▶ 0:16:08Chair Grassley: Morning, everybody. Today's hearing addresses the continued rise in organized retail and supply chain crime and the criminal networks that are involved in that criminal activity. We have all seen videos of mobs ransacking stores of thousands of dollars of goods and doing it in a very short period of time.
▶ 0:16:40Chair Grassley: Somebody measured one time two minutes. The reality is some of the worst criminal organizations, including cartels, terrorists, and human traffickers, use this type of crime, funding their misdeeds, or longer ill-gotten proceeds.
▶ 0:17:03Chair Grassley: These groups steal large quantities of merchandise from retail stores and the supply chain an attempt to resell the stolen items online through other illicit channels.
▶ 0:17:21Chair Grassley: One homeland security investigation operation called king of thieves uncovered organized retail crime ring which sent millions of dollars in criminal proceeds overseas. That same group financed coyote fees for deported individuals to return to the united states.
▶ 0:17:46Chair Grassley: Earlier this year in katy, texas, law enforcement discovered that mall thieves were linked to cartels responsible for over $100 million in theft across the united states. So far, law enforcement officials have linked 98 individuals to this ring.
▶ 0:18:11Chair Grassley: This threat has evolved to supply chain's exposing significant vulnerabilities. The justice department recently indicted 11 defendants, including nine illegal immigrants, with stealing nearly half $1 million worth of nike shoes.
▶ 0:18:35Chair Grassley: The defendants kn the defendants ' new valuable goods -- knew valuable goods were in train cars with high-security locks. They cut the train's braking system which can cause derailments and serious injuries.
▶ 0:18:58Chair Grassley: Criminals see this type of crime as a low risk very high reward way to fund their enterprises with no regard to the people they endanger. It is not just luxury goods these thieves are after. Items in food and beverage categories are among the most stolen in supply chain crime.
▶ 0:19:26Chair Grassley: These goods are transported in specific ways to maintain food safety from infant formula to basic groceries. Once the seal is broken, a single pallet of goods is stolen, the entire container is no longer safe for consumption. Congress must treat these acts for what they are. They are acts of violent sophisticated criminals exploiting a patchwork system.
▶ 0:19:58Chair Grassley: Efforts to address this sweeping problem through civil actions are insufficient. Criminal action must be met with criminal punishment. Federal coordination is needed to share information, promote collaborative investigations, and fully address the sweeping cross jurisdictional crime that impacts all americans.
▶ 0:20:27Chair Grassley: Homeland security investigators estimate that the average american family will pay more than $500 annually in additional costs due to the impact of organized retail crime.
▶ 0:20:43Chair Grassley: This is one of the many reasons 38 states attorney general support senator cortez masto's and my bill that goes by the title of combating organized retail crime. Many of the signatories on this letter are from members of this committee's own state.
▶ 0:21:10Chair Grassley: They wrote, "this legislation will provide the rest of -- the necessary resources at the state and federal level to get those behind this nationwide problem to justice." so without objection, I will enter the letter into the record and now call on ranking member senator durbin for his opening statement.
▶ 0:21:32Sen. Durbin: Thanks, chairman grassley, for holding this hearing to look into large-scale theft of retail products that are then sold to unsuspecting consumers, often in online marketplaces. This is not a new problem. Back in 2008, I met with home depot. They told me the story of a drill they sold exclusively that was being found for sale new in the box and at a discount by sellers online.
▶ 0:22:00Sen. Durbin: It had to have been stolen in some part of the manufacturing or sales process. And it was not just tools. This was and still is happening in all kinds of products, all kinds of stores, including cosmetics, electronics, clothes, over-the-counter drugs, toys, and Mr. chairman said, food and other things. I remember when the ceo of walgreens came in based out of illinois.
▶ 0:22:26Sen. Durbin: I said, why do I have to call a clerk at your drug store I want to buy underwear so they can unlock the shelf and I can buy the underwear? Are these so precious that they have to have special surveillance and guarding? He said the fact of the matter is retail theft takes these things in volume and sells them in volume these things in volume and sells them in volume. It is not -- and sells them in volume. It is not the individual.
▶ 0:22:55Sen. Durbin: This is a problem that affects everybody. Higher prices, lost jobs, and lost investment in jobs that cannot keep up with the rising cost of theft forced to close their doors. I worked on this issue for a long time. As chairman of the committee years ago, I held a hearing cleaning the online marketplace to protect consumers from stolen, counterfeit, and unsafe goods. Not long after congress passed my informed consumers act bipartisan bill I introduced with senator bill cassidy, republican of louisiana.
▶ 0:23:28Sen. Durbin: This law requires online marketplaces to correct, verify, and disclose information about high-volume sellers who offer new or unused consumer products for sale on the platform. That home depot drill I talked to you about earlier, when they found out it was being sold online, clearly had been stolen, they contacted the online operation and said this is a stolen product. There is no doubt about it. The online operation said, so what? That is not our responsibility. That is somebody else's.
▶ 0:23:59Sen. Durbin: This bill changed that. The act is guided by three principles, verification, transparency, and accountability. If someone is going to sell a large volume of goods online in a market place, they should tell the marketplace they are. Home depot could not figure out who was selling these. The online operation would not identify the user. The seller should be verified.
▶ 0:24:23Sen. Durbin: Second, for products sold online that turn out to be fake, stolen, or dangerous, consumers should be able to report it and find the seller and make sure the seller cannot just disappear and reappear with a new name. Third, if a consumer orders and product and it is filled by another company, the marketplace should let the consumer know.
▶ 0:24:46Sen. Durbin: I am sad to report to you that despite two years of the passage of this bill, the ftc has literally dropped the ball on enforcing the informed consumer act. It has been more than two years since this law went into effect. The federal trade commission has not even propagated regulations in two years to implement. The ftc has received hundreds of complaints regarding violations of this law, but how many enforcement actions has this agency taken? None, zero.
▶ 0:25:16Sen. Durbin: This is undetectable and must change. The ftc has to step up and enforce the law that we passed and the president signed. In the meantime, state and local governments have stepped up their efforts. In my home state of illinois, the cook county regional organized crime task force brought together more than 100 law enforcement agencies in 30 major retailers for a crackdown that resulted in hundreds of arrests across 28 states. That is a success we must build on.
▶ 0:25:45Sen. Durbin: Federal law enforcement also has an important role to play. We must acknowledge this administration has announced different priorities. Instead of combating crimes like I described, the trip administration has diverted critical resources to the president's mass deportation agenda. Homeland security investigations play a leading role in combating criminal networks and organized crime, including organized retail theft.
▶ 0:26:13Sen. Durbin: But in this administration, it has been diverted to rounding up immigrants, many of whom pose no threat whatsoever to this country. According to one recent report, "hsi supervisors have waived agents of many cases so they have more time to make immigration enforcement arrests. One veteran agent said, no drug cases, no human trafficking no child exportation. It is infuriating.
▶ 0:26:41Sen. Durbin: Instead, he said hsi is arresting gardeners. This is not the actions of an administration serious on crime. Diverting resources leaves us less equipped to target and disrupt criminals like those in organized retail theft. We have to have an honest discussion on the role of the federal government. I look forward to the dialogue today. Thank you, Mr. chairman.
▶ 0:27:07Chair Grassley: Before I introduce the witnesses, I was say thank you for the time you put in to prepare for this and for going out of your way to be with us to help solve this very important issue. Our first witness, the honorable david glawe, president and chief executive officer of the national insurance crime bureau. In this role, Mr.
▶ 0:27:32Chair Grassley: Glawe leads a united effort among property-casualty insurance companies, law enforcement agencies, car rental companies, and other partners to combat insurance fraud. He served in the intelligence community and law enforcement for 20 years or more before retiring from public service.
▶ 0:27:57Chair Grassley: He was the senate confirmed under secretary of homeland security for intelligence analysis, and he happens to come from the state of iowa. Really. Yeah. Donna lemm. Mrs. lemm is the chief strategy officer of an intermodal carrier and the largest marine short distance transport provider in our country, imc logistics.
▶ 0:28:27Chair Grassley: She is a known leader in the industry, having worked in logistics and transportation for over 30 years. Iomc is -- imc is based in memphis, tennessee, one of the nation's largest freight hubs. Scott mcbride, the chief global asset protection oh officer for american eagle outfitters. After serving as a marine, Mr.
