reporting
suggesting some of these criminals participating in organized retail
crime are tied to terrorist groups.
Please clarify which Transnational Criminal Organizations, or
criminal groups represent the foremost threat in this space? Is it
cartels, sophisticated gangs, or foreign crime syndicates? Or, is it
more loosely affiliated groups of individuals that get together and
steal merchandise? Please provide a detailed description and list.
Answer. HSI, through its on-going investigations of ORC, has seen
the involvement of various transnational criminal organizations to
include South American theft groups, Romanian and Russian organized
crime, Mexican cartels, street gangs, and an array of domestic criminal
groups. For these criminal organizations, ORC can be an additional
revenue stream to bolster their criminal enterprises. In addition to
more sophisticated criminal organizations, HSI has also seen loosely-
affiliated groups of individuals commit organized retail crime.
HSI respectfully defers more detailed information to the
appropriate setting, to protect on-going investigations.
Question 5a. The Committee on Homeland Security received a letter
from CHEP, a Brambles company, that works with reusable pallets and
containers. The December 12, 2023 letter, which was entered into the
record, noted concerns from the supply chain logistics sector about the
theft by criminal organizations of their equipment, including wood
pallets, plastic shipping crates, or shipping containers--which are key
components in our country's supply chain and have been designated
critical infrastructure by the Department of Homeland Security.
Yes or no, is this a dilemma that HSI, the FBI, and/or the Secret
have identified, and committing resources to combat? If so, please
explain.
Answer. Yes, HSI is working to combat threats to the supply chain
logistics sector. ORC organizations need pallets and containers to move
large quantities of stolen merchandise. HSI has received reports about
stolen pallets, intermodal containers, intermodal container chassis,
and empty cargo trailers, which can disrupt operations.
Question 5b. In an effort to tackle this problem, what additional
resources or authorities are needed by Federal law enforcement agencies
and prosecutors, if any?
Answer. Existing HSI authorities provide the necessary framework to
combat ORC. Should additional resources be provided, they could be
directed to expand on-going efforts. Successful investigations and
prosecutions require resources for investigators, analysts, and
prosecutors, as well as training and coordination.
Question 5c. How exactly is Federal law enforcement assisting
State, local, Tribal, and Territorial law enforcement agencies and the
private-sector industry with this challenge and is there currently
coordination and information sharing taking place between your Federal
agencies and law enforcement partners to probe and prevent such crimes?
Answer. HSI, through Operation Boiling Point and the NLDC, is
assisting Federal, State, local, Tribal, and retail partners on suspect
identification, lead development, financial analysis, and prosecutorial
coordination. HSI field offices work closely with law enforcement
partners to combat OTGs in the communities we serve. HSI provides
investigative assistance, including financial analysis, surveillance,
and cell phone record exploitation to identify the organizations behind
the thefts and trafficking of stolen goods. Many HSI field offices
partner with local task forces to combat ORC.
For example, HSI Kansas City has been proactive in forging and
strengthening robust relationships with State and local partners, as
well as with the State's Attorney General's offices, while continuously
striving to enhance these vital partnerships. In Florida, the HSI Miami
El Dorado Taskforce and South Florida Retail Crimes Group are working
with State and local agencies to investigate and prosecute these
crimes. Together law enforcement is partnering with retail victims,
loss prevention investigators, and managers. HSI Miami has full-time
local taskforce officers assigned to specific groups to combat these
crimes.
In July 2023, HSI New Orleans, retail partners and members of
Federal, State, and local law enforcement formed the LAMA ORCA to
foster multi-jurisdictional collaboration to identify, disrupt, deter,
and dismantle the criminal organizations that seek to exploit the
retail industry and threaten our Nation's financial security. This
public-private partnership promotes increased communication and
collaboration between law enforcement and the retail sector partners
both in person via recurring information-sharing meetings and on-line
via the use of a common information-sharing platform. HSI New Orleans
further established a multi-State ORC task force, comprised of Federal,
State, and local law enforcement officers, to collaboratively target
the most egregious multi-jurisdictional violators as identified through
the LAMA ORCA information-sharing process. The HSI ORC task forces
empower State and local law enforcement to conduct large, complex
Federal investigations in collaboration with HSI Special Agents and to
refer such cases for Federal prosecution.
Question 6. Organized retail crime has become a significant threat
to public safety across the country. Many Americans have seen the
dramatic video footage of smash-and-grab attempts at retailers, such as
Nike, Nordstrom's, or Macy's. In addition, organized retail crime and
large-scale theft is taking place at smaller businesses in rural areas.
State, local, Tribal, and Territorial law enforcement entities and our
Nation's retail industry must have support from Congress and the
Federal Government to address this growing threat.
What concrete actions may Congress offer the most help to ensure
that Federal law enforcement agencies are properly equipped to assist
State, local, Tribal, and Territorial law enforcement entities?
Answer. One of the biggest hurdles in ORC investigations is
identifying the individuals involved in the theft. The most important
step Congress can take is to fully fund the fiscal year 2025 DHS Budget
Request, which includes requests for resources across HSI's
programmatic areas that will enable HSI and its partners to combat ORC.
HSI also appreciates efforts by Congress to bring awareness of this
issue, and foster collaboration between ICE and other stakeholders in
State, local, Tribal, and territorial law enforcement, as well as the
business community. HSI is committed to ensuring every law enforcement
agency--regardless of size, funding, or resources--has HSI's support to
carry out the work that is essential to securing the supply chains our
economy relies on and the safety of the American public. HSI stands
ready to engage with Members of Congress to educate and partner with
local stakeholders to better counter ORC.
