00:00:03
It's a chilly, clear
morning in the picturesque
00:00:05
foothills of San Diego
County as we head to a
00:00:08
suspected crime scene.
00:00:09
A convoy of law
enforcement vehicles is
00:00:12
about to descend on an
unlikely place a mansion
00:00:15
complete with its own
vineyard and chapel rented
00:00:18
out as a wedding venue
and Airbnb.
00:00:21
Police believe it's also
the headquarters for a
00:00:24
lucrative theft ring,
where items stolen from
00:00:27
Ulta Beauty Supply and
other retailers are being
00:00:30
resold on Amazon.
00:00:32
As we pull up,
authorities tell us they
00:00:34
have the suspected
ringleader in handcuffs.
00:00:37
What are we looking for?
00:00:38
There they are right
there. Okay.
00:00:43
And it's happening
everywhere.
00:00:45
For months, we got
exclusive access to the
00:00:47
California Highway Patrol
watching up close how it
00:00:51
fights organized retail
crime, which including
00:00:54
external theft, totaled
$40.5 billion in the U.S.,
00:00:59
according to the National
Retail Federation's most
00:01:01
recent estimate.
00:01:04
The fight is constant.
00:01:06
On another day in another
California city, we see
00:01:09
more truckloads of what
police say is stolen
00:01:12
clothing, mostly from TJ
Maxx, plus cleaning and
00:01:16
beauty supplies.
00:01:18
Hands on your head. The
California Highway Patrol
00:01:20
is also California's
state police.
00:01:22
Sean Duryee is
commissioner of the
00:01:24
California Highway
Patrol, which has seen a
00:01:27
170% increase in arrests
for organized retail crime
00:01:32
in 2023 over the previous
year.
00:01:34
The public's had enough.
00:01:36
I think retailers have
definitely had enough.
00:01:38
They've been victimized
enough. And at this point,
00:01:40
law enforcement has had
enough.
00:01:42
While organized retail
crime is getting more
00:01:44
attention from the
public, retailers and
00:01:46
lawmakers, there's debate
about if it's actually
00:01:49
increasing. Retailers
specifically pointing to
00:01:52
theft as a growing
problem in recent years
00:01:54
include Target, Foot
Locker, Walgreens and
00:01:56
Ulta, but few quantify
the impact or offer many
00:02:00
details, raising
questions in the industry
00:02:03
about whether retailers
are using the attention
00:02:06
around theft to cover
their own operational
00:02:09
missteps. A National
Retail Federation survey
00:02:12
of companies identified
Los Angeles, San
00:02:15
Francisco, Oakland,
Houston, New York and
00:02:17
Seattle as the top major
cities hit by retail crime
00:02:21
organized rings as
opposed to lightning,
00:02:23
flash, smash and grabs
use what are called
00:02:25
"boosters" to steal items
that then go to fencers
00:02:29
who resell them for cash.
00:02:31
I think people feel like
it's hopeless, you know,
00:02:33
nobody's going to do
anything. I want the
00:02:35
retailers and the victims
of this to know that
00:02:37
that's not true.
00:02:38
Law enforcement is all in
on this, not just the
00:02:41
California Highway
Patrol, all of our allied
00:02:42
partners throughout the
state.
00:02:44
If you're a consumer and
you're buying on an online
00:02:45
marketplace, how do you
know if the good you're
00:02:47
buying was a stolen good
or a good that was
00:02:50
acquired legitimately?
00:02:52
It's tough, and I don't
know if anybody expects
00:02:54
the consumers to do due
diligence on every product
00:02:57
that they're buying
online. But I'll tell you,
00:02:58
if it seems too good to
be true, it probably is.
00:03:01
And it's probably coming
from some nefarious
00:03:03
activity.
00:03:04
So you guys all got the
out plan, correct?
00:03:05
Yes.
00:03:06
It's a few minutes after
six in the morning as the
00:03:08
police briefing starts
for what's about to happen
00:03:10
at that mansion outside
San Diego.
00:03:12
We have all our entry
tools.