▶ 0:28:55Chair Grassley: Mcbride started his career at american eagle as a store associate in 1993. He has been with the company obviously for more than 30 years. Mr. mcbride is also chairperson of the loss prevention asset protection council at the national retail federation.
▶ 0:29:19Chair Grassley: He recently received loss prevention magazine founder's award for excellence in leadership. District attorney summer stefan -- district attorney summer stephan is the current president of the national district attorney's association.
▶ 0:29:41Chair Grassley: She is the district attorney for san diego county, california, the second largest da office in california and the fifth largest in the united states. As district attorney, Mrs. stephan created a specialized team to investigate and prosecute organized retail crime cases, working closely with businesses and law enforcement.
▶ 0:30:08Chair Grassley: She is recognized as the national leader in combating human trafficking and sex crimes as well as organized retail theft. Now I am going to ask you folks to stand so we swear you in. Do you swear that the testimony you are about to give before this committee will be the truth, the whole truth, and nothing but the truth, so help you god? They all have said yes.
▶ 0:30:42Chair Grassley: Now you may give your opening statement from glawe across the table there. So please begin, Mr. glawe.
▶ 0:30:55Mr. Glawe: Chairman grassley, ranking member durbin, and members of the committee, thank you for the invitation to testify and hold this important hearing on organized retail and cargo theft. Nicb is the premier organization committed to detecting, preventing, and deterring insurance crime and fraud through intelligence driven operations. Nicb has been fighting insurance related crime since 1912.
▶ 0:31:26Mr. Glawe: We are supported by over 1200 insurance companies. For nearly 115 years, nicb has been at the intersection of the insurance industry and law enforcement, serving as a hub for reports of crime. Nicb is codified by name into many crime reporting laws. This gives nicb unique ability into organized crime trends nationwide.
▶ 0:31:52Mr. Glawe: Nicb trains and assists law enforcement in the investigation crimes affecting consumers as well as our members. At the federal level, nicb is especially proud of our long-standing relationships and partnership with the U.S. department of homeland security and the federal bureau of investigation.
▶ 0:32:10Mr. Glawe: As an example, nicb special agents working with our federal partners leverage our expertise on vehicle identification numbers also known as vins to help identify the vehicles in the world trade center and oklahoma city bombings. Nicb assistant state and local law enforcement on 6000 vehicles in wake of the maui and los angeles wildfires.
▶ 0:32:33Mr. Glawe: These public and private partnerships continue today in our efforts to combat threats that transcend state and national borders, including organized thefts. These sophisticated trends organizations that profit from these crimes. Cargo theft exploits supply chain vulnerability. It is big business big money, that's big business, big money, and big opportunity -- it is big business, big money, and big opportunity.
▶ 0:33:01Mr. Glawe: In 2024, cargo theft sword to new highs with estimated losses exceeding $1 billion. This year we expected to rise another 22%. Other estimates suggest cargo losses may reach up to $35 billion annually. In the past 18 months, nicb has assisted in more than 240 cargo theft investigations leading to over 70 recoveries valued at nearly $40 million. Cargo theft are not the result of small operations.
▶ 0:33:31Mr. Glawe: These are well-funded sophisticated criminal businesses which include mexican drug cartels as well as operations out of west africa, china, and eastern europe. Often secured stolen goods come everything from sports drinks to sports cars, are routinely exported into illicit markets to finance other criminal activities including drugs, weapons, and even terrorism.
▶ 0:33:52Mr. Glawe: As an example, nicb weasley a fisted -- nicb recently assisted to stop equipment to be resold overseas. In 2024 we assisted in a multistate investigation that resulted in more than 50 arrest and the recovery of vehicles to include weapons, drugs, and more than $8 million of cargo stolen from a major railroad. Recently, intercepting stolen teepees bound for panama.
▶ 0:34:22Mr. Glawe: Nicb's investigations confirm transnational criminal organizations are exploiting supply chain vulnerabilities by poisoning as legitimate or fictitious carriers through identity theft and synthetic ids. These compact tactics compel a coordinated response from the public and private sectors. In the public sector, deterrence and coordination are critical. Criminals currently benefit from inadequate deterrence and fragmented law enforcement coordination.
▶ 0:34:52Mr. Glawe: Private sector must commit to stronger carrier vetting and adopting other standards for preventing theft. Congress can help by passing the bipartisan combating organized retail crime act. It would increased deterrence by establishing a coronation center within the department of homeland security. Currently, there is no central hub for intelligence sharing and operation sharing, making it difficult to confront the full scope of the threat. The coordination center would address this gap.
▶ 0:35:22Mr. Glawe: Homeland security investigations is well-suited for this role given its expertise in transnational criminal organizations. Public-private partnerships are essential. Nicb stands at the intersection to support the center with any expertise, intelligence, support, and resources. Nicb applauds the bipartisan work of the senate to combat cargo theft, which harms all consumers. Thank you for this opportunity to testify, and I look forward to answering your question.
▶ 0:35:50Ms. Lemm: Chairman grassley, ranking member durbin, and committee members, thank you for the opportunity to testify on the financial rise of cargo theft. We need your help. My name is donna lemm, and I serve as the chief strategy officer of imc logistics.
▶ 0:36:12Ms. Lemm: Imc and our carriers are -- ata carriers are on the frontline of this crisis. A few years ago, cargo theft was barely on my company's radar. In 2021, we had five cargo theft reported. In 2024, we had 876 cargo theft reported. That is a 17,500% increase -- 17,520% increase.
▶ 0:36:45Ms. Lemm: The landscape has shifted. They are sabotaging our supply chain. So much of our cargo moves intermodal e. Our partner railroads share with us drone footage of thieves cutting air brakes, containers strewn across the desert, and them emptying the containers in minutes. They arrive for pickup in our large hubs in chicago, memphis, st. Louis, kansas city, and dallas.
▶ 0:37:15Ms. Lemm: These contents and containers sometimes arriving empty or with contents have gone. Cargo theft impacts all of us, including our food and agricultural shippers who are caught in this explosion of organized theft. Full trailer loads of food and beverages that have been targeted have been stolen and gone.
▶ 0:37:37Ms. Lemm: Agricultural exports by rail sadly seeing loads pilfered, seals cut, our cargo spoiled, damaged, and lost. It becomes so challenging to pinpoint where the theft happens in these interstate commerce moves. Arrests and prosecutions are nearly impossible. Meanwhile, consumer prices and insurance rates soar.
▶ 0:38:06Ms. Lemm: The level of violence surrounding these acts becomes more threatening. On a local level, cargo theft has also taken a very large toll. Just eight weeks ago, our memphis terminal was stormed by seven vehicles. Our gates cut, breached. Criminals went straight to a specific area of our terminal. They were interrupted by our security team, but not before they had stolen $25,000 worth of merchandise in just three minutes. In our riverside, california, terminal, similar stories.
▶ 0:38:37Ms. Lemm: Three mass criminals could ever gates in broad daylight and opened six containers before interrupted by overgaard. We are talking about hundreds of thousands of dollars stolen in incidents across the united states with no resolution. How can we connect the dots at local, state, and federal levels on these cargo crimes? Here is an example of the value if we do. We had two containers of appliances stolen in st. Louis.
▶ 0:39:09Ms. Lemm: It was reported for insurance purposes, but no arrests were made. Several months later, we got a call from the atf. They have stumbled across our appliances in a warehouse that they rated these refrigerators were being stuffed with cash to smuggle money across the southern border. This is not just an insurance matter.
▶ 0:39:32Ms. Lemm: Cargo crimes if connected can help us link these operations orchestrated by transnational criminals. Recent heists like these put our whole supply chain and our workers in harm's way. Our employees and our drivers are our most valuable asset.
▶ 0:39:51Ms. Lemm: We invest millions of dollars in multilayered security, including surveillance equipment, vehicle barriers, tracking technology, engine immobilizes, sos buttons for our drivers and for our guards. We also have very advanced cybersecurity protocol. But these criminal groups are highly organized. They have formidable cyber capabilities of their own.