Question 7. Yes, or no, do you believe that ORC has been
exaggerated and not a serious challenge? Please explain.
Answer. HSI is taking the threat of ORC seriously and working with
State, local, Tribal, and Territorial partners across the country, as
described above, to combat ORC and ensure the safety of the American
public.
Question 8. Yes or no, do you believe that ORC is nonviolent?
Please explain.
Answer. ORC crimes have the potential to become violent. Through
our ORC investigations, HSI has observed incidents wherein ORC
violators engaged in violent behavior.
Question 9. In HSI's efforts to combat ORC, has your agency ever
encountered examples of a connection between groups engaged in ORC and
human trafficking? If so, can you describe those connections and
identify any specific groups associated with these crimes?
Answer. HSI has no information at this time regarding a connection
between groups engaged in organized retail crime and human trafficking.

Questions From Chairman August Pfluger for Jason D. Kane

Question 1a. Felony thresholds vary from State to State, ranging
from $200 in New Jersey to $2,500 in my home State of Texas. To
illustrate the difference, if a criminal were to steal clothing worth
$250 in New Jersey, they would be charged with a felony. If that same
criminal were to steal the same items at the same price in Texas, they
would be charged with a misdemeanor. Some States have increased their
felony thresholds over the past decade with dire consequences. For
example, in 2014, the State of California raised its felony threshold
from $400 to $950. This has led to a surge in criminal activity, often
in the form of organized retail crime.
Yes or no, do you believe raising felony thresholds encourages
criminals to engage in organized retail crime without fear of the
consequences?
Answer. Felony thresholds are a matter of State law, and Homeland
Security Investigations (HSI) does not collect data regarding the
impact that changes in State law have on criminal activity. Such
thresholds may be one of many factors weighed by individuals and
organizations contemplating criminal activity.
Question 1b. Yes or no, do you believe that the increase in
organized retail crime has caused U.S. businesses to close and
endangers the public?
Answer. Organized retail theft can endanger the public when
criminals disregard public safety. Public endangerment occurs in
instances where criminals dangerously flee a retail establishment with
stolen goods or utilize stolen vehicles to smash through store windows.
HSI acknowledges that stores have announced their closures following
incidents of organized retail theft, but HSI does not assess why
businesses have closed.
Question 2a. Combating theft and fraud is a never-ending battle as
retailers try to stay one step ahead of the thieves that prey on their
business and increase the costs to all of us.
From what your agencies are seeing, are organized criminal groups
leveraging emerging technology such as, the expanding on-line
marketplaces, cryptocurrency, or artificial intelligence to support
organized retail theft or the fencing and laundering of the proceeds?
Answer. Yes, HSI has investigated cases in which organized groups
are using on-line marketplaces to sell stolen goods. In some instances,
criminals have also exploited vulnerabilities in corporate point-of-
sale systems to facilitate the return of stolen merchandise for cash.
HSI also has seen organized groups use stolen merchandise for
international or trade-based money laundering.
Question 2b. Are you aware of any emerging technologies like facial
recognition or artificial intelligence that have been developed or
deployed by retailers or State, local, Tribal, and Territorial law
enforcement agencies to combat organized retail crime? If so, please
elaborate in detail.
Answer. HSI is collaborating with State and local law enforcement
partners and private-sector retailers to combat organized retail crime
(ORC); however, we do not have full visibility on all methods being
utilized to identify ORC suspects.
Question 2c. Are organized criminal groups using social media to
recruit individuals to engage in organized retail theft or by using
social media platforms' on-line marketplaces to fence stolen goods? If
so, please elaborate in detail.
Answer. HSI has identified individuals utilizing social media to
recruit individuals willing to participate in ORC. HSI also has seen
instances in which social media is used to lure individuals unwittingly
into large-scale ORC operations.
Question 3. One of the primary hurdles to successful prosecution of
organized criminal groups repeatedly targeting retail businesses is the
difficulty to tie an individual or group to multiple incidents across
several jurisdictions rather than looking at each incident
individually, which fails to recognize the toll a group may be taking
on a particular retailer.
How is Federal law enforcement assisting State, local, Tribal, and
Territorial law enforcement agencies and the retail industry with this
challenge and is there currently coordination and information sharing
taking place between your Federal agencies to tie these groups
together?
Answer. HSI through its National Lead Development Center (NLDC) is
engaged in close coordination and communication with Federal, State,
and local law enforcement agencies and retailers on ORC. The NLDC
intakes ORC leads and looks for patterns, trends, and commonalities to
link the ORC investigations over multiple districts to coordinate the
appropriate prosecution.
Operation Boiling Point is the HSI response to Organized Threat
Groups (OTGs) profiting from ORC, cargo theft, catalytic converter
theft, and other theft-related crimes harming the Nation's economy and
security. The HSI Financial Crimes Unit (FCU) continues to partner with
CLEAR (Coalition of Law Enforcement and Retail), the Retail Industry
Leaders Association, the National Retail Federation, the Transported
Asset Protection Association, the Association of Certified Anti-Money
Laundering Specialists, and several other law enforcement agencies,
companies, and organizations involved in this effort. The NLDC also
coordinates with the FCU and loss prevention and asset protection
representatives from industry on intelligence analysis, lead
dissemination, and case support for HSI field offices.
