Wednesday, June 11, 2008

Authorities crack down on retail theft rings

SACRAMENTO — Shoppers are paying more for basic, already pricey goods — from baby formula and razors to makeup and vitamins — because of a new kind of organized crime that has prompted an emergency legislative hearing.

A select Senate committee is scheduled to meet in the Bay Area on Friday to assess the effect of organized retail crime on the region. The session follows the breakup last week of a large-volume operation, based in San Jose; and one last year, based in Hayward.

Sophisticated rings steal the products from big retailers such as Wal-Mart, Target, Safeway and Walgreens, driving up costs that are ultimately passed to chain-store customers.

The National Retail Federation, which represents 1.6 million U.S. retail businesses, issued a report last week that estimated losses at $5 billion in California.

Organized retail crime also deprived deficit-plagued California government of $375 million in state sales taxes, according to the NRF.

Across the nation, it's become a $30 billion a year problem. At the same time, some consumers benefit.

They pay less because they buy, in most cases unwittingly, the stolen products — including over-the-counter medicines, name-brand cosmetic products such as Oil of Olay and Crest White Strips, and hygiene products — at discount stores, flea markets and Internet sites.

"I am committed to authoring legislation that will protect consumers and assist law Advertisementenforcement to crack down on the ring leaders of organized retail crime," State Senator Leland Yee, D-San Francisco, said in a statement.

"These criminals are not only costing retailers and our economy billions of dollars, they are putting the public health at serious risk," said Yee, who chairs the Committee on Bay Area Sustainable Development and Economic Progress.

In the San Jose bust last week, agents served search warrants at six locations in the city, including retail stores, warehouses and residences.

The three-year operation involved a joint effort by police, the FBI, the U.S. Attorney's Office and the Internal Revenue Service. Stores' private security also participated in the operation.

In February 2007, authorities raided two Oakland convenience stores and a warehouse in Hayward. More than 20 tractor-trailer loads of merchandise were seized from the warehouse.

Several individuals still face charges in U.S. District Court in the case. Two are scheduled to go to jury trial in September.

According to the National Retail Federal report last week, 68 percent of retailers nationwide reported having identified or recovered stolen merchandise from a fence location. That's up from 61 percent in 2007. It also found that 85 percent of retailers said they had been victimized by organized crime in the past year, which is up from 79 percent in 2007.

Yee's hearing on the problem will meet 9 a.m. in the San Mateo Board of Supervisors Chamber.

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