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Homeland Security Investigations’ New and Active Role Against Retail Crime

Organized retail crime (ORC) is a more complex issue than just a theft problem. It’s more than simply a retail concern, with issues branching well beyond the reach of retail and into areas that most may have never imagined. Fortunately, ORC is being addressed in new, innovative, and unexpected ways.

Raul Aguilar

Homeland Security Investigations (HSI) employs a very focused approach to ORC investigations, both domestically and abroad. HSI Deputy Assistant Director Raul Aguilar leads the Countering Transnational Organized Crime (CTOC), Financial and Fraud Division for HSI. This division focuses on financial crimes and fraud, including asset forfeiture, cryptocurrency investigations, bulk cash smuggling, benefit fraud, labor exploitation, COVID fraud, Medicaid fraud, visa fraud, passport fraud, and trade-based money laundering to name a few.

Working with local, state, federal, and international law enforcement partners, prosecutors, and retailers, Aguilar and his team are making tremendous progress in the disruption and dismantlement of ORC networks. HSI recently sat down with LP Magazine to discuss their operations, goals, and insights, and how retailers can collaborate with federal partners to combat organized retail crime

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HSI is the principal investigative component of the US Department of Homeland Security tasked with investigating, disrupting, and dismantling transnational criminal organizations and terrorist networks that threaten or seek to exploit the customs and immigration laws of the United States. HSI investigates these criminal activities:

  • Narcotic smuggling,
  • Money laundering,
  • Child exploitation,
  • Transnational gangs,
  • Labor exploitation,
  • Human trafficking,
  • Identity and benefit fraud,
  • Financial fraud,
  • Illegal technology procurement,
  • International weapons smuggling,
  • National security threats,
  • Terrorism,
  • Human rights violators,
  • Intellectual property crimes, and
  • Organized retail crime.

“We’re continuing to build our network with law enforcement agencies, retailers, and the Organized Retail Crime Associations (ORCAs) across the country to work together and share resources to build these cases,” said Aguilar. “We utilize a collaborative interagency approach to address transnational organized crime.”

HSI’s Three Pillars of ORC

Unit Chief Thomas Welch oversees the Financial Crimes Unit within CTOC. “We are focused on transnational criminal organizations, and those individuals who use the United States’ financial systems to launder their money. They commit crimes and then take the proceeds back to their home countries,” he explained. “We’ve had several ORC initiatives over time, specifically addressing the proceeds from the sale of stolen merchandise as they are being laundered overseas. However, over the last six months, we have noticed an increase in ORC activity and our leadership has provided the necessary resources to increase our focus on these cases and take our investigative role to another level.”

In response to the ORC threat, HSI has implemented an initiative they’re calling “The Three Pillars of ORC.”

Training and Awareness. At each of HSI’s offices across the US, efforts are being made to integrate current investigations with training focused on typologies and similarities with other types of crime, and other tools to help identify and fight ORC. HSI is also spreading awareness regarding the ORC threat through the launch of a robust public awareness campaign.

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Public-Private Partnerships. There is an ongoing need to establish contacts and obtain leads. While HSI has long-standing relationships with many financial institutions, it is important to communicate with retailers, and associations, such as the Retail Industry Leaders Association (RILA), Coalition of Law Enforcement and Retail (CLEAR), National Retail Federation (NRF), and similar groups.

Prosecution. In coordination with the US Department of Justice, state and local prosecutors, district attorneys’ offices, attorneys general, and local task forces, HSI relies on strong and ongoing communication with prosecutors to build successful criminal investigations and prosecutions. HSI aims to disrupt and dismantle organizations involved in ORC by taking down illicit websites, making arrests, and seizing illicit proceeds and stolen property.

Follow the Money

HSI’s Cornerstone Initiative is an outreach program focused on the financial industry but can significantly benefit the retail industry in the fight against ORC by helping banks target the proceeds of retail theft. As a part of the Cornerstone Initiative, HSI distributes publications to financial institutions covering trends and typologies associated with illicit financial activity, helping them target and stop illegal activity.