HSI field offices work closely with law enforcement partners to
combat OTGs in the communities we serve. Many of these investigations
begin with information sharing between HSI and local law enforcement
agencies. HSI also provides financial analysis to identify the
organizations behind the thefts and trafficking of stolen goods. HSI
has led coordination meetings involving multiple State and local
jurisdictions investigating the same ORC subjects/groups to share
information and evidence.
HSI provides education and outreach about ORC schemes, trends, and
applicable laws to Federal, State, and local law enforcement partners,
as well as private-sector retail partners. HSI Detroit, for example,
has partnered with members of the retail industry and local law
enforcement to investigate ORC, and participates in a working group
comprised of Federal, State, and local law enforcement in southeast
Michigan to combat overseas theft groups. Intelligence information is
shared within the working group, as well as through local intelligence
distributions. After committing these thefts, criminal actors may move
to other States, eluding State or local prosecution. As a result, HSI
Kansas City has initiated collaborations with local and State entities,
including State Attorneys General, to enhance the tracking and
prosecution of ORC activities.
In July 2023, retail partners and members of Federal, State, and
local law enforcement gathered at HSI New Orleans to announce an
Organized Retail Crime Alliance (ORCA) for the 4-State region of
Louisiana, Arkansas, Mississippi, and Alabama (LAMA). HSI New Orleans,
which oversees HSI operations in Louisiana, Arkansas, and Mississippi,
has been leading the LAMA ORCA to foster multi-jurisdictional
collaboration to identify, disrupt, deter, and dismantle the criminal
organizations that seek to exploit the retail industry. The partnership
promotes increased communication and collaboration between law
enforcement and the retail sector, including use of a common
information-sharing platform. Additional information regarding the LAMA
ORCA is available via: https://www.laretail.org/lama-orca.
Separately, in 2023, HSI New Orleans established an additional team
called the Organized Retail Crime Task Force (ORCTF) to assist with the
information being received from LAMA ORCA. The HSI New Orleans multi-
State ORCTF is comprised of Federal, State, and local law enforcement
officers, who collaboratively target the most egregious organized theft
groups. Specifically, the LAMA ORCA enables retailers to nominate
significant theft groups, referred to as Priority Regional Theft Groups
(PRTGs), for focused attention. Subsequently, the PRTGs are designated
by law enforcement because the retailers are the victims possessing
substantial data and intelligence to illuminate the groups, which in
turn, informs the decisions of law enforcement and their designation
for PRTGs.
Question 4. When we discuss organized retail crime and the
individuals or groups of individuals who are committing large-scale
theft, it is often unclear who we're referring to exactly. There are
reports suggesting these individuals are supported and operating at the
behest of Mexican cartels, Russian crime syndicates, or other
transnational criminal organizations. We have also seen reporting
suggesting some of these criminals participating in organized retail
crime are tied to terrorist groups.
Please clarify which Transnational Criminal Organizations, or
criminal groups represent the foremost threat in this space? Is it
cartels, sophisticated gangs, or foreign crime syndicates? Or, is it
more loosely affiliated groups of individuals that get together and
steal merchandise? Please provide a detailed description and list.
Answer. HSI, through its on-going investigations of ORC, has seen
the involvement of various transnational criminal organizations to
include South American theft groups, Romanian and Russian organized
crime, Mexican cartels, street gangs, and an array of domestic criminal
groups. For these criminal organizations, ORC can be an additional
revenue stream to bolster their criminal enterprises. In addition to
more sophisticated criminal organizations, HSI has also seen loosely-
affiliated groups of individuals commit organized retail crime.
HSI respectfully defers more detailed information to the
appropriate setting, to protect on-going investigations.
Question 5a. The Committee on Homeland Security received a letter
from CHEP, a Brambles company, that works with reusable pallets and
containers. The December 12, 2023 letter, which was entered into the
record, noted concerns from the supply chain logistics sector about the
theft by criminal organizations of their equipment, including wood
pallets, plastic shipping crates, or shipping containers--which are key
components in our country's supply chain and have been designated
critical infrastructure by the Department of Homeland Security.
Yes or no, is this a dilemma that HSI, the FBI, and/or the Secret
have identified, and committing resources to combat? If so, please
explain.
Answer. Yes, HSI is working to combat threats to the supply chain
logistics sector. ORC organizations need pallets and containers to move
large quantities of stolen merchandise. HSI has received reports about
stolen pallets, intermodal containers, intermodal container chassis,
and empty cargo trailers, which can disrupt operations.
Question 5b. In an effort to tackle this problem, what additional
resources or authorities are needed by Federal law enforcement agencies
and prosecutors, if any?
Answer. Existing HSI authorities provide the necessary framework to
combat ORC. Should additional resources be provided, they could be
directed to expand on-going efforts. Successful investigations and
prosecutions require resources for investigators, analysts, and
prosecutors, as well as training and coordination.
Question 5c. How exactly is Federal law enforcement assisting
State, local, Tribal, and Territorial law enforcement agencies and the
private-sector industry with this challenge and is there currently
coordination and information sharing taking place between your Federal
agencies and law enforcement partners to probe and prevent such crimes?
Answer. HSI, through Operation Boiling Point and the NLDC, is
assisting Federal, State, local, Tribal, and retail partners on suspect
identification, lead development, financial analysis, and prosecutorial
coordination. HSI field offices work closely with law enforcement
partners to combat OTGs in the communities we serve. HSI provides
investigative assistance, including financial analysis, surveillance,
and cell phone record exploitation to identify the organizations behind
the thefts and trafficking of stolen goods. Many HSI field offices
partner with local task forces to combat ORC.