▶ 0:40:17Ms. Lemm: One fraudster stole a customer's identity to place an illegitimate delivery order with us, and we are sending unknowingly valuable goods right into the hands of these bad actors. Another group made counterfeit driver ids and fake pockets on the side of the truck to impersonate a real motor carrier. They stole five loads and chassis valued at more than $1 million.
▶ 0:40:43Ms. Lemm: Rising cargo theft and incidents like ours are happening to my counterparts across the trucking industry and across our supply chain. We cannot stay silent. Cargo theft will continue to metastasize unless congress recognizes the severity of the problem. Law enforcement devoting sufficient time and resources and the federal government taking the leading role in coordinating enforcement efforts.
▶ 0:41:11Ms. Lemm: This is why the trucking industry is enormously grateful to senator grassley and cortez masto for their leadership in introducing the combating organized retail crime act. This bill would put law enforcement's coordination on par with their sophisticated criminal adversaries and safeguard our national security. Cargo theft is robbing our supply chain to the tune of $35 billion per year. Who is harmed?
▶ 0:41:41Ms. Lemm: All of us. I thank the committee for their focus on this issue, and I look forward to your questions. Thank you.
▶ 0:41:55Mr. Mcbride: Chairman grassley, ranking member durbin, and esteemed members of the committee, thank you for the opportunity to address this critical issue of organized retail crime. Chairman grassley, thank you you to you and senator cortez masto for reintroducing the corca act of 2025 and inviting me to testify.
▶ 0:42:15Mr. Mcbride: My name is scott mcbride, and I am the chief global asset protection officer for american eagle outfitters, a national retail company that operates stores and online in all 50 states and represents more than 35,000 associates. I have also been an active member for almost 20 years of the national retail federation's loss prevention council having just completed a two-year term as chair and now currently chair emeritus.
▶ 0:42:46Mr. Mcbride: Imagine an organization that leverages masters level business concepts to unite individuals toward a common goal, harnessing technology to their advantage, and defining clear roles and responsibilities. You might think I am describing a successful retail company.
▶ 0:43:09Mr. Mcbride: But this group also uses intimidation and violence, electronic countermeasures to hide from and evade detection, and manipulates financial instrument on gift cards, and executes nefarious reverse logistics, tactics to sell, remove stolen product of fshore. Orc is far more than simple shoplifting.
▶ 0:43:37Mr. Mcbride: It represents sophisticated criminal enterprises perpetrating massive thefts, escalating violence against our associates and customers, crossing jurisdictional lines to avoid prosecution, and deploying professional-style tactics to fuel their nefarious operations, including reverse logistics, illicit liquidation, financial crimes, and recruitment. They repeatedly victimize retail stores and disrupt our supply chains.
▶ 0:44:08Mr. Mcbride: This is how an organized retail crime group operates. Orc is not new. Its veracity, sophistication , frequency, and geographic reach have medically increased in the post-covid era.
▶ 0:44:24Mr. Mcbride: These groups use encrypted message apps to recruit thieves, coordinate the consolidation of stolen goods, liquidate them through illicit online tertiary and black-market sites, and even for treatment stolen product out of the country.
▶ 0:44:44Mr. Mcbride: Simultaneously, retailers have invested in new technology to provide a clear insight into the scope of these stats, pinpointing the last known locations of missing items, time stamping video evidence of incidents, and enhancing collaboration with law enforcement across all jurisdictions. Despite our efforts, the problem continues to grow.
▶ 0:45:04Mr. Mcbride: Consider the recent case where homeland security investigations working alongside state and local law enforcement successfully interdicted an exfiltration scheme. Stolen apparel was being prepared for packing onto sea-land containers destined to cross the texas-mexico border.
▶ 0:45:24Mr. Mcbride: With the assistance of corporate investigators, hsi recovered almost 2000 pairs of american eagle jeans with other retail merchandise value exceeding $100,000 along with nearly $2 million in other retailer merchandise. Rfid research revealed these stolen aeo items originated from 35 stores in 13 states.
▶ 0:45:53Mr. Mcbride: Evidence from this seizure has already led to the discovery of a second arm of the same criminal group in utah and has generated additional investigative leads in multiple states. Without the national reach of hsi, we would not have achieved such success in developing this ongoing case, a case far beyond the reach or understanding of any one local or state law enforcement agency given the magnitude of the crimes across a -- crimes and the multitude of jurisdictions.
▶ 0:46:22Mr. Mcbride: This example clearly underscores the urgent need for national-level involvement to support local and state law -- state government, district attorneys, and state attorneys general.
▶ 0:46:36Mr. Mcbride: National visibility and link analysis are crucial to comprehending the entire scope of criminal involvement, enabling the appropriate agencies and offices to make the ir legal determinations commensurate with the full scope of the criminal activity and lead to the disruption and dismantling of organized criminal groups. In conclusion, the combatting organized retail crime act is an essential missing layer.
▶ 0:47:08Mr. Mcbride: It would bring together federal, state, local law enforcement with private sector experts to share vital information and collaborate on strategies to keep our stores and supply chains safe. Thank you for this opportunity to tell our story, and I look forward to answering your questions.
▶ 0:47:27Ms. Stephan: Good morning, chairman grassley, ranking member durbin, and respected members of the committee. My name is summer stephan. I spent 28 years as a prosecutor fighting crime and violence in my community, rose through the ranks to become the elected district attorney, and currently the chairwoman of the national district attorneys association.
▶ 0:47:56Ms. Stephan: I bring both the national and local experience to you to help bring a local prosecutor's view and law enforcement review to this issue. I want to focus on a topic that we often hear about, which is a characterization of this as being an economic crime. That is an absolute falsehood.
▶ 0:48:20Ms. Stephan: Anybody who goes to a store and looks in the eyes of the employees and talks to them will see a very different picture in america than we have had in years past. I went to an alta store where there are 20-year-olds are 20-year-old aspiring to become makeup artist. This is a story that is a chain that sells makeup, which is a target of organized retail theft.
▶ 0:48:47Ms. Stephan: The way that those clerks, young clerks looked was very different from the past. They are looking over their shoulder. They are waiting for something bad to happen. And why are they waiting for that? Because a crew of organized criminals attacked the alta stores and install $700,000 worth. How do I know this -- and stole $700,000 worth? How do I know this? We were angry in san diego to see the fear in our community.
▶ 0:49:19Ms. Stephan: I worked with the organized retail crime theft alliance, which has businesses and local and state officials. We were able to put together the case and solve it and be able to bring people to justice and send them to the consequences that they deserved. However, all of the products were already lost. They were either sold online or sold internationally. This same thing, I went to a small store selling perfumes.
▶ 0:49:51Ms. Stephan: The owner was an immigrant near the border. Again, this man had a different look. Not one of excitement like our business owners that are heart of america should have but rather a look of trepidation. He showed me his broken camera. He showed me how he has his cheap perfumes in the front, knowing that someone will come in and take his product. So what I want to focus on is not just theft.
▶ 0:50:25Ms. Stephan: Capital one said this was a $45 billion industry. I want to focus on our fight in san diego, where we have tried to preserve jobs. We know the U.S. chamber of commerce said 650,000 jobs have been lost. These are jobs for people to work and provide for their family. This elevates it by itself to a national issue.
▶ 0:50:50Ms. Stephan: But in addition to that, because of our efforts in san diego, we have been able to identify and prosecute in two years 218 defendants engaged in organized theft. And the best we could do is get up to the fence level, which is the second level at a level of $2.6 million.
▶ 0:51:14Ms. Stephan: Even despite the successful efforts and taskforces that came together, we were unable to get beyond to be able to track the product and the shock collars that are providing the shocking lists for people to go in and steal hundreds of sunglasses worth $350,000 or makeup or jeans or legos or our recent $8 million jewelry heist where two
▶ 0:51:45Ms. Stephan: Other states suffered from the same crew, but it was unsolved because there was no other system in the national scope that alerted us that they are coming to us potentially. These were part of identified and prosecuted as part of a south american group, transnational group that has been identified by the fbi. They have also been the people responsible for 100 residential burglaries.
▶ 0:52:16Ms. Stephan: In the cases we have done committees residential burglaries have been linked to multistate residential burglaries, again proving that this cannot be solved locally. It must be solved by local, state, and national.