Originally passed in 1970, the Bank Secrecy Act (BSA) requires financial institutions to assist the federal government in the detection and prevention of money laundering and other illegal activities. To keep pace with criminals looking for new ways to launder their proceeds, the BSA must evolve to keep pace with both current and emerging threats.

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“In the BSA compliance world, there are volumes and volumes of financial transactions, and identifying suspicious activity can be like trying to find a needle in a haystack,” said HSI Program Manager Billy Melton. “To help thwart illegal activity, HSI has stepped in to assist financial institutions identify typologies and red flags to look for in account activity to detect suspicious transactions.”

Melton added, “Following the money can take us to the heart of the criminal operation. While retailers may see the boosters in stores, the banks are going to see the fences, the higher-level actors, and the money launderers. Every crime has different red flags or typologies—different ways of moving the money. HSI provides training to financial institutions to look for transactions and activities that are outside the normal.”

By working with banks to identify anomalies, HSI can then take additional steps to identify the bad actors and take a deeper look into the criminal organization. This presents the potential to open other doors, including the seizure of criminal assets and dismantlement of the criminal enterprise.

Collaboration in Action

Operation King of Thieves began as a large-scale ORC operation initiated in the Houston, Texas, market. ORC booster teams traveled throughout the region stealing all types of products, and each would hit ten to thirty stores each day. Many of the crew members had a long criminal history, including drug abuse and violent behavior. The teams primarily stole drugstore goods such as over-the-counter medications, hair restoration products, electric toothbrush heads, whitening strips, shaving razors, and other items that are small, expensive, and in high demand for consumers.

During the course of events, retailers spearheaded by ORC teams at CVS Health, Rite Aid, and Walgreens assessed the size and complexity of the criminal operation impacting their businesses and contacted Homeland Security Investigations to share the information developed to that point.

The investigation targeted two primary organized theft groups—one run by Yasser Ouwad, a Palestinian refugee from Lebanon involved in ORC activity since his arrival in the US, and the other lead by Bilal Awad, Yasser’s brother, who also immediately got involved in ORC schemes after moving to the US.

As the investigation continued to unfold, HSI recruited a known booster as an informant who was embedded into the criminal operation. The informant was very well-connected, knowing multiple fences in and around the Houston area and was trusted by the illicit actors.

Through the informant, HSI learned the thieves were given detailed “shopping lists” of products to be stolen, including how much the thief would be paid for each item by the fencing operation. Thieves were also given information to maximize the value of the stolen products, such as targeting products with more distant expiration dates.

As stolen goods were collected, the merchandise was sent to various storage locations where the goods would be stockpiled and later processed for redistribution. The crews working for Ouwad sent everything to various PO boxes, mail rooms, or mail centers under the name “Santino Wholesale,” while the crews working for Awad sent everything to a storage unit facility under the alias, “Malina Ana Vulpe.”

Theft crews traveled through states across the country stealing large quantities of merchandise with a focus on the Southeast. There were a large number of theft crews, and each would hit ten to thirty stores per day, depending on the routes taken, states traveled, and how close the stores were to each other.

Once in a target retail store, theft crews worked quickly to steal large quantities of merchandise. Working the aisles and stealing the most valuable items found on their lists, the theft crews would fill shopping carts with stolen goods and blatantly push them out of the store to a waiting vehicle.

During the case, investigators were able to determine that approximately 1,200 shipments of stolen merchandise from all across the country were received by the two brothers, amounting to more than $6 million in loss to the retail companies. Further, once the products were “cleaned” and readied for shipment, the investigation revealed that many of the stolen goods were being shipped to a known diverter, a wholesale company in New England, that would resell the stolen merchandise, often back to retail companies. In total, 76 pallets of stolen merchandise were recovered from the diverter with an estimated value of $7.6 million.