For example, HSI Kansas City has been proactive in forging and
strengthening robust relationships with State and local partners, as
well as with the State's Attorney General's offices, while continuously
striving to enhance these vital partnerships. In Florida, the HSI Miami
El Dorado Taskforce and South Florida Retail Crimes Group are working
with State and local agencies to investigate and prosecute these
crimes. Together law enforcement is partnering with retail victims,
loss prevention investigators, and managers. HSI Miami has full-time
local taskforce officers assigned to specific groups to combat these
crimes.
In July 2023, HSI New Orleans, retail partners and members of
Federal, State, and local law enforcement formed the LAMA ORCA to
foster multi-jurisdictional collaboration to identify, disrupt, deter,
and dismantle the criminal organizations that seek to exploit the
retail industry and threaten our Nation's financial security. This
public-private partnership promotes increased communication and
collaboration between law enforcement and the retail sector partners
both in person via recurring information sharing meetings and on-line
via the use of a common information-sharing platform. HSI New Orleans
further established a multi-State ORC task force, comprised of Federal,
State, and local law enforcement officers, to collaboratively target
the most egregious multi-jurisdictional violators as identified through
the LAMA ORCA information-sharing process. The HSI ORC task forces
empower State and local law enforcement to conduct large, complex
Federal investigations in collaboration with HSI Special Agents and to
refer such cases for Federal prosecution.
Question 6. Organized retail crime has become a significant threat
to public safety across the country. Many Americans have seen the
dramatic video footage of smash-and-grab attempts at retailers, such as
Nike, Nordstrom's, or Macy's. In addition, organized retail crime and
large-scale theft is taking place at smaller businesses in rural areas.
State, local, Tribal, and Territorial law enforcement entities and our
Nation's retail industry must have support from Congress and the
Federal Government to address this growing threat.
What concrete actions may Congress offer the most help to ensure
that Federal law enforcement agencies are properly equipped to assist
State, local, Tribal, and Territorial law enforcement entities?
Answer. One of the biggest hurdles in ORC investigations is
identifying the individuals involved in the theft. The most important
step Congress can take is to fully fund the fiscal year 2025 DHS Budget
Request, which includes requests for resources across HSI's
programmatic areas that will enable HSI and its partners to combat ORC.
HSI also appreciates efforts by Congress to bring awareness of this
issue, and foster collaboration between ICE and other stakeholders in
State, local, Tribal, and territorial law enforcement, as well as the
business community. HSI is committed to ensuring every law enforcement
agency--regardless of size, funding, or resources--has HSI's support to
carry out the work that is essential to securing the supply chains our
economy relies on and the safety of the American public. HSI stands
ready to engage with Members of Congress to educate and partner with
local stakeholders to better counter ORC.
Question 7. Yes, or no, do you believe that ORC has been
exaggerated and not a serious challenge? Please explain.
Answer. HSI is taking the threat of ORC seriously and working with
State, local, Tribal, and Territorial partners across the country, as
described above, to combat ORC and ensure the safety of the American
public.
Question 8. Yes or no, do you believe that ORC is nonviolent?
Please explain.
Answer. ORC crimes have the potential to become violent. Through
our ORC investigations, HSI has observed incidents wherein ORC
violators engaged in violent behavior.
Question 9. A recent Better Business Bureau study highlighted the
growing threat of gift card scams to retailers, citing a 50 percent
increase in these scams reported over the previous year. In many of
these cases, criminals, often overseas, persuade Americans to purchase
gift cards by impersonating service providers, government agencies, or
sweepstakes officials, amongst others. Once the victim provides the
gift card information, the fraudster can use the funds on-line or
purchase additional gift cards to obscure where the funds came from.
Many retailers are becoming more engaged in helping to protect and
assist victims of gift card fraud.
As one example, Walmart recently teamed up with the Secret Service
to intercept fraudulently-obtained gift card funds and redirect them
into an escrow account, which once confirmed as fraud, can be used to
repay victims. Walmart reported earlier this year that the partnership
led to the return of almost $4 million back to victims.
Please explain how the Secret Service is able to partner with
retailers like Walmart to return stolen funds back to victims and if we
can expect to see more partnerships like this developing across the
retail industry.
Answer. Response was not received at the time of publication.

Questions From Chairman August Pfluger for Jose A. Perez

Questions From Chairman August Pfluger for David Johnston

Question 1a. We have heard from several retail industry businesses
and representative organizations and there does not seem to be a
universally-accepted definition of organized retail crime.
Do you consider credit card and gift card fraud as well as skimming
attacks, credit card payment processing system hacks, and even
ransomware attacks as a part of organized retail crime that are
increasing costs for retailers?
Answer. At present, there is no universally-accepted definition for
organized retail crime (ORC). The National Retail Federation defines it
as theft or fraud activities conducted with the intent to convert
illegally-obtained merchandise, cargo, cash, or cash equivalents into
personal financial gain. It also must involve theft or fraud of
multiple quantities, conducted in concert by two or more people. ORC
typically involves multiple occurrences and may occur across several
stores and jurisdictions.