▶ 0:52:32Ms. Stephan: This is why ndaa and san diego d.a.'s office supports the corca bill, because we need to bring bigger solutions to a really big problem that is affecting daily lives in every neighborhood. Thank you.
▶ 0:52:48Chair Grassley: Before I ask my questions, I got a couple of things. Last month, matt allen from the dea told this committee that criminal investigations go hand in hand with operation enforcement, homeland security investigation special agent in charge agreed that these crimes do not operate in isolation. Reconciliation made millions.
▶ 0:53:21Chair Grassley: That is intended to and will allow agents to tackle violent crime, including organized crime. I also want to put in the record either statements or letters on this legislation from over 260 member companies of the national retail federation.
▶ 0:53:46Chair Grassley: The national retail industry leaders association, alta beauty inc., home depot, national police association, national insurance crime bureau, association of american railroads, international council of shopping centers, intermodal association of north america, and the american trucking
▶ 0:54:16Chair Grassley: Association. Without objections, they will be entered into the record. So I am going to start my questioning. By the way, I will announce that on the democratic side the order is durban, white house, klobuchar, blumenthal, hirono. On my side, it is grassley, corning, blackburn, britt, moody. You are a strong supporter of my bill. You made an outstanding statement.
▶ 0:54:46Chair Grassley: The bill hands come along to enable the prosecution of retail and supply-chain crime groups using interstate commerce and establishing the organized retail and supply-chain crime coordinated center at hsi. How would this legislation improve the ability of law enforcement and prosecutors like you to tackle organized retail theft?
▶ 0:55:15Ms. Stephan: I believe, senator, this would be a game changer because with the 218 organized crime cases that our office has done in san diego, we have not been able to break through to what is going on nationally. We know these groups are operating nationally, and internationally. In fact, the retailers tell us their trackers are being sounding off in the middle of the seas heading to different countries.
▶ 0:55:46Ms. Stephan: But the investigations stop at the local level. This is a national problem that is draining the economic resources from americans, hard-working americans. But it is also draining the heart and soul and security of human beings. We have to be able to bring national solutions. We have multiple examples where national state and local solutions work.
▶ 0:56:13Ms. Stephan: When we are dealing with for example elder scams, we brought a national task force with the fbi. That is the only way we were able to identify nationals from china that can organize these scams and were able to actually bring both ricoh actions on the federal -- rico actions on the federal and my office brought state actions. Fentanyl, we have been able to drop that and san diego by 37%.
▶ 0:56:44Ms. Stephan: Absolutely would not happen without working with customs and border protection on a fast team when we got that done.
▶ 0:56:50Chair Grassley: Thank you. Mr. glawe, you served at the top level of law enforcement intelligence. We know from dhs reports that cartels, terrorists, and human traffickers facilitate organized retail and supply-chain crime or use the proceeds to finance other crimes. How are transnational criminal organizations using the crime to further their criminal activities?
▶ 0:57:19Mr. Glawe: Thank you for the question. We are embedded with the department of homeland security, hsi, and customs and border protection at all of the major ports and with the fbi. We are embedded with all 50 states and multiple fusion centers as well. Nicb is the information hub for carriers and these organizations. We have done it for 115 years. We have seen goods moving overseas.
▶ 0:57:47Mr. Glawe: In mexico, 2000 vehicles ended up south of the border. We know stolen goods are going to west africa and the middle east. From my prior role as the undersecretary and as an fbi agent here in washington, we know that the supply chains are interdicted with hezbollah. We have seen it through hamas. We know mexican drug cartels are south of the border.
▶ 0:58:13Mr. Glawe: The coordination center excellent to coordinate intelligence. As well as coordinating operations is critical. This committee is well aware of the counterterrorism center that provides information for operation, sharing resources and tactical level response. We know the successful model. This bill would get us there or partially there.
▶ 0:58:42Chair Grassley: Title 18 mixed federal crime to transport stolen property with a value of $5,000 or more in interstate and foreign commerce. Supreme court case law allows prosecutors to aggregate the value of stolen goods in common scheme to reach that threshold. Why is aggregation of theft amounts very important?
▶ 0:59:07Ms. Stephan: Aggregation is critical because it distinguishes between somebody who is drug addicted who goes in to steal something. It is still wrong but it separates them from the habitual organized criminals. It allows you to see the activity in totality and to be able to see the repeat offenses that form the structure of organized habitual criminals.
▶ 0:59:36Ms. Stephan: In california, we recently after a long tenure fight made a change in proposition 36 that allowed us to aggregate. It is already making a difference because we used to have criminals coming in with calculators to go right under $950, thus leaving them at a citation misdemeanor level. That is what caused all of our products to become locked up except the criminals that were committing the crimes.
▶ 1:00:06Chair Grassley: Thank you. Senator durbin.
▶ 1:00:09Sen. Durbin: Thank you, chairman grassley. This stephan, thank you for what you do and for endorsing this bill. It is an expansion of the federal enforcement, is it not? It would not apply to your jurisdiction, correct?
▶ 1:00:24Ms. Stephan: It actually is I think an expansion. I read it a few times. The task force puts together this duchenne center like a law enforcement coordination center. Then that information is supposed to feed to the locals and all the way up. So I view it as like the other taskforces on fentanyl where we worked with dea, that it will bring that fusion together to assist locals as well.
▶ 1:00:54Sen. Durbin: But the leadership under this legislation is federal. Correct?
▶ 1:00:59Ms. Stephan: Absolutely, yes.
▶ 1:01:01Sen. Durbin: That is the point I want to make. And the reason I make the point is going back to my opening statement. The investigations of these crimes at the federal level depends on the department of homeland security. Does it not?
▶ 1:01:15Ms. Stephan: That is what I read. Yes, sir.
▶ 1:01:17Sen. Durbin: That is what I understand as well. In february, the department of homeland security in washington ordered its entire investigations division composed of 6000 agents to divert focus on terrorists and human traffickers and drug dealers and shipped priority to the trumpet ministration's mission of deporting -- trump administration's mission of deporting people in the united states illegally.
▶ 1:01:46Sen. Durbin: Karen and foreign officials say it is keeping with the president's executive orders that demand a wholesale shift in resources to immigration crackdowns and removal. But they warn that shift will undermine high-profile investigations into some of the most dangerous transnational threats americans face, including mexican drug cartels smuggling dudley fentanyl across the border from mexico.
▶ 1:02:12Sen. Durbin: Chris campanelli, the former hsi supervisor agent, said a lot of my colleagues were afraid this was going to happen. This is going to be a total train wreck. So let's put the cards on the table. Yes, if anyone is involved in illegally being in the united states, undocumented or otherwise, and is engaged in criminal activity, they should be removed. Period. Prosecuted. Period. Or never let in in the first place. Period.
▶ 1:02:42Sen. Durbin: But what about those who have been here for years, working a job, showing up every day, raising a family which is mainly american citizens paying their taxes? Is that a priority over what we are discussing today? Not in my book. As far as I'm concerned, we should go after the most dangerous and threatening situations imaginable. I have described a few of them. The subject of this hearing is another one, retail theft.
▶ 1:03:09Sen. Durbin: I don't doubt for a second that what has been described to us today is part of a much bigger network, even reaching into drug syndication. To say we are worried about whether someone cutting grass on a golf course today is undocumented, we will put the resources of the federal government to putting them in a detention facility and deporting them, I don't think that is as high a priority as the subject of this hearing today. Miss stephan, let me ask you about criminal forfeiture.
▶ 1:03:37Sen. Durbin: Can you describe, this is not a quiz or a bar exam, why criminal forfeiture being added to this bill is important?
▶ 1:03:46Ms. Stephan: Because all of the crime, this works on greed and on money. So being effective means you have to forfeit, you have to take away the things that they stole. It is absolutely important because that is what they rely on for profit.
▶ 1:04:04Sen. Durbin: Asking you to get down to a little lower level. A primary education course on what criminal forfeiture is.
▶ 1:04:11Ms. Stephan: Criminal forfeiture is when you take moneys from bad to worse -- bad doers wrongdoers because they committed crimes. You are able to take cars, homes, anything related to their criminal activity.
