Statement
of
Chris Swecker
Assistant Director, Criminal Investigative Division
Federal Bureau of Investigation
Before the
House Judiciary Committee
Subcommittee on Crime, Terrorism, and Homeland
Security
March 17, 2005
Good morning Mr. Chairman and members of the
Judiciary Committee. On behalf of the Federal
Bureau of Investigation, I would like to express
my gratitude to the committee for affording
me the opportunity to speak with you concerning
the FBI's efforts in addressing the nationwide
problem posed by criminal enterprises involved
in the theft, diversion, repackaging, and ultimate
resale of consumer products, to include such
items as over-the-counter medications, prescription
drugs, health and beauty aids, and infant formula.
This
problem is significant for the economic losses
it brings to manufacturers and retailers, which
are then passed on to consumers. Ultimately,
the American consumer ends up paying significantly
higher prices for these products. This problem
is particularly acute in the area of Organized
Retail Theft (ORT) by criminal enterprises.
It is estimated that the retail industry loses
between $15 to $30 billion annually to such
theft.
The
unsuspecting consumer also faces potential health
and safety risks from legitimate products which
may have been mishandled by the criminal enterprises
who stole them for resale to consumers. In many
cases, stolen infant formula, pharmaceuticals,
and other consumables are not stored under proper
conditions. When these items are reintroduced
into the retail market, they can pose a significant
health hazard to the consumer.
The
potential threat to the health and safety of
unsuspecting consumers is most evident in cases
in which infant formula is stolen, repackaged
and then resold to both knowing and unknowing
wholesalers, who then sell the infant formula
to government food programs and discount stores.
The
first phase of the ORT Initiative included the
formation of a National Retail Federation (NRF)/FBI
Intelligence Network. This network is a partnership
between the FBI, state and local law enforcement,
and corporate security entities; to establish
an effective means of sharing ORT information/intelligence;
to discuss ORT trends as they relate to specific
areas of the retail market; and, to identify
and target the most significant ORT criminal
enterprises, particularly those that may be
involved in the funding and/or supporting of
terrorist organizations or activities.
Stolen
prescription and over-the-counter medications
and health and beauty aids are also sold to
illegitimate wholesalers who specialize in the
repackaging and reintroduction of these products
into the retail market, creating the same health
and safety concerns. These illegitimate wholesalers
also work with other criminal enterprises to
facilitate the introduction of counterfeit prescription
and over-the-counter medications and health
and beauty aids to unsuspecting retailers and
consumers. In addition to these concerns, the
potential for intentional product tampering
prior to the reintroduction of the stolen merchandise
into the retail market is significant.
These
sophisticated ORT criminal enterprises can best
be dismantled through a coordinated and cooperative
effort between law enforcement and the manufacturing
and retail industry. In December 2003, the FBI
established an ORT Initiative to identify and
ultimately to disrupt and dismantle the most
sophisticated, multi-jurisdictional ORT criminal
enterprises, using the Interstate Transportation
of Stolen Property, Money Laundering, and RICO
statutes.
Increased
information sharing and cooperation between
law enforcement and the private sector will
enable both to gain a better understanding of
the full nature and extent of this crime problem,
as well as to identify the best methods for
law enforcement and the manufacturing and retail
industry to attack this serious crime problem.
The
FBI's ORT Initiative and the formation of the
Intelligence Network has received strong support
from the retail/food industry. Information obtained
through this initiative has been furnished to
appropriate FBI field offices to initiate investigations
and to facilitate a more effective, intelligence-driven
investigative response to the significant problem
of ORT criminal enterprises.
As
part of the Intelligence Network, the NRF is
creating a Retail Loss Prevention Intelligence
Network Database (RLPIN). This database will
provide retail entities and law enforcement
with an ORT information/intelligence sharing
capability. The FBI is serving on the RLPIN
committee in an advisory capacity.
In
addition to the ORT Initiative, the FBI is identifying
and targeting multi-jurisdictional ORT criminal
enterprises utilizing joint Major Theft Task
Forces. These task forces, which combine the
resources of local, state and federal law enforcement,
as well as manufacturing or retail security
personnel, are applying investigative techniques
and strategies which the FBI has successfully
utilized to target traditional organized crime,
including the development of a solid intelligence
base and the use of undercover operations and
various electronic surveillance techniques.
These task forces increase the effectiveness
and productivity of limited personnel and logistical
resources, avoid the duplication of investigation
resources, and expand the cooperation and communication
among federal and state law enforcement agencies.
Currently
there are 9 FBI-led Major Theft Task Forces
located in the Houston, Memphis, Miami (2 Task
Forces), Newark, New York, Philadelphia, San
Juan, and Washington DC Field Offices. These
task forces are responsible for conducting investigations
of all major theft violations to include retail,
cargo, vehicle, and jewelry and gem theft. As
of this date, the 9 FBI-led Major Theft Task
Forces are staffed by FBI Agents and other federal,
state and local law enforcement officers.
In
FBI Field Offices that do not currently have
formal Major Theft Task Forces, significant
ORT investigations are being conducted by criminal
enterprise squads. Many of these investigations
are worked in coordination with state and local
law enforcement agencies, and include assistance
from manufacturing and retail security entities.
In
summary, Major Theft Task Forces are an extremely
effective manner by which to combat ORT criminal
enterprises. They "force multiply"
federal resources, benefit local law enforcement
efforts, eliminate redundant investigative efforts,
reduce concurrent jurisdictional issues, encourage
information sharing and intelligence development,
and reduce substantial organized retail theft.
The
use of Major Theft Task Forces, coupled with
a partnership with the retail industry, is seen
by the FBI as one of the most effective and
efficient tools by which to identify, disrupt
and dismantle organized retail theft criminal
enterprises impacting the health, safety and
pocketbook of American consumers.
Thank
you.