Organized retail crime frequently involves orchestrated efforts by
criminal enterprises to steal merchandise or monies from retailers on a
large scale. These enterprises or groups use others to commit crimes
involving the physical retail location, across the supply chain or
throughout a retailer's digital or ecommerce environment. These crimes
may not be known initially to be associated with organized retail crime
until further investigation occurs. The stolen goods or monies are then
resold through various channels, including on-line marketplaces,
ecommerce and other websites, peer-to-peer marketplaces, flea markets,
pawn shops, back into the legitimate supply chain, and even at
legitimate retail establishments.
Organized retail crime (ORC) can consist of any crime against
retail where the stolen goods or monies are meant to support a criminal
enterprise or structure that directs or supports the resale of those
stolen goods or monies back into the retail marketplace for profit
through their illicit activities.
ORC-related crimes can be conducted against retail store locations,
across supply chains, and in the cyber, digital, and ecommerce
environments of a retail entity. Credit card and gift card fraud along
with cyber crimes that include skimming and ransomware can be
considered ORC-related crimes if the victim(s) are retailers or the
retail customer, the crimes are committed to support a criminal
enterprise or structured organization, and the goods or monies received
from those crimes are to support the illicit resale of those goods or
monies for profit.
For example, ransomware or credit card skimming can be crimes
conducted against a retail environment by a cyber criminal or cyber
crime organization that obtains the personal and credit card
information of hundreds or thousands of individual customers. That
information can be obtained by an ORC group or sold via the dark web to
an ORC group, which uses the data to illicitly purchase large
quantities of merchandise or gift cards on-line from various retailers.
The merchandise or gift cards received are then re-sold on-line by the
criminals back to consumers or sold to distributors that resell it back
into the marketplace. As the stolen goods and monies make their way
back into our commerce, the ORC group obtains the proceeds of those
goods or monies sold or re-distributed.
This exact example was a scenario occurring to a national brand
retailer, where a group of criminals used compromised credit card
accounts, buying product on-line and picking merchandise up in store,
resulting in financial chargebacks over $430,000, and a loss of
merchandise. This single group committed crimes across several States,
including CA, IL, KY, OH, PA, and TX, with an expectation that they may
be based in Michigan. The investigations are still on-going. One of the
biggest challenges facing the investigation is the coordination and
support of various law enforcement agencies across multiple
jurisdictions.
Question 1b. How damaging are these types of fraud schemes versus
the physical theft of product that has garnered so much attention
lately?
Answer. On-line frauds and cyber crimes can result in a faster and
higher rate of loss. Cyber criminals or fraudsters often take advantage
of technology to accelerate their crimes and have more anonymity in the
cyber environment.
To our knowledge there has not been a comparison to determine the
level of damage or loss retailers experience between the physical theft
of product versus on-line or digital-related fraud schemes. Individual
reports have been published, but we are not aware of a collective or
comparison report.
Question 1c. Are these frauds also increasing year over year as
dramatically as the attacks on physical inventory?
Answer. Due to not having any specific comparison, we cannot
compare these frauds directly to physical thefts, but anecdotally the
retail industry does see constant and increasing fraud, as they do
physical theft and in-store criminal activity.
The following report links from both the FBI and the FTC provide
the impact of various internet- and consumer-related frauds. We provide
these reports as examples of personal or consumer-related complaints of
stolen information, frauds and schemes, and criminal activities that
often result in the eventual acquisition of stolen merchandise or
monies from the retail industry.
FBI Internet Crime Report 2022, Internet Crime Complaint
Center (IC3), March 2023
Federal Trade Commission, Consumer Sentinel Network 2022,
February 2023
Question 2a. A recent report released by Mayor Adams of New York
highlights that organized retail criminals exploit New York law by
stealing less than $1,000 of merchandise, thereby avoiding a felony
charge. California has a similar statute that categorizes theft of less
than $950 as a misdemeanor.
Is this practice of stealing less than $1,000 worth of merchandise
common, and what other practices and tools do these criminals utilize
to commit crimes, avoid detection, and evade prosecution?
Question 2b. Several States have recently passed laws aimed at
increasing penalties on so-called ``boosters,'' the lower-level
criminals who repeatedly shoplift, in the hope that this will
eventually lead to the identification of organized crime kingpins. How
effective have these measures proven thus far?
Answer. (See response below--duplicate question.)
Retail asset protection teams and/or law enforcement investigations
have shown evidence that retail theft criminals are familiar with laws,
felony threshold levels, retail security measures, and even law
enforcement capabilities. This awareness does afford the criminals with
knowledge to steal below felony thresholds, choose specific retail
locations, target unprotected merchandise, and even identify what tools
are needed to steal protected merchandise.
Felony threshold laws vary from State to State, ranging across the
Nation from $200 to $2,500. For many States, these thresholds serve as
limits to what retail thieves will steal at a given time. These
criminals realize that remaining below these thresholds limits the
seriousness of the crime and its subsequent consequences. Retailers
believe laws that include aggregation of incidents or total theft value
over a period of time help address the practice of individual thefts
below the felony threshold, and therefore aid in reducing overall
retail theft.
Evidence of tools, methods, and practices are seen more regularly
in today's retail theft environment. Organized and/or professional
criminals use tools as simple as hammers and crowbars to smash locked
cabinets or cases, to more sophisticated ``booster skirts'' or ``foiled
lined theft bags'' to conceal and counter anti-theft measures, to
medical masks and hooded clothing to conceal physical appearance and
reduce video surveillance or witness detection. False identifications
are used in refund schemes, fraudulent purchases, or to make arrest
history or immigration status difficult.