▶ 1:04:29Sen. Durbin: There is an expansion of that in this new bill as I understand it. Is that the way you see it as well? Criminal forfeiture?
▶ 1:04:37Ms. Stephan: I saw criminal forfeiture. I did not see that it expanded beyond what is allowed, which is the nexus between the crime and the activity. I can go back and study it.
▶ 1:04:50Sen. Durbin: I am not being critical of the bill or your analysis of it. But I am saying the notion for dealing with some network and you find the kingpins, their personal possessions could be on the table as well if they are found guilty. Is that correct?
▶ 1:05:08Ms. Stephan: That is right.
▶ 1:05:09Sen. Durbin: I am all for that.
▶ 1:05:11Ms. Stephan: Yes.
▶ 1:05:12Sen. Durbin: That sounds good.
▶ 1:05:14Chair Grassley: I think this speaks a little bit to what you just talked about. This legislation implements criminal assets -- transportation of stolen goods and sale or receipt of stolen goods.
▶ 1:05:42Chair Grassley: The government uses discouragement to take the profit out of crime. No one has a right to retain the proceeds of their ill-gotten gains. Doing so would be an invitation to commit similar crimes tomorrow and forever. Senator cornyn.
▶ 1:05:57Sen. Durbin: Mr. chairman, let me add that I support that and I think you do too.
▶ 1:06:04Chair Grassley: Senator cornyn.
▶ 1:06:06Sen. Cornyn: Thank you all for being here. I was struck by the fact that in each of your testimony, you highlight the transnational aspect of this problem.
▶ 1:06:23Sen. Cornyn: In other words, this is not just a local crime that d.a.'s would prosecuted in san diego county but these are criminals in international organizations and it reminds me of what we have become familiar with in places like mexico where the cartels do a lot of different things, but it is all designed to generate money for the cartels, whether they steal food, fuel, traffic
▶ 1:06:57Sen. Cornyn: Drugs, or people. Now it seems like it has crossed our borders into the united states because I note in the katy mills mall case that occurred in april of 2025 in texas, two of the individuals that were apprehended had mexican ids, and in the news, we hear about marijuana farms in california where unaccompanied minors who were allowed into the
▶ 1:07:28Sen. Cornyn: Country without any real restriction during the biden administration were part of the roundup there. Ice, immigration and customs enforcement, estimates there are as many as 662,000 illegal immigrants currently in the country who have either criminal convictions or criminal charges pending against them.
▶ 1:07:55Sen. Cornyn: It strikes me as this is quite a workforce for some of these criminal organizations. In other words, things don't stop at the border. When people get into the united states who are unvented and who have criminal convictions or make crime their life's work, they have to be doing something. I wonder, Mr.
▶ 1:08:16Sen. Cornyn: Glawe, do you think that part of the fact that we have had these open border policies in recent years that have allowed unvented people, these are not just people who want to come here to work and have a better life, these are people who are unvented, we don't know who they are.
▶ 1:08:36Sen. Cornyn: But if it includes such a large contingent of people with criminal convictions or are currently charged with crimes, aren't they part of the workforce that are used by these organized criminal organizations to do what we are talking about here today?
▶ 1:08:54Mr. Glawe: Thank you for the question. In my current role and pastoral, we know transnational terminal organizations know no boundaries. These are billion-dollar businesses. A cartel runs like a fortune 500 company. Moving people and moving goods. It is all about the money. These organizations have connectivity to nationstates and terrorist organizations. We have seen that. This committee is well briefed on that and has oversight on some cases.
▶ 1:09:26Mr. Glawe: Regarding the vetting of individuals and goods, it is concurred -- it is critical. I know that very well. Identifying those criminal actors, those criminal networks, those terrorists coming in and out of the united states, and the goods being supplied in and outside of the country, the vetting process is critical.
▶ 1:09:48Mr. Glawe: I think this law, corca, is a good step in creating a center to identify the illicit goods and the people involved with trafficking those goods globally. It is an excellent first step. We well know this model works. It is a center of excellence model to target an illicit activity affecting the united states, affecting the consumers.
▶ 1:10:09Sen. Cornyn: Senator durbin raised a concern that some of the law enforcement authorities that are currently being used to repatriate or deport people with criminal records out of the country, that somehow they are being diverted from other law enforcement activities.
▶ 1:10:30Sen. Cornyn: But I will note that recently we voted for $170 billion addition to the funding for ice for detention facilities and for personnel and training. All of our democratic colleagues voted against it. I don't know. You really can't have it both ways. Do you believe as I do, Mr. glawe, then these go hand-in-hand in terms of addressing this problem?
▶ 1:11:02Sen. Cornyn: You cannot get at this problem without dealing with the people who are on the ground committing these crimes on a daily basis who are connected with these international organizations, can you?
▶ 1:11:10Mr. Glawe: Intelligence sharing on individuals and organizations and the supply chain is critical to have a hub for information sharing to identify the nefarious actors and operationalize a response.
▶ 1:11:21Sen. Cornyn: Thank you.
▶ 1:11:23Chair Grassley: Senator hirono, you are next.
▶ 1:11:28Sen. Hirono: Thank you, Mr. chairman. Thank you for testifying. I think part of the concern regarding the organized retail crime situation is the lack of, I would say, adequate information and data. Would you agree that we should have a better system of determining how much of this is going on?
▶ 1:11:54Sen. Hirono: I realize that you are here because it is a serious concern, but I do think a lot of this data is not reported to the national incident-based reporting, for example. That is an area that could be improved. Would you agree, any of you?
▶ 1:12:19Ms. Lemm: I would just like to comment that I agree. And one of the things that has been so interesting as we prepared for this testimony, our own statistics. I agree with you the stats that are being reported are maybe a fraction of maybe the actual theft that is going on. Motor carriers are the eyes and ears of our supply chain. We see everything. We are the first ones to see if that seal is broken. Right?
▶ 1:12:46Ms. Lemm: We are the first ones because we are held the same as we allocate responsible for that load. We look at our own statistics for the past four years.it is staggering . That is why I made the comment about in 2021 we had five reports of cargo theft. Five. By 2024, we had 876 reports. It is huge.
▶ 1:13:12Sen. Hirono: I think to the extent that it is increasing, it would also be helpful that we should have all of our large centers in particular reporting incidents of these kinds of crimes to the national incidents -based reporting system that we put together.
▶ 1:13:33Sen. Hirono: All of you testified that it is going to require the enforcement of whatever legislation that we enact will require a collaborative enforcement involving federal, state, local, and the private sector all working together. That is one of the things that you hope will be created under this law that we are contemplating. Is that a critical part of any kind of a law enforcement effort to get at this crime?
▶ 1:14:04Sen. Hirono: I would ask miss stephan.
▶ 1:14:06Ms. Stephan: Yes, exactly. I think being able to put that together, we did that at a state level, and it enhanced our ability. This is why we have been able to get to 218 organized criminal actors. But we know it goes well beyond that.
▶ 1:14:28Ms. Stephan: So being able to organize a similar thing on a national level because I can cite you multiple cases, senator, where the same group that we were able to hold accountable in san diego went to chicago, illinois, did damage, went to the state of washington, did damage. And we finally caught them.
▶ 1:14:50Ms. Stephan: We were c1 we were able to join r california crimes together, but we didn't have any kind of alert or information data sharing about what to look for, what is the profile, what is coming our way in this big jewelry heist I mentioned. Maybe there is another question.
▶ 1:15:16Ms. Stephan: >> with regard to the data sharing, this is something homeland security would supply. Is that your expectation, that homeland security would required to be the repository of a lot of the enforcement activity under the bill?
▶ 1:15:34Ms. Stephan: I expect a federal agency to do it because of my experience with federal agencies. For example we were simply guessing until the fbi took on the leadership of our elder justice task force, we were able to connect the dots and find out my seniors were losing $98 million a year.
▶ 1:15:59Sen. Hirono: Excuse me, I'm running out of time. To the extent there will be much bigger federal involvement in enforcement, there is a concern about what is happening at homeland security and the department of justice, that the diversion of resources and bodies to other than prosecuting and going after these kinds of crimes and dozens of experienced
▶ 1:16:30Sen. Hirono: People normally focused on these kinds of crimes are no longer there we can pass whatever laws we want but there is this commitment on this to enforcement at the federal level , we will continue to run into resource problems.