00:03:14
Everybody bring them. Got
'em?
00:03:16
Okay. And we got the ram,
we got the pick.
00:03:19
How long has this taken to
gather the information?
00:03:21
This investigation has
been going on for almost a
00:03:24
year. We've identified a
total of 13 suspects who
00:03:26
were responsible for
multiple deaths statewide.
00:03:29
And in some of our
neighboring states.
00:03:33
And these individuals, you
suspect, are sort of
00:03:36
bosses running an
operation.
00:03:37
Is that correct?
00:03:38
These individuals today
are the fencing
00:03:40
operations. These are the
ones that are putting out
00:03:41
the orders to the
boosters to obtain this
00:03:43
merchandise, and then
ultimately resell it to
00:03:46
the unsuspecting buyer.
00:03:47
At the mansion, CHP and
agents from the Department
00:03:50
of Homeland Security fan
out looking for potential
00:03:53
stolen items.
00:03:54
The woman in custody is
Michelle Mack.
00:03:56
According to the search
warrant, she's in charge,
00:03:59
giving a group of a dozen
women across the country a
00:04:03
list of retail stores to
target, along with the
00:04:05
retail merchandise.
00:04:07
Those Ulta Beauty
products then ending up on
00:04:09
an Amazon digital
storefront called the
00:04:12
Online Makeup Store at
deep discounts.
00:04:15
Where are the goods being
sold?
00:04:16
Our investigation leads us
to believe that the
00:04:19
majority of these goods
are being sold through
00:04:20
online marketplaces.
00:04:22
Box after box are removed
from the home, the search
00:04:25
warrant alleges. Mack has
sold nearly $8 million
00:04:29
worth of merchandise on
the platform since 2012.
00:04:32
In one text message to a
booster, Mack wrote did
00:04:35
you get some new girls?
00:04:36
I really need product.
00:04:38
She's taken into custody.
00:04:42
The next morning, a team
from Ulta unloads the
00:04:45
haul, along with CHP
officers, sorting and
00:04:48
carefully organizing
everything, most of it
00:04:51
$387,000 in stolen items
from Ulta, according to
00:04:56
authorities, but also
some items from Sephora,
00:05:00
Victoria's Secret, Bath
and Body Works, Sunglass
00:05:03
Hut and LensCrafters.
00:05:05
And these boxes of manila
envelopes, they were being
00:05:08
mailed to customers who
ordered from the online
00:05:10
makeup store, who now
aren't getting anything
00:05:13
like Donna Washburn, who
says she bought her
00:05:16
daughter a $42 makeup
item for Christmas.
00:05:19
I looked at a different
places with prices, and
00:05:22
then I said, you know,
it's Amazon.
00:05:24
It'll come fast.
00:05:25
It was the beginning of
December, so I really
00:05:27
didn't want to wait too
much longer for Christmas.
00:05:29
So I figured and then
when I ordered it, they
00:05:32
said, okay, December 11th
delivery.
00:05:33
So when December 11th came
and went and the product
00:05:36
didn't appear, what did
you start to think?
00:05:39
I got an email that said
it's out for shipment but
00:05:43
it is delayed. It will be
on the 14th.
00:05:45
I'm like mm, okay.
00:05:47
And then 14th came and it
wasn't here.
00:05:50
And then I got the
message that said this
00:05:53
little store can't take
your orders anymore.
00:05:56
Amazon refunded her the
money.
00:05:58
Did it ever occur to you
that buying a product off
00:06:02
of Amazon, you could be
buying a product that was
00:06:05
stolen?
00:06:06
No. Never.
00:06:10
You put in the trust in a
store like that, that
00:06:13
they're checking these
things and but then you
00:06:15
think, 'How can they
check those things?' It's
00:06:18
above me.
00:06:18
As for Michelle Mack,
California Attorney
00:06:20
General Rob Bonta
announced she and her
00:06:22
husband, Kenneth, are
facing charges of
00:06:24
conspiracy, grand theft
and receipt of stolen
00:06:27
property. The Macks have
pled not guilty.
