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Perpetrators of organized retail crimes, or ORCs, use a variety of methods to move and launder their profits, from simple structuring of deposits to complex trade-based and third-party money-laundering schemes, federal investigators and anti-financial crime professionals have found.

In a 53-page report, Homeland Security Investigations, or HSI, and ACAMS, the parent company of moneylaundering.com, found that suspects behind ORCs—a term typically used to describe coordinated heists of medicines, designer clothes, razors, power tools and other valuable products—most frequently peddle their goods on unregulated online marketplaces, then move the proceeds into banks and onward to funnel accounts in other U.S. states.

Large, complex organized theft groups led by “orchestrators” consist of several individuals who perform the various functions necessary for the enterprise to thrive, starting with the thieves who, acting under the direction of a crew boss, boost and sell high-end goods to fencers who then “clean” them of all anti-theft devices before relabeling, repackaging and reshipping them to warehouses controlled by diverters.

“Diverters often set up shell companies with opaque names to place and layer the illicit proceeds of the stolen goods,” HSI and ACAMS found in the report. “They often have prominent interaction with the … banking industry through e-commerce, shell companies and transaction laundering, as they will own the shell-company bank accounts and initiate wire transfers.”

Fencers, diverters and the orchestrators at the top of the enterprise also often own at least one apparently legitimate company or a portfolio of companies that they use as fronts to blend licit and illicit profits, and sometimes turn to third-party professionals to help obscure the source of their money.

“Professional money launderers may set up multiple shell companies to further layer illicit funds from ORC proceeds,” according to the report. “The shell companies are only used to process the financial aspects of ORC … they communicate with diverters and orchestrators.”

In smaller organized theft groups, fencers may occupy the top rung of the enterprise, and, after cleaning the stolen goods they acquire from thieves, sell them directly to unwitting customers via e-commerce, online markets or brick-and-mortar businesses.

“Typically, boosters are given a list from the crew boss of the goods to steal and their quantities,” HSI and ACAMS found. “Fencers typically buy the goods from the boosters and pay them in cash, though they may wire money directly to accounts in some instances or leverage peer-to-peer networks like Zelle and Venmo.”

Organized retail crimes differ from one-off instances of shoplifting and opportunistic “smash and grab” thefts in that they are often perpetrated by professional thieves working in tandem to steal high-end goods or defraud retailers, or by individuals who both steal and fence large quantities of such merchandise on a regular basis.

Fueled by the global economy and the parallel proliferation of peer-to-peer online marketplaces, they also now differ in scale: a retail industry group cited by ACAMS and HSI estimates that transnational criminals and other parties raked in nearly $70 billion from ORCs against U.S. businesses in 2019 alone.

Red flags, national priorities

Pharmacies rank as the top target of ORCs, followed by big box stores, home improvement retailers and grocers.

But organized theft groups, or OTGs, have recently expanded beyond retail to stealing entire shipments of cargo at railroad stops, overnight storage centers and other stages of transportation to the tune of $15 billion to $30 billion a year.

Some OTGs use online research to glean the names, letterhead and other “identifiers” of legitimate businesses, then forge records that they then use to take custody of their high-value cargo en route.

“The stolen cargo will be sold as is, or comingled with legitimate merchandise to be sold by a wholesale company or similar business,” ACAMS and HSI warned. “Financial transactions related to these thefts are usually business-to-business transactions by check, wire transfer and/or cryptocurrency.”

Other OTGs have posed as freight handlers to trick actual companies into wiring them funds in advance to cover the cost of fuel for delivering their merchandise. They then subcontract another carrier to deliver the goods and keep the fuel payments for themselves.

Organized retail crime did not appear on the Treasury Department’s inaugural list of high-priority threats of illicit finance last year but directly intersects with several that did, including terrorist financing, drug trafficking, human trafficking and the financing of weapons of mass destruction.

ORC-related transactions also show many of the suspicious characteristics that sometimes mark payments associated with those eight threats, such as copious movements of cash across state lines, as well as regular deposits in locations far removed from a client’s listed address followed by rapid withdrawals of comparable sums.

Checks paid for no apparent commercial purpose to individuals with no clear relationship to the account holder may also indicate ORC, according to the report, as does the involvement of apparent shell companies with beneficial ownership structured below the 25 percent reporting threshold.

“Unusually large number of beneficiaries receiving funds from one company … may be indicative of payment to fencers,” according to the report.

Difficulties in identifying and vetting the originators and beneficiaries of wire transfers via online sources, through commercial databases or by direct inquiry to the account holder should trigger further investigation, HSI and ACAMS advised, as should large, regular wire transfers made in round-dollar amounts.

Businesses that claim to function as warehouses, merchandise sellers or other similar enterprises while producing no evidence of having ever purchased goods should also raise suspicion, according to the report, which lists 65 red flags in total.

Contact Colby Adams at cadams@acams.org