▶ 1:16:42Chair Grassley: Thank you you, senator blackburn.
▶ 1:16:46Senator Blackburn: Ms. lemm, welcome. We know you do a great job in memphis and we do a great job -- we know you do a great job. How long have you worked in logistics?
▶ 1:17:01Ms. Lemm: Actually, 38 years.
▶ 1:17:05Senator Blackburn: You have seen this as tennessee has grown to be a logistics hub in memphis where you have all of the class one railroads. You have the court of memphis moving a lot of cargo and containers moving up and down the mississippi river we have
▶ 1:17:36Senator Blackburn: The trucking organizations were located in memphis. It was a 5000% increase so this is an astounding we all know that week da's and weak judges that will not abide by sentencing guidelines and lock these people up is one of the
▶ 1:18:08Senator Blackburn: Reasons we have seen this cargo theft explode. I want you to talk for a minute about what you think has caused this explosion.
▶ 1:18:21Ms. Lemm: Well, I absolutely agree that part of it is there is no arrest and no prosecution. We also have a problem with an understanding of what the magnitude of cargo theft actually means. So often and the memphis police department does a great job. A tremendous job.
▶ 1:18:50Ms. Lemm: In so many ways, cargo theft, we speak almost a different language, a terminology. Many things are very different and so often when the local police do,, they may write this whole theft as vandalism. They are not immediately able to qualify and quantify what was taken, what is the value of what was taken? It is vandalism as we know it.
▶ 1:19:21Ms. Lemm: I think what we like so much about the bill is this outline and this standardization of what is cargo theft? What is it? We don't have a voice, we need a centralized place to report. I explained the incident in st.
▶ 1:19:51Ms. Lemm: Louis where we basically had the atf calling us to tell us we have your refrigerators. It is this ability to connect the dots, local, state, and federal that we don't have today and you asked the question about what is that, what could we do better in the state of tennessee, what could we do better in memphis? I think we are doing all that we can.
▶ 1:20:19Sen. Blackburn: Let's talk for a minute, pardon me, about that. You are right, it takes passing legislation, reframing the conversation, if you will, and then putting the parameters around that. But one of the things we have looked at is utilization of technology.
▶ 1:20:43Sen. Blackburn: Because of what you were talking about with cutting the fences and local law enforcement saying it is something that is vandalism or how do we know what the extent of the theft is? So changing the approach and gathering that evidence, utilizing technology, speak to that importance.
▶ 1:21:08Ms. Lemm: I 100% agree that they are better recording those instances. I think that could be a very helpful part of this discussion of reporting. Technology can help us do it faster. More efficiently and effectively. I really appreciate you even bringing that up.
▶ 1:21:40Ms. Lemm: We have a strong technology team in memphis and I would love to invite you to our headquarters to have maybe a further discussion about how we could bring in this idea of technology in this area of cargo theft where we need standardization.
▶ 1:22:06Sen. Blackburn: Thank, Mr. chairman.
▶ 1:22:08Chair Grassley: Senator? >> thank you. Thank you, Mr. chair. Colleagues, it is clear that across the country, policymakers are responding to this dynamic of increased reports of organized retail crime. It is on the news constantly.
▶ 1:22:41Chair Grassley: Through our collective experience it also depends on accurate data what we hear based on shrink estimates often conflates theft with inventory loss, employee error, and fraud.
▶ 1:23:06Chair Grassley: Without standardized disaggregated data there is a risk it may be based on more assumptions than actual evidence. Distinguishing between as opposed to employee theft and
▶ 1:23:37Chair Grassley: Other forms of loss?
▶ 1:23:40Mr. Glawe: Thank you for the question. We have been the hub for the insurance industry and law enforcement for 150 years. We have access to the data with crimes involved. We have seen almost a 50% increase in cargo theft and the goods inside the cans. In the last 18 months we have seen 200 theft investigations that our organization has been involved with.
▶ 1:24:13Mr. Glawe: Regarding the shoplifting it is the larger volume, the criminal organizations.
▶ 1:24:26Sen. Padilla: That in and of itself is an important distinction framing it accurately is important.
▶ 1:24:39Mr. Glawe: The cargo theft we have the data associated with that. The data regarding organized retail theft which we know are associated with some criminal organizations overseas, but the data associated with that, I think this legislation would be a good first step in providing some granularity. Local law enforcement, where they get their data from it doesn't necessarily resolve to the federal system or into the claims data we would access to report crimes.
▶ 1:25:10Sen. Padilla: Let me jump to a different topic. Crime goes up -- time goes by quickly. Organized retail theft crosses state lines. Theft, transport, resale. It also requires the right federal partners. With the right tools and oversight.
▶ 1:25:39Sen. Padilla: There was a long history of handling multijurisdictional property crimes with prosecutorial discretion and judicial accountability. The proposal would shift that rolled to the department of homeland security, raising questions about surveillance. Given your background in national security and fraud prevention do you think dhs is the best agency to address economic property challenges?
▶ 1:26:08Mr. Glawe: Thank you for the question and I did spend a large part of my career in dhs and the fbi so I have an idea of both organizations. Department of homeland security at the ports and borders we are embedded with them. We recovered a lot of high-value stolen vehicles. Cbp is an important interlock on people and goods traveling across the borders.
▶ 1:26:40Mr. Glawe: Hsi has a long history of working transnational criminal organizations as well. Dhs is a logical point of being the center here, but I think a partnership is critical with the fbi, local law enforcement and state workers and national security. We need to identify these networks associated with national security threats being terrorism and nationstates.
▶ 1:27:09Sen. Padilla: I agree when it comes to the cargo at ports at -- ports. Retail theft being conducted at shops I thing is a different thing. Last question because my time is up.
▶ 1:27:39Sen. Padilla: If there was access to business and consumer data at the retail level, not through the supply chain, how do we prevent that information that consumer business data from being used for unrelated purposes?
▶ 1:27:54Chair Grassley: Senator, I think
▶ 1:27:57The --Mr. Glawe: Senator, I think the prioritization on violent nose, transnational, and organizations that are a threat the united states, that transit the borders is critical. This center, the criminal organizations, drug cartels, terrorist organizations is critical and will be a good first step to do that.
▶ 1:28:21Chair Grassley: Senator britt.
▶ 1:28:25Senator Britt: Thank you, chairman grassley, and thank you for all the witnesses. I'm proud to be a cosponsor of the chairman's bill and I agree deterrence and a coordinated response are essential to addressing the issue. We know organized retail -- retail crime and supply chain crime has been a problem in recent years.
▶ 1:28:54Senator Britt: We learned that it is a multifaceted problem and opposes law enforcement, economic, and national security challenges to read while these activities involved theft which is a crime, one of my concerns is the extent to which the crimes in supply chain areas are carried out in further crimes.
▶ 1:29:24Senator Britt: My verse -- first questions are for Mr. glawe and Ms. stephan. What are some of the downstream illicit activities that are tied to retail and supply chain theft?
▶ 1:29:40Ms. Stephan: Thank you for that question. What we do know it is not uncommon to find retail theft goods along with drugs.
▶ 1:30:08Ms. Stephan: We don't have the tools to be able to tie those two specific activity and what cartels and organized crime in the shipment we have right there. That is where the bill you are supporting can come into play and help us.
▶ 1:30:29Ms. Stephan: We also know that the intersection of crime, we know that cartels in mexico work with our mexican mafia and then they issue orders to our local gangs which control the human trafficking activity.
▶ 1:30:49Ms. Stephan: It is hard to separate these criminal organizations there based on greed and profit and wherever they can do that, they are not always specialists, just specialists in retail theft. In a recent case we did that have the south american deaths linked to hundreds of burglaries.
▶ 1:31:21Ms. Stephan: They would watch in their business and attack their homes when they were away. They had pictures in social media that same group with guns and escort services, which is really human trafficking and other things, so the intersections abound and I think that having those dots connected at a federal level would allow us to see that framework and
▶ 1:31:52Ms. Stephan: Then be able to attack that monster in a better and more precise, strategic way.
