Theft-Ring Arrests Shed Light on 'Gray Market'

Retailers fight the battle against shoplifting and employee theft every day. But what happens to stolen merchandise once it's out the door?

Recent arrests in a case involving Chapel Beer & Wine Market in Detroit provide a rare look at how millions of dollars of stolen merchandise move through the "gray market" and provide a thriving business for criminals.

The Chapel Market case also signals an aggressive new stance against retail theft taken by area law enforcement and Michigan Attorney General Mike Cox.

Police from the Western Wayne Community Response Team worked with retailers to build what they believe is a strong racketeering case against the men involved. By pursuing racketeering charges in this case, Cox has embraced a new strategy that will focus on drying up the market for stolen goods by shutting down - permanently - these gray-market operations.

"Attorney General Mike Cox wants a renewed emphasis on the criminal investigation and prosecution of this type of crime." said Kevin Simowski of the attorney general's office. If the prosecution goes as well as the investigation, future cases are more likely and may further dry up the gray market.

3 arrests, 31 charges

On February 22, Zeki Abdul Butris, 54, his son, Bernard Zeki Butris, 24, both of West Boomfield, and employee Karim Seiba, 25, of Sterling Heights, were arrested on a total of 31 charges of racketeering. The arrests followed 16 months of surveillance, undercover work and tracking of merchandise.

The older Butris is the owner of Chapel Market, where a ring of shoplifters has been bringing merchandise stolen from suburban retailers since at least 2002, according to police.

The investigation also discovered that Chapel Market was more than the average "fence," where locally stolen merchandise is resold locally.

Stolen goods were also bring repackaged and shipped to gray market operations in New Jersey and Florida, police said. They are investigating whether any goods were sent out of the country. In the current context, the gray market describes the supply chain that includes the 'boosters' (the term for organized shoplifters) who supplied stolen goods; the "fence" who received, resold and even repackaged merchandise for distribution; and various stores where customers are often unaware the shelves are stocked with stolen merchandise.

The value of the stolen merchandise involved is uncertain. Police said each time they sent undercover officers to the location, they saw at least $100,000 worth of stolen property.

Retail Racketeering

The charge of racketeering covers a broad range of illegal activity and is not commonly used in retail crimes, according to Simowski, because of the higher burden of proof required for successful prosecution. It is intended to address ongoing, organized, illegal business operations.

"The racketeering charge is much more serious than the charges of receiving and concealing stolen property, which are more commonly filed in fencing operations," said Lt. Edward Gerds of the Western Wayne Criminal Investigations divison of the Michigan State Police.

"Without the cooperation of all parties - the local and state police, the attorney general's office and the retailers - there wouldn't be a racketeering case. We would have gotten the shoplifters early on, but we wouldn't have been able to build the substantial case required for making racketeering charges stick," explained Gerds.

If convicted, the Butrises and Seiba face a maximum of 20 years in prison and a $100,000 fine. In addition, the property used in a racketeering offense may be forfeited. Cox's office has filed for forfeiture on the Chapel Market property near Fenkell and Outer Drive.

The racketeering penalties are far tougher than the maximum penalty of five years imprisonment and smaller fines for the lesser charge of receiving and concealing stolen property - charges that Gerds said are easily beaten.

Larry Meyer, Chairman and CEO of Michigan Retailers Association, described his encounter with this case "an impact moment for me. In my 30 years in retail, this was the first time I saw, face to face, the magnitude and seriousness of organized crime hurting the industry."

"Retail thieves steal from everyone, because the price of goods reflects stores' losses from theft. Organized rings are a serious problem, and we applaud the efforts of Attorney General Cox for going after this type of crime and producing results. We also commend Target for working with state authorities on this problem," said Meyer.

Year-long Investigation

"The case arose out of an investigation that began in October of 2002 in Northville Township with the arrest of a shoplifter. That person told police that he was stealing mostly non-prescription medication from retailers and grocery stores in western Wayne County and areas in Oakland County and selling those items to Chapel Market," explained Simowski.

Further investigation revealed that other 'boosters' were also supplying Chapel Market with stolen merchandise. Hiller's Market and Farmer Jack were among the first retailers whose shoplifting losses were connected to the Detroit store.

"At that point, members of the Western Wayne Community Response Team joined the investigation. Target Corporation also provided support in donating resources for purposes of making undercover buys at the market," said Simowski.

The Western Wayne Community Response Team consists of members from the Northville, Plymouth and Canton Township police departments, Wayne County Sheriff's Department and Michigan State Police.

"We arranged for a person to go undercover and pose as someone with merchandise to fence. This allowed us to learn a lot about the operation," said Gerds.

The undercover investigator observed the shoplifters sharing information about where to go for merchandise and how to get past anti-theft devices like sensors and detectors. "most of them know all the tricks; it's like a business for them" he added.

More investigations

How important is the Chapel Market case? Along with putting three criminals out of business, its impact may be felt in other ways.

"To be honest, closing this place down is down is not going to stop all shoplifting in the area. But it should make a good dent. If we can dry up the market for this merchandise, it's not as profitable for the petty thieves," said Gerds.

In addition, if the prosecution goes well, the case may impact the decision to pursue other cases of boosting and fencing operations.

"With the success of this investigation, we are likely to see more investigations and arrests," said Simowski.

Shoplifting and employee theft combined account for the largest source of property crime committed annually in the United States, according to University of Florida criminologist Richard C. Hollinger, Ph. D., director of the National Retail Security Survey.

"This means that the single largest category of larceny in the United States is the crime that occurs in retail stores. This figure is larger than motor vehicle theft, bank robbery or household burglary combined."

By addressing retail theft as a serious crime, in which shoplifting and employee theft are just the first links in a gray-market supply chain, law enforcement may provide Michigan retailers with a measure of justice in their struggle against shrinkage.