Many of these tools, methods, and practices are highlighted on the
Operation Boiling Point website, provided by DHS Homeland Security
Investigations, including those used by transnational and highly
sophisticated international theft groups.
Question 3. Several States have recently passed laws aimed at
increasing penalties on so-called ``boosters,'' the lower-level
criminals who repeatedly shoplift, in the hope that this will
eventually lead to the identification of organized crime kingpins.
In your view, how effective have these measures proven thus far?
Answer. Several States have passed laws specifically focused on
organized retail criminal networks, aggregation of theft or increasing
penalties involving retail crimes that involve the use of specific
tools, tactics, or threats. The focus of these laws is the repeat
offender or those stealing for the sole purpose of reselling the stolen
merchandise to another source (person, business, organization) that
will resell the stolen goods.
At present, it remains too early to determine the overall
effectiveness of these laws. Several States have recently passed laws
and/or established task forces to investigate and prosecute using these
new laws.
Without specific data, I can state through retailer conversations,
news media, and learnings from law enforcement agencies, the number of
apprehensions and prosecutions of those above the ``booster'' appears
to be increasing. This may be an early indicator that these types of
laws are having a positive effect, but only time will tell.
An ORC investigation is a process, one that often takes months to
years to detect and identify those leading or the ``kingpins'' of a
network or group. Often involving interstate or transnational activity,
investigations may be more challenging, especially to local or State
law enforcement agencies.
Question 4. Yes, or no, do you believe that ORC has been
exaggerated and not a serious challenge? Please explain.
Answer. No. Organized retail crime is not being exaggerated and
continues to be a serious and growing challenge to the retail industry;
our workers, consumers, and communities; and the larger U.S. economy.
Having more than three decades of experience in retail asset
protection, investigations, and global security, what I see happening
today is unprecedented.
Most retail crimes including shoplifting, burglary, and credit card
fraud are not new. Even professional shoplifting (a former term for
organized retail crime) is not new. What is different is the ease of
criminals to network, organize, and establish the means of reselling
merchandise or monies stolen from the retail ecosystem. Technology has
afforded greater opportunities to organize and communicate. On-line
marketplaces have provided opportunities for organized theft groups to
resell stolen merchandise to a wider audience. Even consumers seeking
lower prices for products have increased the demand for stolen
merchandise, which can be resold at lower prices.
My professional opinion is that the crimes that occur in our retail
supply chain, retail stores, and on-line retail environments will
continue to rise until efforts increase to detect, disrupt, and
dismantle the organized retail crime networks creating the demand for
these crimes. ORC networks orchestrate, influence, and create demand
for those committing theft and fraud in our retail environments.
Shoplifting, cargo theft, burglaries, smash-and-grabs, and various
frauds are just a means to their end. Varying in scope and scale, these
networks range from loosely-organized, local and regional groups to
highly-sophisticated hierarchies operating at a transnational level.
These criminal groups thrive on enabling others to commit their
crimes. They prey on the homeless, the addicted, and even the victims
of human trafficking. They profit from the reselling of stolen goods
on-line, re-channeling and re-distributing goods back into our
marketplace and the transportation of stolen goods and proceeds beyond
our border. What's most important that many fail to recognize is that
these groups use ORC as a gateway crime, with profits funding more
nefarious activities including drugs, weapons, and human trafficking.
These groups must be the focus of our local, State, and Federal
efforts.
Question 5. Yes or no, do you believe that ORC is nonviolent?
Please explain.
Answer. No. Violence continues to occur at increased levels with
those criminal activities involving or associated with organized retail
crime. ORC is not a victimless crime.
Retail asset protection professionals inform me repeatedly of the
increase in threats, assaults, and acts of violence against their
employees, security officers, and customers. Several reported that the
number of acts of threat or violence reached upwards of 75 percent year
over year prior to the holiday season. One retailer reported to me a
statistic that, across their organization, employees had to disengage
from 77 percent of shoplifting apprehensions due to the threat of
violence--up from 64 percent of apprehension incidents the year prior.
Our 2023 National Retail Security Survey, representing 177 retail
brands, found that 88 percent of asset protection leadership stated
shoplifters are more or much more aggressive and violent compared with
1 year ago; 66 percent stated that those determined to be involved in
ORC-related shoplifting were more aggressive and violent than the
previous year.
Violence in the retail store is of serious concern. Beyond the loss
of product, retail CEOs, executives and asset protection professionals
view the safety of retail workers and customers to be a priority. The
violence is due to those stealing products, knowing that the product
can be resold through an ORC group or effort. Retailers continue to
speak of incidents involving the use of weapons like mace, bear spray,
knives, and guns. Some of these criminals have set fires in stores to
create a distraction. Extremely concerning is the depressing fact that
several retail workers have been killed during recent theft incidents--
including trained security personnel as well as retail workers serving
in customer-facing roles.
The violence, and threat of violence, in the retail environment
impacts a retailer's ability to hire and retain labor. The threat of
violence impacts employee morale, causes undue stress, and impacts
employee and customer trust in the retail industry. Retailers have
increased violence prevention training, mental health support, and
security presence to keep their employees safe.

Questions From Chairman August Pfluger for Summer Stephan

Question 1a. We have heard from several retail industry businesses
and representative organizations and there does not seem to be a
universally-accepted definition of organized retail crime.
Do you consider credit card and gift card fraud as well as skimming
attacks, credit card payment processing system hacks, and even
ransomware attacks as a part of organized retail crime that are
increasing costs for retailers?