00:06:30
Seven others connected to
the ring were also
00:06:33
charged.
00:06:34
This is a multi-million
dollar criminal scheme.
00:06:37
It was complex. It was
orchestrated.
00:06:39
The crimes occurred from
the West coast to the East
00:06:40
coast in this country,
Bonta tells us.
00:06:42
This case shows more needs
to be done to root out
00:06:45
stolen items being sold
online.
00:06:47
This Amazon Marketplace
site, called the Online
00:06:52
Makeup Store that was
selling the stolen goods
00:06:54
year after year, and it
wasn't detected.
00:06:57
You have to ask yourself,
what more can we do,
00:06:59
should we do to make sure
that incidents like this
00:07:01
don't occur in the
future? That's the right
00:07:03
thing to ask. I think
they have the ability to
00:07:05
root out more sales of
stolen goods on their
00:07:10
platform, and should ask
themselves, what more
00:07:12
could they have done here
and what more can they do
00:07:14
going forward?
00:07:15
We asked Lisa Labruno,
senior executive vice
00:07:17
president of the Retail
Industry Leaders
00:07:19
Association, how this
could happen.
00:07:22
You're going to have to
ask Amazon that question,
00:07:24
Courtney. You know, how
is it that someone is able
00:07:27
to sell that large a
quantity of product?
00:07:30
And I'm going to guess, I
don't know the particular
00:07:32
case that you're talking
about, but I'm going to
00:07:34
guess that it was the
best sale ever of that
00:07:38
Ulta Beauty product.
00:07:39
Right? It's clear to the
industry, the retail
00:07:42
industry, that the online
marketplaces either don't
00:07:46
have the stop gaps in
place to proactively
00:07:50
identify product that's
stolen, that's being sold
00:07:53
on their on their
marketplaces or they don't
00:07:56
want to.
00:07:57
Congress passed the
Informed Consumers Act
00:07:59
last year to address
situations like this by
00:08:02
requiring online
marketplaces to obtain
00:08:05
information from
high-volume third party
00:08:07
sellers as a way to
identify possible stolen,
00:08:10
counterfeit, or unsafe
merchandise.
00:08:13
So if you're Amazon,
should you have had some
00:08:16
kind of an algorithm that
flagged it, even if all of
00:08:19
the rest of the business
appeared legitimate?
00:08:22
This is not just about
Amazon. There's other
00:08:24
online marketplaces who
serve as fences for the
00:08:27
sale of stolen product,
but I don't see the online
00:08:30
marketplaces raising
their hand and saying, we
00:08:33
acknowledge that this is
dirty money.
00:08:35
Labruno says the issue
will get worse as
00:08:37
organized retail theft is
a significant problem on
00:08:40
the rise.
00:08:41
The online marketplaces,
they profit from the sale
00:08:45
of stolen goods.
00:08:46
And last time I checked,
none of them were raising
00:08:49
their hand to say here,
retailer, you can have it
00:08:53
back.
00:08:54
Retail CEOs have been
largely mum about
00:08:57
organized retail crime,
but Ulta Beauty CEO Dave
00:09:00
Kimbell spoke to us about
the issue.
00:09:03
Well, we're taking
ownership of it and we are
00:09:05
taking a lot of action.
00:09:06
This is a top priority
for me, primarily because
00:09:10
of the safety and
security risks that it
00:09:13
brings to our team.
00:09:15
He says Ulta stores around
the country have been
00:09:17
targeted, with the
company locking up
00:09:19
fragrances and bolstering
security.
00:09:22
We invested in fixtures
that make it harder for
00:09:25
these thieves to come in
and just swipe the shelf
00:09:28
clean in seconds and walk
out the door.
00:09:30
We've invested in
training for our team to
00:09:32
help them during the
event, and to deal with
00:09:34
some of the trauma that
these events can bring.
00:09:37
We invested in technology
and other tools that allow
00:09:41
us to, through cameras
and trackers and other
00:09:44
things that allow us to
bring more insights into
00:09:46
what's going on in the
marketplace.
