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Black Market Billions: How Organized Retail Crime Funds Global Terrorists, CourseSmart eTextbook

By Hitha Prabhakar

Published by FT Press

Published Date: Oct 31, 2011

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Organized retail crime is now a $38 billion business. Synchronized global teams using advanced technologies are stealing massive amounts of products–and, if that’s not bad enough, the profits are being used to support terrorist groups bent on destroying America. In this eye-opening exposé, veteran journalist and retail consultant Hitha Prabhakar connects the dots and follows the money, taking you inside the world’s fastest-growing criminal industry.


You’ll learn how the Internet, social media, and disposable cell phones have opened the flood gates for US-based domestic and international criminals, and how multimillion-dollar thefts are funding everyone from Al-Qaeda to the MS-13. Prabhakar introduces you to participants at every level of the chain, from consumer to terrorist, and shows how thieves and crime rings are at work in industries ranging from cigarettes to baby formula, designer handbags to couture dresses.


Black Market Billions draws on extensive first-person interviews with government, law enforcement, and industry task forces, as well as some of the thieves or “boosters” themselves.  She explains how retailers and consumers are being duped by sophisticated criminal networks… why the piracy economy has exploded in recent years… why preventive measures have failed… and what to expect next, as organized retail crime reaches a terrifying critical mass.

Table of Contents

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

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Black Market Billions: How Organized Retail Crime Funds Global Terrorists, CourseSmart eTextbook
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$14.99 | ISBN-13: 978-0-13-282255-8