Answer. The laws governing organized retail crime do not commonly
include credit card and gift card fraud and other crime schemes.
However, these types of fraud schemes contribute to the overall harm
that retailers small and large are inflicted with.
Question 1b. How damaging are these types of fraud schemes versus
the physical theft of product that has garnered so much attention
lately?
Answer. The variety of fraud schemes have a tremendous negative
impact on retailers, yet they generally do not produce the same
physical threat and fear to employees and customers as the ``smash-and-
grabs'' that they experience.
Question 1c. Are these frauds also increasing year over year as
dramatically as the attacks on physical inventory?
Answer. We continue to see cases related to the use of stolen
credit cards and the use of skimmers in San Diego County. Unlike credit
card fraud and cyber intrusions, the attacks on physical inventory
result in a traumatic emotional impact on those retail employees and
consumers that are present during the thefts/robberies, and they
produce a ripple effect in the community at large. Many times, these
witnesses/victims sustain fear and concern for their physical safety
and well-being that can be on-going. Each type of crime requires
appropriate laws, investigative strategies, resources, and prosecution,
along with stakeholder education and prevention to effectively reduce
it.
Question 2a. A recent report released by Mayor Adams of New York
highlights that organized retail criminals exploit New York law by
stealing less than $1,000 of merchandise, thereby avoiding a felony
charge. California has a similar statute that categorizes theft of less
than $950 as a misdemeanor.
Is this practice of stealing less than $1,000 worth of merchandise
common, and what other practices and tools do these criminals utilize
to commit crimes, avoid detection, and evade prosecution?
Answer. In San Diego County, retail theft under $950 is a common
crime. In 2014, California increased the felony theft threshold to $950
and eliminated increased punishment for repeat, habitual stealing of
under $950. We have received reports over the years where bad actors
willingly admitted to law enforcement that they know nothing will
happen to them because the theft is only a misdemeanor. We have seen
cases where individuals steal from different stores on different days
allowing them to stay under the $950 threshold each time.
We have seen numerous methods used to commit these thefts and avoid
detection:
Criminals use tactics to distract store personnel to hide
thefts.
Others have been known to brazenly go to one part of the
store--take a bolt cutter for sale in the store (as one
example) and use it to cut off a lock on a display case to then
steal the contents in the case.
Some use bags lined with aluminum to defeat the exit
sensors.
It is common for criminals to simply push carts full of
store items out the door with employees looking on with
desperation. Employees tell us that they feel trapped between
store rules created for their safety that require them to not
interfere and their own sense of despair over the wrong they
are witnessing and the feeling that the losses reduce their
chances of getting better pay for their hard work and
contribute to store closures that can cost them their
livelihood.
Some enter stores with receipts from an earlier purchased
item, grab a new item from inside the store and then take the
new item to the return counter to get paid the value of the now
stolen (new) item.
Some hide higher-priced items within boxes for lower priced
items to secrete the higher priced items out of the store--
paying only for the lower-priced box item.
Some rush in quickly in numbers and take multiple high-
priced items to overwhelm any potential security.
Some conceal identity by using stolen cars, rental cars, or
cars with covered license plates to hide their identity from
license plate readers as they drive away from the crime.
Some use COVID masks or other face coverings which makes
identification difficult.
Question 2b. Several States have recently passed laws aimed at
increasing penalties on so-called ``boosters,'' the lower-level
criminals who repeatedly shoplift, in the hope that this will
eventually lead to the identification of organized crime kingpins. How
effective have these measures proven thus far?
Answer. California has not had success passing new effective laws
to deal with the habitual offenders ``boosters'' that steal under the
felony threshold amount. Recently, the legislature codified existing
law that permitted aggregation in very limited situations where
multiple acts of theft are committed against the same owner pursuant to
one intention, one general impulse, and one plan. Because this is high
bar for prosecutors, its application has been very limited and may face
legal challenges if it doesn't comport with the intent of proposition
47.
Our office's specialized organized retail crime team investigates
the cases using multiple avenues of evidence including cell phone,
social media, and video evidence to uncover the higher-level organizers
of these criminal syndicates.
Question 2c. In your view, how effective have these measures proven
thus far?
Answer. In our county, we have used the organized retail theft
statutes to bring justice and obtain higher sentences to increase
accountability and deterrence in our region. We need stronger laws for
the individual habitual offenders that are not as dramatic and
instantly damaging as the ``smash-and-grabs'' but do have a long-term
effect. They create a slow bleed and a demoralizing effect on employees
and managers of large and small businesses along with severe negative
economic impacts. We continue to evaluate cases individually to assess
the correct level of accountability, recognizing that certain youthful
offenders and non-repeat offenders can benefit from treatment to
address the underlying causes for their conduct, but other habitual or
organized criminals deserve strict consequences.
Question 2d. Yes, or no, do you believe that ORC has been
exaggerated and not a serious challenge? Please explain.
Answer. The issue of ORC and habitual theft is a serious challenge
that in our experience is not exaggerated--however there are
inconsistent figures regarding the amount of losses and the prevalence
of the criminal activity. Our experience tells us that multiple factors
contribute to the disparities in the figures because many States
including California did not even have Organized Retail Theft statutes
until recently. Different stores track losses more generally to include
fraud-related losses along with organized retail theft and theft. Law
enforcement also does not have accurate data because many theft
instances are not reported by store managers and owners who feel that
nothing is going to happen especially when crimes against them are
categorized as misdemeanors no matter how many times they are
committed. As an example, I talked to one frustrated small business
owner in my community who said that he places his less expensive
merchandise (perfume) at the front of his store because he knows people
are going to steal in this current environment, so he might as well
offer up his less expensive merchandise. That is a sad commentary. We
also have stores that leave their cases unlocked at night when the
store closes so that burglars will take the product but and hopefully
not break the expensive locked display cases. This is an unacceptable
state of affairs.