00:09:48
Are you shocked by the
sheer volume that one ring
00:09:51
could have been doing
over more than a decade?
00:09:54
Well, unfortunately, I'm
not that shocked because
00:09:57
we've seen it in other
parts of the country and
00:10:00
the magnitude of this one
is significant.
00:10:03
But this is what's
happening, and this is the
00:10:06
environment in which
we're operating.
00:10:08
The network that she had
built across the country
00:10:11
was impacting multiple
stores.
00:10:13
And so by eliminating
that, it's a step.
00:10:16
But unfortunately, I know
there's others that are
00:10:18
out that are just like
that.
00:10:20
In this particular case,
much of it was being sold
00:10:23
on Amazon for over a
decade.
00:10:26
Are online marketplaces a
bigger part of this
00:10:29
problem?
00:10:30
Well, I'd say it's a big
part of the challenge that
00:10:34
we face is that there has
grown over the last
00:10:37
several years, an ease of
distribution of stolen
00:10:42
goods. You used to have
to sell stolen goods at
00:10:45
flea markets or out of
the trunk of your car, or
00:10:47
maybe just locally. Now
you have, you know, more
00:10:51
sophisticated tools to
have a broader reach
00:10:53
across the country or
even internationally.
00:10:55
Kimbell says more can be
done to ensure stolen
00:10:58
merchandise doesn't end
up for sale online.
00:11:01
Everybody that sells
online products should be
00:11:03
committed to ensuring
that nothing that they
00:11:07
sell is stolen goods.
00:11:10
I can tell you with 100%
certainty, nothing that we
00:11:14
sell at Ulta.com or any
online platform is product
00:11:18
that's been stolen from
another retailer.
00:11:20
What do you think in this
case, as we're speaking of
00:11:23
in California, that
Amazon could have done to
00:11:26
know that these were
stolen goods, if it was
00:11:29
operated as a third party
marketplace where Amazon
00:11:31
never saw or touched any
of these items.
00:11:34
Yeah, I, I'm not going to
comment specifically about
00:11:37
that case or what any
individual company could
00:11:41
do. What I would say more
broadly is there is
00:11:45
technology available.
00:11:46
There's, you know, use of
advanced analytics and
00:11:49
data capabilities to try
to understand behaviors
00:11:53
that are indicative of
reselling stolen goods.
00:11:58
And when they're sold at
scale at online
00:12:00
marketplaces. This is not
some individual that, you
00:12:04
know, bought too many
lipsticks and they want to
00:12:07
resell it.
00:12:07
Amazon declined an on
camera interview, but a
00:12:09
spokesperson said we
invest more than $1
00:12:12
billion annually and
employ thousands of people
00:12:15
to fight fraud.
00:12:16
The company says it uses
"sophisticated detection
00:12:19
and prevention
solutions...allowing us to
00:12:22
quickly spot a range of
organized retail crime
00:12:25
schemes." The company
also has "referred
00:12:28
thousands of ORC bad
actors to law
00:12:30
enforcement," resulting
in "arrests, product
00:12:33
seizures and recoveries."
It says it's "untrue" that
00:12:37
the company is profiting
from the sale of stolen
00:12:39
goods. Despite all these
measures, in this case,
00:12:42
Amazon acknowledged "we
did not receive signals to
00:12:45
identify the seller was
engaged in selling stolen
00:12:48
goods." Sephora and Bath
and Body Works declined to
00:12:52
discuss the case.
00:12:53
Victoria's Secret,
Sunglass Hut and
00:12:56
LensCrafters didn't
respond to our request for
00:12:58
comment. And it's not
just the online
00:13:02
marketplaces where
authorities say stolen
00:13:04
items frequently end up.
00:13:07
Wheelers up. I want a map
drawn of the house
00:13:10
separated into two
groups, and then we can
00:13:12
start loading.
00:13:13
This is the police
department.
00:13:14
We have a search warrant
for the residence.