▶ 1:31:56Sen. Britt: Thank you so much. Mr. glawe, before you answer, not only the downstream illicit effects, but also how does this fit into the larger picture of these transnational criminal organizations and speak to that as well.
▶ 1:32:12Mr. Glawe: Thank you for the question and actually working on transnational crime -- organized crime strategy under two administrations I can speak to how important it is to have senators so the intelligence coordinating can be put together. The national security threats cannot be stated more emphatically.
▶ 1:32:33Mr. Glawe: We need these centers to be able to run this information against classified databases to understand if these are being sponsored by nationstates, be it north korea, iran, china, russia where these are by terrorist organizations we know too well. Involving vehicles involving 2010, 2015 era.
▶ 1:32:55Mr. Glawe: There are historical cases to show the model works, oversight is appropriate to run classified and unclassified data together to bring the federal and private sector together.
▶ 1:33:08Sen. Britt: Let me ask you in my few remaining seconds, can you speak to any gaps in information sharing that may need to be addressed in how we actually threw the coordination and creation of the center can work to fill the gaps?
▶ 1:33:24Mr. Glawe: Every center from the organized drug enforcement center, it will take time for the policies and the strategies to get in place and the legal parameters to go with it. The public-private partnership is critical.
▶ 1:33:44Mr. Glawe: Bringing together law enforcement officers, cbp, and our national security partners to identify the threats biggest to the united states is critical and this would be a good first step.
▶ 1:33:56Sen. Britt: I have more questions that I will cement for the record. Thank you for being here.
▶ 1:34:00Chair Grassley: Senator klobuchar.
▶ 1:34:03Senator Klobuchar: I was talking to senator whitehouse about my previous job when I was a prosecutor and we actually set up a whole group of prosecutors to work on retail threat -- theft. It seems like a problems were simple then compared to now. I guess I will start with you, Ms. stephan. Could you tell me how this federal legislation would ensure criminals who engage in what is actually different than what it was back then.
▶ 1:34:34Senator Klobuchar: It is now organized retail theft , basic accountability --how they face accountability.
▶ 1:34:39Ms. Stephan: Thank you, senator klobuchar. The cases we have done which have been 218 cases over two years with $2.6 million in loss show that there is a footprint and it is outside our state and across our nation and an international footprint.
▶ 1:35:00Ms. Stephan: A recent $8 million jewelry heist, the rolexes were gone overseas with the fence being in chile. So it will enhance our ability to be ahead of it in the same type of jewelry heist that happened in the state of washington but we received no information. It is extremely sophisticated.
▶ 1:35:28Sen. Klobuchar: That is why that retail crime coordination center would be so important.
▶ 1:35:33Ms. Stephan: Exactly.
▶ 1:35:34Sen. Klobuchar: Mr. glawe, could you tell me how transnational criminal organizations use cargo theft to fund other illicit operations.
▶ 1:35:43Mr. Glawe: We have seen an exponential increase in cargo threats over the last three years. In 2023 we saw a 7% increase. We are up 50%. We know the supply chain is going overseas. We know is -- we know it is going over our borders.
▶ 1:36:12Mr. Glawe: So the question is how do we identify those nefarious actors, the biggest threat to the homeland. That is the need for the classified databases. And this bill would provide us the strategic and tactical intelligence and we have no doubt the supply chains are being used to facilitate it.
▶ 1:36:37Sen. Klobuchar: Thank you. Mr. mcbride, how did the threats of violence by these organized retail crime cartels not only threatens the safety of store employees, but make it hard to keep the stores open?
▶ 1:36:54Mr. Mcbride: Thank you for that question. The threat of violence and actual violence that some of my peers have experienced has grown exponentially over the last decade. My fellow witness here testified to the attitudes of some of the store and shop owners that are concerned for their safety when they are operating their shops.
▶ 1:37:19Mr. Mcbride: The intimidation tactics to come back and be able to re-victimize the retail locations over and over again has grown so much that we have had to implement additional countermeasures, we have had to implement training to keep our employees safe and all of that leads to reevaluation of the investment being made in stores and different locations and has in some cases the entire resale sector -- retail sector led to
▶ 1:37:51Mr. Mcbride: Product deserts in some parts of the country because stores had to leave because they could no longer sustain viable operations because of violence, crime, theft, and the losses they are incurring.
▶ 1:38:03Sen. Klobuchar: Ms. lemm, last but not least, thank you for the support for the ocean shipping act that senator thune and I did.
▶ 1:38:17Sen. Klobuchar: As many of you know, that was about the pricing during the pandemic hurting our farmers and retail making a difficult and after we passed the bill, president biden signed it into law and the rates went down for a number of reasons, but I think the threat of that in the maritime commission does make a difference and it wouldn't have happened without companies like yours. So thank you. Just one question on this topic.
▶ 1:38:46Sen. Klobuchar: Do you agree that cargo theft poses a risk to the security of our food supply chain?
▶ 1:38:51Ms. Lemm: I absolutely agree.
▶ 1:38:53Sen. Klobuchar: Would you explain that quickly?
▶ 1:38:55Ms. Lemm: Yes, senator, food and beverages the number one targeted commodity. Number one. Why? Demand, of course. It is so difficult to track. It is so easy to distribute. What is so devastating about that is price of food, we know already is so high. The average american cringes every time they go to the grocery store.
▶ 1:39:25Ms. Lemm: What happens with these targeted that on food is once you have something that is precious, any kind of food, we see two, 3%, stolen, those costs are passed on to the consumer.
▶ 1:39:45Ms. Lemm: You have been very helpful with this as we discuss agricultural exports and what has happened is actually targeting agricultural exports, beef, poultry, perishables and what we also see happening because of so much trans national crime on our railroads. Pilferage. Yes, it may be secondary.
▶ 1:40:11Ms. Lemm: We believe these thieves are after high-value cargo, but destruction to our agate exports is they cut the seals and the integrity of the load is lost. Thank you. >> thank you, Mr. chairman. Thank you for introducing the federal legislation combating organized retail crime act. I'm incredibly proud to be a cosponsor of that. It is timely, certainly, and needed now more than ever.
▶ 1:40:42Ms. Lemm: I'm one of the newest senators here, as you can tell. I sit down here at the edge of the dais. And one of the things that has shocked me and frustrated me to put it mildly is when we are dealing with organized retail crime, really this should be a bipartisan effort and how we approach it. I'm always incredibly surprised to hear questioning that is it really that bad?
▶ 1:41:15Ms. Lemm: Should we attribute that to something else or why is fbi and dhs helping? So what I'm finding is that I think, whether it is a governor or a mayor in so many places and just to be clear that is the executive branch whose responsibility is to enforce the law, there was also an ignorance or willful blindness or may be over the success and stability
▶ 1:41:45Ms. Lemm: Of their state or city, I don't know what it is, but it is increasingly hard for somebody like me who served as a judge and a federal prosecutor and is the life of a lot -- wife of a law enforcement officer to watch these statements. One governor, newsom out of california, went to a cargo theft site and said, I don't know what is happening, this looks like a third world country.
▶ 1:42:08Ms. Lemm: In fact, I don't think it is a coincidence that in the last three years, the incident rate of cargo theft has gone up 17,000% and we have also seen in vetted people come into this country by the millions and invited into california and nobody is picking up on that? How many times have we heard transnational criminal organization?
▶ 1:42:36Ms. Lemm: We just rolled out more arrests since trump has been an office of people who have been deported time and again stealing from cargo freight. In florida, we just arrested a ring of people here from venezuela with ties to trendy aragua who were found to have been responsible for dozens of retail thefts in florida.
▶ 1:43:05Ms. Lemm: We now seem to have proposed legislation. When I was attorney general we launched a database to track and show it was nine jurisdictions, $20 million in loss, 20 different retailers, and we charged it and prosecuted that way and locked them up for the true crime.
▶ 1:43:29Ms. Lemm: We also did legislation that expanded the time period in which you could tie in these multiple incidents into the organized crime and that is what this proposed federal legislation is going to do. But what we have to stop doing is saying the problem is not bad when the numbers are staggering.