This case concluded with the arrests of several subjects and the seizure of merchandise, bank accounts, and real property, all totaling approximately $2 million.

Just the Tip of the Iceberg

While this investigation provides a prime example of the power of these public-private partnerships, there is more to the story that highlights the potential reach of these criminal networks and their impact on our communities.

Organized retail crime is well-known as a “gateway” crime, often leading to other criminal activity including violent crimes, guns and other weapons, drug trafficking, human trafficking, and additional serious and far-reaching issues. Like many of the criminal networks dealt with today, this story doesn’t end with these two brothers and their crews. HSI continued expanding the investigation, leading to the identification and arrest of one of the primary ORC kingpins in the country.

Mohamed Mokbel is a naturalized US citizen originally from Egypt. Long known for his involvement in fencing operations, he has reportedly been involved in ORC since his arrival in the US in the 1990s. Mokbel is believed to be responsible for a criminal network moving tens of millions of dollars in stolen products throughout the US. As part of this intricate and profitable illicit operation, he also owned and operated 4M Pharmaceuticals, the parent company of more than a dozen pharmacies operating throughout the country.

Mokbel, a primary actor in the Operation King of Thieves fencing conspiracy, slowly relinquished control of these interests to other fences so that he could focus on another illegal business—healthcare fraud.

In partnership with the Food and Drug Administration Office of Criminal Investigations, Department of Health and Human Services Office of the Inspector General, the Federal Bureau of Investigation, and various state agencies, HSI targeted and dismantled Mokbel’s transnational criminal operation. The investigation revealed that Mokbel was involved in a large-scale healthcare fraud operation, defrauding insurance companies and the government out of more than $134 million. Search warrants were executed and more than $7 million seized from his bank accounts.

The reach of Mokbel’s criminal organization did not end at the US border. As part of his healthcare fraud scheme, Mokbel moved part of his operations to his home country of Egypt, including a call center used to defraud victims in the United States. Not only was Mokbel in a network of individuals engaged in illegal activity throughout the US, but these illegal operations, contacts, and proceeds supported criminal operations overseas.

Innovation through Partnerships

Organized retail crime is a more complicated problem than often perceived by the general public. However, these networks can also take directions that branch beyond what even seasoned professionals might expect. Every case is different and must be approached based on the merits of the investigation, the actors involved, the types of crimes committed, the individual circumstances surrounding the investigation, and the reach of the criminal activity.

While there may not be any simple answers to the complexities of these criminal enterprises, what has become crystal clear is the importance of working together. Crippling these criminal operations requires the attention of like minds and the cooperation of diverse teams. Public-private partnerships are at the heart of those efforts.

“These issues can go far beyond theft,” said Deputy Assistant Director Aguilar. “At HSI, we are looking at transnational organized crime groups on a daily basis. To combat these criminal networks, HSI’s relationships with interagency teams, our public partners, and the private sector are critical. I cannot stress enough the importance of us all working together.”

“This is a significant problem and a major economic and national security threat to the United States,” advised Robert Skidmore, case agent for Operation King of Thieves. “We’re witnessing a vast amount of criminal activity that is tied to organized retail crime. I can truly say that this investigation never would have come together the way it did without the help and guidance of our retail partners. As the case agent, they helped me understand how organized theft groups operated, best practices from previous investigations, and they provided a large amount of support that enabled HSI to dismantle this transnational criminal organization. It was a true partnership. Without that, it wouldn’t have worked.”

“Communication remains the key,” explained Aguilar. “This is a great opportunity for us to come in direct contact with the people affected by crime, sharing ideas, as well as information. Paying attention to the innovation piece is critical as we move forward, and we welcome your participation and partnership. As criminals continue to evolve, we need to be able to evolve in law enforcement as well.”

When dealing with ORC, every partnership is an opportunity. Learning from one another, building relationships that matter, and finding ways to work together should be the easiest steps we take. Make it happen, and make it count.

This story is a part of LPM‘s Special ORC Issue. Download the full issue for free here. 

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