00:13:16
In San Jose, California,
another case, this time
00:13:20
targeting suspects police
say are running a large
00:13:23
fencing operation,
stealing clothes and
00:13:25
household goods for
resale at flea markets.
00:13:28
We're riding with CHP
Officer Andrew Barclay.
00:13:31
So we are about a block
away.
00:13:34
Just about a minute out.
00:13:35
We are passing target
location so we do not want
00:13:39
to stare.
00:13:39
That's the, location one?
00:13:41
Yep.
00:13:42
Manny from Andy, we're in
position whenever you guys
00:13:44
are ready.
00:13:44
We have a search warrant
for the residence.
00:13:46
Come out with your hands
up now.
00:13:48
As the residents exit the
home, there's piles of
00:13:51
merchandise, mostly from
TJ Maxx, whose employees
00:13:54
are there to identify and
organize what police
00:13:57
seize. This box was just
taken out of one of the
00:13:59
houses it's full of
over-the-counter drug
00:14:02
store type items.
00:14:03
So you've got medication
stills, a retailer's label
00:14:06
on it from Safeway, but
you also have beauty
00:14:08
products. And these store
tags in plain sight strewn
00:14:12
on the sidewalk.
00:14:14
The sheer volume of
stolen goods fills a
00:14:17
truck. This is just one
of several u-hauls that is
00:14:21
full of merchandise
suspected to be stolen.
00:14:24
Everything from tools,
hardware, blow up items,
00:14:27
drugstore items, you name
it, it's in here.
00:14:30
Police department. We have
a search warrant.
00:14:32
At another home connected
to the ring, police say
00:14:35
they find evidence of
storage lockers with
00:14:37
stolen items.
00:14:40
And when they search the
lockers, they find even
00:14:43
more merchandise they say
was stolen from TJ Maxx
00:14:46
and other retailers.
00:14:48
If you have somebody who
is stealing large amounts
00:14:51
of product or fencing
large amounts of product,
00:14:53
if you need somewhere to
store it, storage
00:14:55
facilities are an option.
00:14:56
The total value seized in
San Jose $553,000.
00:15:02
TJX, the parent company
of TJ Maxx, tells us
00:15:06
"organized crime is an
issue for the retail
00:15:08
industry as a whole, and
we are taking it very
00:15:11
seriously at TJX,"
adding, "we are
00:15:13
laser-focused on ways to
mitigate theft in our
00:15:16
stores," including
"initiatives like
00:15:19
increased merchandise
protection and operational
00:15:21
controls as well as
industry-wide
00:15:23
initiatives." Safeway
declined comment, and we
00:15:26
didn't hear back from
Nike or Ross.
00:15:29
What we saw in California
mirrors a retail crime
00:15:32
crackdown around the
country.
00:15:34
So some people look at
organized retail crime or
00:15:37
theft and think it's a
victimless crime.
00:15:40
Is it?
00:15:40
It is not a victimless
crime.
00:15:43
What we see is that the
consumer is the victim.
00:15:46
Those costs will be put
back on the consumer.
00:15:50
Michael Kroll is special
agent in charge at the
00:15:53
Department of Homeland
Security.
00:15:55
How is the government
working with big box
00:15:58
retailers or retailers
that tend to be higher
00:16:00
targets for organized
retail crime?
00:16:02
It is so important for HSI
to partner with the
00:16:08
private sector.
00:16:09
They are a wealth of
information for us.
00:16:12
Certainly their data,
their information and
00:16:16
their intelligence will
help us to better target
00:16:20
bad actors, but also
become aware of threats
00:16:23
that we may not know of
at that time.
00:16:26
Ultimately, Kroll says,
it's all about following
00:16:29
the money and
merchandise.
00:16:31
How often is an organized
retail crime network just
00:16:36
sort of one symptom of
bigger criminal
00:16:39
activities?
00:16:40
This is what we see in
21st century criminal
00:16:43
organizations. They have
become masters at all
00:16:48
trades. Where they can
make money is where
00:16:51
they're going to go.
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