▶ 1:43:50Ms. Lemm: It is costing americans when we are trying to figure out how we are going to a four to put food on the table with skyrocketing prices we don't need theft built into those prices that can be avoided if we just have executives understand that it is their job, governors and mayors to work with law enforcement to enforce the law.
▶ 1:44:10Ms. Lemm: When you have da's abdicating responsibility and saying I'm not going to lock anybody up for theft, that blows gasoline on the fire. What did we do different in florida? We removed the da's that wouldn't enforce the laws they didn't like. In new york it shouldn't have been surprising when they were catching people stealing and they said, we still here -- steel here, but we go in florida to spend the money.
▶ 1:44:40Ms. Lemm: We need a national approach that says we are taking this seriously, this is costing americans' money. This is costing us the ability to share information across not just county lines within a state, but across state lines and across nationstates. This is so important, I cannot stress how important it is, otherwise, Mr. mcbride, you reference this and you said it is costing us so much money, can we even stay open?
▶ 1:45:11Ms. Lemm: Miracle mile was about a third empty. You had a mayor blaming the businesses that they didn't have more security. If that is not shortsightedness in the role of an executive, I don't know what is and that is a primary driver of this. Mr. mcbride, can you say from your experience how much do you think costs go up as a percentage as a result of this organized retail crime?
▶ 1:45:36Mr. Mcbride: I can't speak exactly to a number. I can tell you that the losses are absorbed by corporations as they possibly can stand but it does end up coming back to the consumer in a lot of different ways, whether it is cost of goods because we have to provide additional inventory to cover the gaps that now are missing from the store, cost of security, cost of training, cost of rehiring's.
▶ 1:46:05Mr. Mcbride: Associates, when they no longer feel safe to work in those locations. It is a very x and uncial amount of increased effort and costs on the part of every single retailer because every single retailer in this country in every single state have been victimized in some ways by these crime rings.
▶ 1:46:25Sen. Moody: Thank you, Mr. chairman.
▶ 1:46:27Chair Grassley: Senator whitehouse. Senator tillis, are you going to ask questions? I've got to go vote. [laughter] >> we will manage. Ms. stephan, I think you're the prosecutor here on the panel, is that correct?
▶ 1:46:53Ms. Stephan: I believe so and I'm one that doesn't mind prosecuting. There have been some comments. [laughter] >> I wanted to first of all let my colleagues know I'm very happy to work on legislation to focus on the organized nature of these theft rings.
▶ 1:47:20Ms. Stephan: I'm a little skeptical of making ordinary shoplifting a federal offense but I think we can figure out our way through that as we start to actually design legislation. I just wanted to open with that point. One of the very powerful laws for dealing with criminal organizations, particularly criminal enterprises as you figured out from the use of my word -- the you -- my use of the word enterprise is the rico statute.
▶ 1:47:52Ms. Stephan: Both transporting and sailing or receiving -- selling or receiving stolen goods are rico predicates. Could you walk us through where there have been rico successes at dealing with these systemic theft rings and then also transport sale or have somebody receive the stolen goods and where you have run across or your colleagues in law
▶ 1:48:24Ms. Stephan: Enforcement have run across legal impediments to using the rico statute against this predicate offense?
▶ 1:48:32Ms. Stephan: So, in california, our state statutes don't have an actual rico component, we don't have the laws as strong as the federal side. This is white in our fentanyl task force, the cases that are solved in the task force are provided with a federal prosecutor takes those cases that involve a tren de aragua --
▶ 1:49:04Ms. Stephan: A rico element.
▶ 1:49:07Sen. Whitehouse: California does not have a state rico law?
▶ 1:49:12Ms. Stephan: We don't. We have conspiracy laws, but they are not the same as rico statutes.
▶ 1:49:22Sen. Whitehouse: You would have to go to the U.S. attorney work with the prosecution -- work with them to get the prosecution going. How about your colleagues with rico laws across the country?
▶ 1:49:37Ms. Stephan: Through ndaa I know there have been a lot of successes in bringing organized retail theft cases. San diego, we brought 218 cases even under -- not under rico but under an organized retail theft statute, which is a little easier to get to but those tools that allow you to go to the higher ups, whether it is the organized retail theft or rico
▶ 1:50:07Ms. Stephan: Are absolutely imperative.
▶ 1:50:08Sen. Whitehouse: Well, I'm going to close out and turn the gavel over to senator coons who is the last senator who can get us in all sorts of trouble alone in the room.
▶ 1:50:22Sen. Whitehouse: [laughter] I would love if you have a chance if there is any particularly helpful document out there from the ndaa about the use of state rico statutes in the area or if you have any personal experience from your colleagues that would help inform our deliberations or if there have been any good uses of your colleagues bringing cases to federal U.S. attorneys and getting rico prosecutions that resulted.
▶ 1:50:52Sen. Whitehouse: I would love to get that from you so I will make that is a question to the record if I may and I think all the witnesses for being here and I yield back my time.
▶ 1:50:59Sen. Coons: Thank you, senator whitehouse. Thank you to the witnesses. I would like to think chair grassley and rigging member durbin and their staff for pulling together this hearing. This is an important topic all over the country, certainly in my home state. Delaware has a retail crime prevention task force to examine and better understand this issue and it is a focus for delaware.
▶ 1:51:25Sen. Coons: Interstate organized networks present challenges for any single state and I am open to seeing how we can coordinate federal resources and federal legislation to help address this and coordinate intelligence sharing and prosecution. How we disrupt organized networks is also important that we avoid wasting federal precious resources on minor shoplifters as opposed to those who are actually part of an organized effort.
▶ 1:51:54Sen. Coons: I have long been concerned about the criminalization of poverty. That is why I have let the bipartisan driving for opportunity act with the support of senators grassley, tillis, white house, blumenthal and booker and I think we need to avoid unintentionally exacerbating the problem while addressing the critical issue of organized retail theft. Ms. stephan, thank you for ndaa 's long-standing support.
▶ 1:52:24Sen. Coons: I appreciated how you distinguish between petty theft and ringleaders. Can you say little bit more about that. What sort of indicators are there to distinguish between casual petty theft versus those committing casual petty theft to feed into an organized criminal ring?
▶ 1:52:38Ms. Stephan: Thank you so much, senator. Part of having the data and having organized taskforces helps us make those distinctions in a more factual manner, not stereotyping. So being able to look at a track record of the data points, how many times has this person captured stealing the exact same item which they can't possibly need 200 sunglasses?
▶ 1:53:06Ms. Stephan: There has to be another use that isn't one that makes it a necessity for something dealt with at the lower level. I think relying on data and that is part of why I support this federal, not only to make more prosecutions, but also to distinguish the correct organized level and hold those who are pulling the strings.
▶ 1:53:35Ms. Stephan: Sometimes they are using vulnerabilities such as homeless people, a young kid who wants to have a phone. Different things, we have seen those solicitations of young people, vulnerable people. Having the correct data, the national level, the local level allows us to make those important decisions.
▶ 1:54:05Sen. Whitehouse: Thank you. I have to vote. Mr. glawe, any thoughts about how we would get better data? You gather data in a very broad, neutral way. How do we make sure we have that data and we are sharing it effectively?
▶ 1:54:21Mr. Glawe: Senator, we bring together over 1200 carriers and the claims associated with crime and suspicious activity, we have done this with -- for 115 years. We were the hub of auto theft in 1912. I would say we do it very well. That engagement with state and local law enforcement and the private sector and my partners to the left and summer, is critical to this.
▶ 1:54:49Mr. Glawe: We have seen the centers, the organized crime drug enforcement center, the counterterrorism center, a center to bring us all together and unite us but also running the information against national security threat so we are prioritizing resourcing. Mexican drug cartels, terrorist organizations, nationstates, iran, north korea. Some of the biggest cases in the fbi I had was against those organizations.
▶ 1:55:17Mr. Glawe: So a holistic approach and this bill would have that good first step for us to start building that center so we could have strategic and tactical intelligence to address this threat.
▶ 1:55:27Sen. Coons: Thank you. That makes great sense to me. I appreciate this testimony -- all of your testimony. This will conclude this hearing. Any written questions can submit them -- can be submitted one week today. I would ask the witnesses to return them within two weeks. Thank you again and this hearing is hereby adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]