Enhancing Loss Prevention

• By Ralph C. Jensen
• Nov 01, 2011

Do you ever wonder why commodities are so expensive? I do, and I ponder the possibilities of lowering the cost of goods. The problem is thieves—inside and outside the retail setting.

Thieves are responsible for millions of dollars of lost merchandise. They are directly responsible for the price of goods being raised to compensate for items taken out the back door. Whether it’s a ring of highly sophisticated thieves or an individual store employee, stealing merchandise is a problem.

Recently, Dallas’ local CBS 11 News had exclusive access to raids across Dallas County as law enforcement agencies executed “Operation No Return.” The county’s district attorney’s office arrested 14 people accused of operating an organized crime ring involving stolen gift cards and retail clothing. The day this information was released, three more people were expected to be arrested.

The investigation took a year, and, in the end, authorities were able to shut down what they called a “major and sophisticated” retail theft ring.

Here’s how the theft ring operation worked: “One person would provide the transportation; she would wait out in the car while one individual went out and actually stole the merchandise,” said Tony Robinson, chief investigator for the Dallas County District Attorney’s Office. “She [the shoplifter] would leave the store, get back in the car, they’d drive to another retailer and the person that was driving would get out and go exchange the merchandise.”

This was a very clever bunch. They would often accept gift certificates for the stolen merchandise they returned to the retailers. Once the gift cards were obtained, they would sell them on eBay, Craigslist or even Facebook. According to investigators, the suspects got away with hundreds of thousands of dollars in merchandise.

So, who absorbs the loss? You and I as consumers, sure, but most definitely the retailer takes the brunt of the theft and associated costs.

“To take this kind of loss, we’re talking in excess of $400,000 that we know of,” Robinson said. “It’s a major impact on a corporation’s bottom line.”

In this particular case, those arrested face charges of engaging in organized crime and could serve from two to 10 years in jail and fines up to $10,000. Hopefully, the courts will understand that, if convicted, these people have truly been a menace to society.

Statistics show that employees actually steal more from retailers than any highly sophisticated ring of thieves. I suppose when an employee gets caught, the news generally isn’t that spectacular, at least not like the trio busted in Operation No Return.

Kelvin O’Brien lived the high life for a while. He and a couple of associates have been accused of swiping more than $6 million in gold, watches and diamonds from Karat 22, a Houston jewelry store.

O’Brien, his brother John and Jason Kennedy have been charged with organized crime after they allegedly targeted a number of high-end stores. The three are believed to be responsible for as many as 30 thefts in Texas and Oklahoma, dating back to 2000. Their modus operandi included cutting a hole in the roof of the store and cutting their way into vaults.

The Karat 22 store owner told investigators he was alerted during the night that his store was under siege, but when he checked security cameras from his home computer, he didn’t see anything out of the ordinary. However, upon arriving at the store the following morning, he realized he had been burglarized. He determined 155 kilos of 22-carat gold, precious stones and Rolex watches were stolen. Fortunately, surveillance video from a nearby business showed a pickup truck cruising the area on the night of the robbery, and at about 4:30 a.m. two men could be seen dragging heavy objects from the store to the truck.

Thank goodness for surveillance video. It helped police identify the truck that belonged to Kennedy. Investigators also found several cut blades at the scene of the crime, apparently used to cut through the vault. Put to the test again, investigators found that the blades are sold exclusively at The Home Depot, and thanks again to video surveillance footage, they found John O’Brien buying some of the blades at a store near his home in Fort Worth, Texas.

Theft begets greed, and the O’Briens and Kennedy have shown how greed will land them in jail, hopefully for a long time. The brothers expeditiously filled two Home Depot buckets with 99 pounds of melted-down gold, which they sold to Millennium Precious Metals for $1.6 million on Feb. 7. Incredibly, only four days later, the O’Briens were back to sell another 85 pounds of melted gold, netting an additional $1.3 million.

Soon after the money was wired to their individual bank accounts, Kelvin O’Brien paid cash for a $455,000 home, put in an $85,000 pool, paid cash for a $100,000 Land Rover and bought a $100,000 boat. Kennedy has already confessed, and, thankfully, O’Brien will never enjoy any of his allegedly ill-gotten gains.

This and many other examples are reasons security is necessary in the workplace. Take a look around; there are cameras and surveillance solutions everywhere. The security industry is growing, and, with that growth, video surveillance is among the technologies that are improving by leaps and bounds.

This article originally appeared in the November 2011 issue of Security Today.