2020 has been a year of surprises. Below are the details about the ORC operation that recovered over $8 million of stolen products, had multiple arrests, and resulted in a $50 million case against a highly advanced ORC group. Here’s how it all happened and what we can learn from it.
CVS Puts a Strategy in Place
With COVID-19 forcing companies to pause their operations during the start of the pandemic, “essential” businesses like CVS Health kept their doors open. But with fewer stores operating, those businesses became a target for ORC groups. Ben Dugan, Senior Manager of Organized Retail Crime for CVS Health said, “We’ve heard a lot of bad news about how the coronavirus is impacting our lives and businesses, and ORC investigations are no exception… To make matters worse, at least 8,000 nonviolent offenders have been released from jails, many of whom are ORC offenders.” Dugan said in an interview with LP Magazine.
CVS began their loss prevention plan by having their asset protection team meet and work with company stakeholders to adjust their current ORC strategy. The asset protection team started by reviewing the information they already collected about the ORC crime groups. This information included reviewing video surveillance, previously gathered evidence, and speaking with store employees. They gathered all the information and created case presentations to help identify these criminals and keep their stores operating safely and efficiently.
John Liesching, Vice President of Asset Protection at CVS Health, said in an interview with LP Magazine, “ORC operations are getting more sophisticated, especially given the volumes of stolen merchandise being sold through online marketplaces. Thus, it requires retailers to ‘up their game’ by making strategic and timely investments in their tools, processes, and people to appropriately bring to justice these illicit enterprises. That is exactly what we have and will continue to do at CVS in supporting a zero-tolerance approach to this type of criminal activity.” At Product Protection Solutions, we are continually helping our customers ‘up their game’ through our TotalLP App by aggregating data in real-time to let stores like CVS and others know what items are being stolen in locations near them. The app also makes it simple to click to source and shop item-specific theft prevention solutions in just seconds.
CVS and Law Enforcement Team Up
“Operation Proof of Purchase” began when CVS’s ORC teamed up with the Division of Law Enforcement’s White-Collar Investigation Team, the San Mateo County Sheriff’s Office’s Crime Suppression Unit; the California Highway Patrol; and the San Francisco County District Attorney’s Office. This public-private task force included almost 100 law enforcement officers and was lead by the CVS’s ORC team investigators, Anna Isabel Marquez and Ryan Puryear.
From Boosters to Street Fences to Illicit Wholesale Operations
During this time, investigators Marquez and Puryear, while working from home, began to investigate store reports as ORC crimes increased. After reviewing the store’s video surveillance, Marquez and Puryear were able to identify the subjects on camera who were linked to criminal organizations, with help from law enforcement detectives. As the subjects were determined, Marquez and Puryear began monitoring their activity and identify which subjects were involved in reselling stolen merchandise. Having a take charge, loss prevention system in place can help guard your business against thieves.
When state and corporate restrictions were lessened, Marquez and Puryear could return to work in the field and continue gathering information on the professional thieves, also known as boosters. (Boosters are professional shoplifters who resell stolen items.) The investigators apprehended and arrested the boosters. Once in police custody, many boosters agreed to cooperate with law enforcement, which helped them identify and arrest a “street fences” group. (“Street fences” are the ‘middlemen’ who purchase the stolen items from the boosters.) The alleged “street fences” included Edgar Geovany Robles-Morales (28-year-old San Francisco resident), Isis Vasquez-Villanueva (26-year-old San Francisco resident), and Jose Villatoro (45-year-old Daly City resident).
Soon law enforcement discovered the stolen items were being sold to an illicit wholesale operation. Allegedly, the illegal operation was run by Danny Drago, also known as “The Medicine Man”. Drago allegedly had the boosters steal small items that would have a high resale value and extended expiration date (to help increase the resale value). Solutions like our theft buster adhesive label, which lies over the UPC, cannot be peeled off without ruining the whole package and destroying its resale value, which protects these items that thieves want to resell. As the ORC operation moved to the San Francisco Bay area, millions of stolen products were still being resold below the retail value.
Closing in on “The Medicine Man”
During this time, the investigation extended to other criminal activity and was clear that it would only get bigger. Working with a loss prevention service team, like PPS, will meet your current needs and anticipate future needs. CHP Lt. Kevin Domby said in an interview with LP Magazine, “Any one of these police departments are not going to be able to connect the dots on these less-than $1000 thefts, but the retailers will know that they’ve had 10 stores hit and might have ten different law enforcement agencies working on those smaller cases. The retailer knows they’re connected to something larger. We can then work with everyone involved to put it all together.”
The investigation led to the Tenderloin neighborhood in San Francisco, where an ORC group was purchasing and reselling the stolen items to a distribution warehouse in Concord, CA. They tracked many of the stolen items to three residences, two distribution warehouses, and eleven storage units. The task force made several arrests during this time, including “The Medicine Man” Danny Drago (50-year-old) and his wife, Michelle Fowler (48-year-old) from Concord, CA.
Officers recovered $85,000 in cash, a high-speed bill counting machine, and several vehicles at Drago’s home. Drago allegedly moved the stolen merchandise through a shell company, D-LUXE OTC, using online marketplaces (Craigslist, Facebook Marketplace, Amazon, and eBay).
Over $8 million in stolen items were recovered, but investigators believe tens of millions have yet to be found. The investigation further showed that allegedly the ORC suspects transported, stored, and sold stolen items in other countries and then laundered the money back to the U.S. Edgar Geovany Robles-Morales, Isis Vasquez-Villanueva, Jose Villatoro, and Danny Drago and wife Michelle Fowler were all charged with Criminal Profiteering, Money Laundering, Conspiracy to Commit, Possession of Stolen Property, and Organized Retail Theft, all felony charges in the state of California.
When the COVID-19 pandemic hit, it forced CVS Health and other retailers to look at multiple and new ways to protect their business. Dugan said, “We were put in a position where we had to evaluate how we would effectively deal with ORC issues during the pandemic, putting together the right plan to focus research efforts, collect information, increase awareness, and continue to build key partnerships with our law enforcement partners….This case is just one example of how that strategy has paid dividends.”
“Operation Proof of Purchase” showed that ORC groups are more than shoplifters, and it’s more important now than ever for retailers to be prepared. As online demand for products continues to grow and stolen items are being resold, now is the time to invest in a product protection team whose dedication and commitment to you will go beyond the initial sale.
What can you do to protect your business?
This case was not a rare occurrence, but similar cases are being uncovered all over the U.S. Retail shrinkage, and ORC groups don’t just hurt your business. However, they can lead to higher prices for consumers, reduce tax revenue for the local community, and even lead to more dangerous crimes. It’s time to make a change. Here at PPS, we are the experts in loss prevention services. We take pride in our ability to work with our customers to find the right solution for them.
Connect with us today so we can start building a partnership to protect your products and secure your bottom line at 888.542.3065 or email@example.com
“Preparing for an ORC Epidemic Post COVID-19” –
Operation Proof of Purchase: The Story Behind a $50 Million ORC Case –