America's silent crime: organized retail fraud spreading

GRAND RAPIDS, Mich. (WZZM) -- As the Christmas shopping season gets underway, police and retailers are keeping close watch on what is called the nation's silent crime: Shoplifting.

Shoplifting has grown into a $30 billion industry; an economic drag that can no longer be dismissed as the traditional "five-finger discount.''

It is more organized, more professional and far more pervasive than people think. Only about 20 percent of shoplifters are prosecuted, according to law enforcement estimates in Michigan.

"Organized Retail Crime is not shoplifting. It's a premeditated crime committed by sophisticated criminals,'' said William J. Hallan, chief operating officer for the Michigan Retailers Association in Lansing.

"They know what they're searching for and they often go in with a shopping list of items,'' Hallan said. "They're stealing it to resell to further other criminal activities.''

Smaller, pricier items that can be easily concealed are targeted. The list includes teeth whitening strips, iPhones, cologne and medications.

"A lot of times I'll take orders from people and steal what they want,'' said Douglas Loran Vanwyk, 32, to Grandville police after they arrested him in February for stealing glasses frames from Pearle Vision, according to a police report. Vanwyk said he resells the frames at half-price to help pay child support.

"People have come in with shopping lists, so they're actually going shopping for the items they intend to sell,'' Kentwood Police Chief Tom Hillen said. "We've actually had cases where our guys have apprehended people who were going out to their car, dumping merchandise into their car and coming back in.''

Muskegon County Chief Assistant Prosecutor Timothy M. Maat says his office typically sees two types of professional shoplifters -those feeding drug habits and those working for a larger organization.

"We'll typically see a drug addict stealing and converting that property so that they can either have cash or actually trade it for drugs,'' he said. "Then there are those who will literally set up a store and try to sell this property on eBay or Craigslist or other organizations.''

Recent thefts of baby food formula fall into the latter category, he said. A mother and daughter from Montcalm County face arraignment in Muskegon District Court Tuesday for stealing baby food formula from a Meijer store in Norton Shores.

Both were convicted in Montcalm County of shoplifting from a Walmart store in Greenville and sentenced to six months' probation. A week after the Oct. 27 sentencing, Norton Shores police released surveillance photos of two women suspected of stealing more than $1,000 worth of baby formula. It did not take long for investigators to identify the Stanton women.

They're being charged with 1^st degree retail fraud, meaning the items have a value exceeding $1,000. A second charge of Organized Retail Fraud alleges the items were stolen with the intent to resell. Under Michigan's Organized Retail Crime statute, it does not matter how much the stolen items are worth; prosecutors only need to show the defendants sold, or intended to sell, the stolen goods. The law hit the books in spring, 2013.

"We saw this as a really useful opportunity to employ another tool to combat shoplifting – the organized aspect of it,'' Maat said. "Since the enactment of the statute, we've actually filed 57 different cases, so we've wasted no time in terms of using this tool to combat this very serious problem.''

The statute is particularly effective in targeting people who know how to work around existing retail fraud statutes, said Eaton County Prosecutor Douglas R. Lloyd, who sits on the state's four-member Organized Retail Crime Advisory Board. Up until last year, stealing items worth less than $1,000 was a misdemeanor. Not anymore. Michigan's Organized Retail Crime Act makes it a felony to steal items with the intent to resell. Offenders face up to five years in prison.

It was used to charge a man who stole replacement parts and equipment for snow blowers, string trimmers and other power tools at several farm equipment stores in the Lansing area. The man kept the value of each haul at less than $200, so he'd only face misdemeanor charges if caught, Lloyd said.

"He'd sell the items to individuals or return the items for cash,'' Lloyd said. "He had 20 convictions for retail fraud third-degree because he never stole more than $200 at any one time.''

On-line fencing

Michigan is one of 26 states with criminal statutes targeting organized retail crime. It's even got a name: E-fencing.

"They'll literally set up a store and try to sell this property, whether it's eBay or Craigslist or any other organization,'' Maat said.

That's what helped Kentwood police arrest Shavon Tajay-Terrell Holt, who stole more than $1,000 in merchandise from the Victoria's Secret on 28^th Street SE between Oct. 1, 2013 and March 1, 2014. Kentwood police interviewed him after finding Facebook postings showing brand new items offered for sale, court records show. Holt was sentenced to 2 ½ to 20 years in prison.

"The actual key to success in that case was the interaction with the store, in them saying 'hey, I think we have a problem here,''' said Hillen, the Kentwood Police Chief. "A lot of times things just didn't get reported. We've got to know. You've got to report it because it helps us build a pattern.''

But shoplifting – and efforts to thwart it – is something retailers are reluctant to discuss. Officials with Woodland, Centerpointe and Rivertown Crossing malls declined to be interviewed for this story. A Meijer spokesman also refused comment.

A prime destination for shoplifters is the retail corridor along 28^th Street SE encompassing Grand Rapids and Kentwood. More than 220 shoplifting complaints have been filed since June along a ¾-mile stretch of 28^th Street between Woodland and Centerpointe malls. Businesses targeted include Nordstrom Rack, TJ Maxx and JC Penney.

But the premier target is Meijer. Its store on 28^th Street near Kalamazoo Avenue SE has been hit 114 times since June; the Knapp's Corner Meijer 30 times, according to police reports.

West Michigan is seeing numbers increase as out-of-town thieves come to the area, some from Detroit. The Motor City this year joined the Top Ten list of cities with the greatest incidents of organized retail crime, according to the National Retail Federation.

"What we're seeing is the phenomenon moving to more of the suburban stores because it's not viewed as serious of a problem there,'' Hallan said. "Nine out of 10 retailers have been subject to organized retail crime in the last year; that number is astounding.''

Professional shoplifters work in teams. One keeps the clerk distracted while others stuff items into purses and bags. They're often lined with foil to keep anti-theft tags from setting off alarms. Or thieves simply cut off the anti-theft devices – a crime in its own right. They'll leave through fire exit doors or go out the front door to waiting vehicles.

After Kentwood police assigned an officer to Woodland Mall fulltime, patterns were quickly recognized, Hillen said.

"It's amazing how many times people we'll stop have the foil-lined bags,'' Hillen said. "You can pick up on that right when they walk in the store. So then they're able to potentially watch the parking lot for people dumping material and coming back in.''

Added Hallan: "I don't think they're always stealing thousands of dollars of merchandise every time, but they may hit five stores in one day and after a while, that does add up.''

That's what police discovered when they arrested Theodore Ryan Haugland in August, 2013. Wyoming police questioned him after Haugland pulled into Lemery Park at 5:15 a.m. He told police he just purchased two booster seats at the Meijer store in Grandville, which were boxed and in the backseat of his vehicle.

Police found three rolls of packing tape and two more booster seats in his trunk. The original tape on the boxes had been cut and resealed, police reports show. In-store video shows a man identified as Haugland self-scanning a booster seat box and leaving. The actual seat was left in the swimming supplies aisle. Inside the box, police found $1,791 in merchandise, including Crest whitening strips, Rogaine and hair nutrition tablets. Between the booster seat boxes and a motel room he rented in Fruitport Township, police seized $6,600 worth of stolen merchandise, police reports and court records reveal.

Haugland was sentenced to nearly six months in jail and ordered to pay restitution for the Grandville thefts.

"They're always coming up with ways to defeat things that we've put in place.'' Hillen said of the professional thieves. "And you know, in probably six months it'll be something else. Because that's the way this goes.''