Black Market Billions
How Organized Retail Crime Funds Global Terrorists

From piracy to counterfeiting to cargo theft, organized retail crime has exploded into a $38 billion industry. Synchronized global teams of thieves are pilfering immense volumes of high-value products, counterfeiting even more--and using the profits to support the world's most vicious terrorists and criminal gangs. In this eye-opening piece of investigative journalism, top business reporter Hitha Prabhakar connects the dots and follows the money deep into the world's fastest-growing criminal industry. You'll learn how the Internet, social media, and disposable cell phones have opened the floodgates for a new generation of criminals--and how buying something as innocent as a counterfeit handbag or discounted cigarettes actually funds terrorist groups from Al-Qaeda to Central America's drug lords. Black Market Billions draws on extensive first person interviews with law enforcement, industry, and the criminals themselves to reveal how retail crime rings impact the security in every country in which they operate. Prabhakar goes "inside" to reveal why the piracy economy has exploded...why preventive measures have failed...and what to expect next, as organized retail crime reaches a terrifying critical mass.

Introduction
1
Part I: The Piracy Economy
Chapter 1: Organized Retail Crime Goes Global
9 Why Is ORC Such a Threat?
11 The Promised Land: Money Talks
13 Made in America: Homegrown Terrorism
17 Recruiting from the Inside
19 From Prison to Gangs to the World's Most Notorious Terrorist Group
21 Access to Funding Gets Creative
25 Burrowing In: The Hezbollah Finds a Home in the U.S. and South America
27 From America to South America: Ties Get Stronger in the Tri-Border Region
28
Chapter 2 When a Deal Isn't a Deal
31 Getting a Slice of Luxury the Cheapest Way Possible
34 The "Real Deal"
36 Dying for a Deal: The Recession Doesn't Make Aspirations Go Away
38 Big Takedowns Take Precedence Over Smaller Offenders
39 Counterfeiters and ORC Move Their Operations Online
40 eBay's Swift Response
42 Too Little, Too Late
44 Lurking in the Shadows: Stolen Gift Cards Bought Online
45 Easy to Obtain, Easy to Sell
46 Fake-out: Retailers Fronting as Legitimate Stores
48 Protecting Yourself: Know the Signs of E-fencing/ORC
51
Chapter 3: The Cost to the Stores
53 The Blame Game
54 Insider Information: Employee Theft and ORC
54 Human Resources Fail: Hiring the Wrong People
56 Wholesale Scam: Terrorist-Affiliated Warehouses Sell to the Little Guy
61 Taking a Bite Out of the Balance Sheet: Economic Downturn Fosters Cargo Theft
64 Coordinating Information in Real Time: LAPD and APD Case Studies
67
Part II: Follow the Money
Chapter 4: The Money Trail and the Business of Cross-Border Trade
77 The Warehouse: Ground Zero for Cross-Border Trade
80 Profile of a Purchaser
81 Keeping Shelves Stocked Through Cargo Theft
83 Coveted Items: Over-the-Counter Drugs
84 Profile of a Cargo Thief
86 "Shell Stores": A Conduit for Organized Retail Crime
87 Shell Stores Move Online
89 A Hotbed of Stolen Merchandise: Flea Markets
91 Nabbing the Bad Guys: Classifying Organized Retail Crime as a Felony
91 Insurance Companies: The Missing Link
93 The Gray Market: Another Retail Facilitator of ORC
94 Laws Have Been Passed, But Are They Helping?
95
Chapter 5: Profile of a Booster and a Fence
97 Moving the Merchandise: The Role of a Fence
100 Being Convicted as a Level 1 Fence: More Like a Slap on the Wrist Than a Slap in the Face
101 The Level 2 Booster: Inside the Mind of a Potentially Dangerous Criminal
104 Other Forms of Theft from a Level 2 Booster
106 Level 3 Boosters and Fences: A High-Level Organization Equals High Profits
108 Level 3 Boosters: Frequently Lifted Merchandise
112 Curbing Boosters and Fences: What Does and Doesn't Work
115
Chapter 6: Family Ties
119 When Family Funds Support Terrorism
121 Assad Muhammad Barakat and His "Family"
123 Illegal Entry into the U.S. Is Not Difficult--if You Have Money
127 The Great Entrepreneurs: Terrorists
132 The Trust Factor: The Basis of Any Organized Retail Crime Ring
136
Chapter 7: Money Laundering 2.0
139 The Three Stages of Money Laundering
141 Organized Retail Crime and Latin America
151 Funneling Money Through the Black Market Peso Exchange
152 The South American, Mexican, and African Connection
155
Chapter 8: The Political Agenda
159 Homegrown Terrorism: How Retail Theft and Piracy Has Funded Terrorist Operations
160 Rebel Kids: Extremist Ideas Financed Through International ORC
163 When Things Went Awry
164 ORC Funding by Way of Somalia: A Tale of Two Misguided Kids
165 As Local as Down the Street
168 Funding Evil Under the Guise of Charitable Contributions: The Mosques
168 Muslim Charities: Capitalizing on Natural Disaster and Religious Empathy
169 Terrorist Fund-Raising Via Charities Finds Roots in the U.S.
172 Charitable Donation Loopholes: How the IRS and Banking Systems Failed to Prevent Fraudulent ORC Funds from Financing Terrorist Groups
173 Charities Turn to a Cyber Audience
175 Why the Government Can't Regulate Charities
175
Chapter 9: Strange Bedfellows
179 How Banned TVs Funded Bombings
180 The Business of Cigarette Smuggling
183 The EC Versus R.J. Reynolds Tobacco
185 The Role of Money Brokers and Money Launderers
186 The History of Cigarette Smuggling
188 Cigarette Smuggling Funds Local Terrorism Around the World
189 Chiquita International Brands: "Either You Pay Me, or I Am Going to Kill You."
192 Dole Foods' Involvement with the Colombian Paramilitary
195
Part III: Putting a Band-Aid on a Broken Leg
Chapter 10: The Failure of Preventative Measures
201 Acting Locally, Thinking Globally
202 Types of ORC Theft Prevention That Are Supposed to Work But Don't
204 A Bottom-Line Breakdown of Costs
207 Legal Issues: Defining ORC Versus Shoplifting and Shrinkage
215 Regulating the Resale Market
216
Chapter 11: Letting the Bad Guy Get Away
219 Regulation Epic Fail: How Banking BSAs and AML Programs Let Terrorist Funding Slip Through the Cracks
222 Continued Failure to Regulate IFTs: The Costs to Local and Federal Governments as Well as Retailers
223 Failure to Regulate Hawalas
224 IFTs Get Sophisticated: Stored Value Cards
227 Bulk Cash Smuggling Comes in a Smaller Package
228 Retailers Feel the Pain of SVC Fraud
230 Credit Card Fraud Is Even Worse
231 RICO Defined
234 Why ORC Rings Still Exist: Money Laundering and the RICO Statute
235 More Problems with RICO: It's in the Definition
236 Laws That Once Protected Potential Terrorists Have Changed
239 Defining "Material Support" and "Coordination"
239
Epilogue
243
Glossary
247
Endnotes
271
Index
299