Question 3. Yes or no, do you believe that ORC is nonviolent?
Please explain.
Answer. The law categorizes Organized Retail Crime as nonviolent.
Having talked to employees, loss prevention personnel, and customers
who have been victims to ORC, their experience is one of fear and
trauma which is very similar to experiencing a violent crime under the
law. I do not view ORC as purely economic crime but rather as crime
against human beings that puts them at risk of harm and leaves them in
a state of vulnerability. In fact, many instances of ORC include or
become a violent crime. Our stores have reported an increase in
violence during thefts. A number of these crimes result in physical
altercations or threats of harm. There are examples of loss prevention
officers or store personnel in San Diego County being assaulted or
threatened to be assaulted with fists or weapons. Store personnel have
described the fear they sustained after a few people run into a store
and openly grab numerous products and run out without touching anyone.
This type of crime is unsettling and causes emotional trauma to all
who are present whether it be store personnel or customers. Some
personnel have stated that they are afraid to go back to work after
such an event even when physical touching did not occur. There have
been many recent cases in San Diego County where perpetrators knew that
they only have to display a weapon (examples--a knife folded up, a
pellet gun tucked in a waistband), and security will not interfere.
It's the mere threat of violence that works and has become more and
more common for our local store loss prevention officers.
Additionally, in San Diego County, we have had cases where the ORC
participants flee in vehicles at high speeds with reckless driving,
sometimes striking other cars or bicyclists; and some have thrown
products out of their windows during pursuits on the freeway, further
endangering the public.
Of course, we can't forget that in California and across the
Nation, lives of employees have been taken by criminals in the course
of committing theft.
Question 4. There are numerous pieces of legislation that have been
introduced to help combat ORC. In your opinion, what piece of
legislation, if passed by Congress and signed by the President, would
have the most instant impact in effectively combating ORC? Why?
Answer. I am aware of 4 bills currently introduced to help combat
ORC--S. 139, H.R. 895, S. 140, and H.R. 316.
While all these bills proposed would positively impact our united
struggle against ORC, we believe H.R. 895 and S. 140, its Senate bill
companion, cover a critical need to coordinate efforts in order to
combat this organized crime more effectively. H.R. 895/S. 140 seeks to
create an ``Organized Retail Crime Coordination Center''--which, under
the text of the bill, is intended to coordinate efforts not only with
Federal agencies but also with State and local agencies and with the
retail stores. The bill calls for the sharing of information and
efforts by a team.
We recommend that these bills be amended to include the addition of
local prosecutors such as myself to the coordinated task forces.
District attorneys are your local prosecutors with direct access and
partnership with local law enforcement and can bring important insight
and contribution to the task force. Our success in San Diego County is
based, in large part, on the team network we have developed with local
law enforcement and prosecutors in our various cities and nearby
counties along with our relationships with our major retailers. As you
are aware, these groups target multiple jurisdictions at once and
through coordinated efforts, here in San Diego, we have been able to
identify perpetrators and put together large loss cases involving
multiple thefts. It is our hope the same can be true at the Federal
level. The coordination center contemplated could benefit
investigations across the board and hopefully provide the same type of
teamwork which would result in large successful prosecutions.
Question 5. There are more than 30 States that have passed ORC
laws, while other States are considering similar measures. Please
elaborate on these efforts and how they could help address the rise in
ORC.
Answer. In my opinion, the laws that could have the greatest impact
on ORC would be the following:
A law that would allow all the ORC that occur in various
counties in a particular State to be prosecuted in a single
jurisdiction by the local prosecutor that has the readiness,
passion, and resources to bring a complex case to justice. That
would allow the penalties (and accompanying deterrent effect)
to be increased. Additionally, such laws would promote judicial
efficiency and save money when violators are not punished in
multiple counties in sequential order.
A law that would increase consequences commensurate with the
crimes and the criminal history of the offender to include
creating new and stronger aggregation and great financial
taking laws.
A law that would increase consequences whenever an object
that threatens safety is used even if it is used on physical
objects such as doors, windows, and display cases in the
presence of people.
Laws that would curtail the sales of stolen items in the on-
line marketplace. Strengthening the INFORM act by providing
more resources to investigate those cases. If there were less
opportunities to re-sell the items, the perpetrators would be
less likely to steal. We must remember that there is a
relationship between the increase in ORC and repeat theft with
the proliferation of unregulated on-line market spaces that
were used as anonymous pawn shops. Enforcing the regulations
brought about by the INFORM act will be pivotal to reduce this
criminal activity.
Question 6. Do you believe that the rise in organized retail theft
is exacerbated by certain bail reform measures, such as in Los Angeles
or New York City? If so, what do you recommend would help combat this
problem?
Answer. It is important that persons who pose a threat to the
community by the demonstrated facts of the current crime including ORC,
along with their past criminal history and history of failure to appear
be brought before the Judge and not released before all the factors
relevant to detention under the law are evaluated giving consideration
to community safety.

Questions From Chairman August Pfluger for Scott Glenn

Questions From Chairman August Pfluger for Abby Jagoda

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