LP Managers Work to Shut Down a Major Shoplifting Operation in Oregon

Last fall, Greg Malone was feeling pressure from Best Buy's corporate offices to slow a hemorrhage of stolen merchandise, which was quickly pushing loss figures at the Beaverton store to alarming levels.

Sleuthing around, Malone, head of the store's loss-prevention department, discovered thieves were sneaking out coat-loads of booty --DVDs, MP3 players, mini-hard drives and much more --and taking it to secondhand shops in Portland for quick, easy cash.

Malone called a Portland police detective with his evidence: Names. License plate numbers. Information about secondhand dealers buying the pilfered merchandise. But the detective refused to investigate without serial numbers from each piece of merchandise, which the store didn't keep, Malone said.

It was one of two frustrating conversations with the detective, which went nowhere, Malone said. "He really didn't seem interested in it at all," Malone said.

But the FBI was interested.

Since 2001, federal agents had been investigating how secondhand shops had enabled a thriving culture of rampant thievery in the city, even as Portland police made routine visits. Malone is one of two former Best Buy managers in the Portland area who say they repeatedly complained to Portland police about the problem but got nowhere.

Portland police Chief Derrick Foxworth has declined to comment on the ongoing investigations into secondhand stores.

When a federal agent visited Malone at Best Buy a year ago, he asked about the thieves. He also wanted to know about Malone's conversation with the Portland officer.

As the interview ended, Malone said, the agent made a final request: Don't tell the Portland detective we talked.

In August, the FBI raided 10 Portland secondhand shops, leading to indictments against more than two dozen Portland-area residents. The FBI sting targeted owners of secondhand shops in Portland and the shoplifters, or "boosters," who stocked their shelves with millions of dollars in stolen goods.

However, the feds were interested in more than the shops. Their investigation raised questions about the Portland Police Bureau's role in allowing the illicit trade to flourish in the open. Foxworth has reassigned the two detectives charged with monitoring the shops, and he launched an internal investigation. The FBI has opened a corruption investigation.

Although most of the trade operated in the open, some merchants were concerned that the black market could attract attention from federal agents, according to a voluminous FBI affidavit.

Kenneth Laurent, an employee at Curt's Cash Corner, confided to an undercover informant that some of his competitors were "too flashy, too much attitude, too much of a line out the door," according to the affidavit.

The secret, he said, was to try to stay invisible. He also knew Portland police were hamstrung by a loophole in the city's secondhand ordinance, which doesn't require secondhand stores to record the purchase of new goods, and too few detectives.

"There's nothing anybody's ever gonna do," said Laurent, who has since been indicted. "They can't. The smart guy knows."

Racket isn't complicated

It was a Wednesday night in June, near closing time, when A-1 Cash owner Kevin Mason Sr. told one of his regular customers to stick around for another hour.

"The tweak show begins here," he promised.

Mason didn't know the customer, a wholesaler who bought in bulk, was a government informant who was taping their conversation for the FBI, according to court documents.

A rush of methamphetamine addicts, known as "tweakers," showed up at the drab and smoky shop every night, their cars packed with loot from a day of shoplifting, Mason told the wholesaler.

Mason is now under federal indictment on charges of interstate transportation of stolen goods and other accusations. He has declined to comment on the case, referring questions to his attorney, who could not be reached.

The criminal ecosystem in which A-1 Cash existed wasn't complicated, according to court documents. Professional boosters went on shoplifting sprees across the West and brought the goods back to Portland's loosely regulated secondhand stores.

The shops, in turn, sold items at a fraction of the retail price on eBay or to wholesalers, who would sometimes sell the loot back to the retail chains.

Business was so good, Mason told the government informant, dubbed WH#1, that he kept his store open until 4 a.m. for thieves working in the city. "They'd go steal it and bring it straight here," Mason says in a court transcript of the conversation. "Pound on the door till I answered."

Before saying good night, the files show, Mason gave WH#1 some Safeway Rancher's Reserve steaks from his "meat supplier" --a shoplifter.

Malone had figured out the racket months before. Last fall, he handed the police what he considered a bulletproof case, leading right to the shoplifters and secondhand stores.

Malone said he called Portland police Detective William Carter, one of two officers in charge of monitoring the city's nearly 140 secondhand stores. But instead of launching an investigation, Carter asked whether Best Buy recorded serial numbers for each item of merchandise.

No, the manager said.

Malone recalled that the detective dismissed the evidence he had collected, saying there was no proof the merchandise in the secondhand stores was stolen.

During a second conversation, Malone said he told Carter he planned to start tagging high-risk merchandise with yellow Best Buy price labels, so they could be easily tracked to the secondhand stores.

"He would not accept that as proof" that it was stolen, Malone recalled.

Creating shopping lists

Malone wasn't the only one to figure out the problem.

For at least two years, Portland police knew that massive amounts of stolen goods were moving through the shops, yet the bureau had failed to cite a single merchant.

Internal police memos The Oregonian recently obtained show an East Precinct officer documented the problem in 2003 and outlined several possible solutions. Two months ago, a property crimes sergeant wrote a memo to Foxworth, complaining of a "cultural acceptance" by police of the secondhand shops, which had become a "sanctuary and safe haven" for criminals.

Neither of the reassigned police detectives has commented on the ongoing investigations.

On the day of the August FBI raid, Kwik Way Cash was packed with stolen items, ranging from laundry detergent to sealed boxes of new chain saws stacked floor to ceiling, police photos show.

Most boosters followed the same playbook to steal goods. Many would simply charge out of a store with a cart of items, ignoring the ringing electronic sensors at the door, knowing many retailers tell employees not to confront shoplifters for fear of violent encounters.

According to the federal affidavit, demand for stolen goods often reflected the season. KitchenAid mixers were hot at Christmas. In summer, Crest Whitestrips were in high demand. According to the affidavit, a Kwik Way Cash employee told a government informant that people want the Whitestrips in summer because they are "out more in the daylight hours talking to other people."

Vernon Walczak, owner of one of the city's three Cash on the Run stores, said he provided boosters with shopping lists. Walczak, now under indictment, said he once went online to show one of the boosters what he wanted. "She just sat there and she wrote everything down," he told the informant.

Walczak's lawyer declined to comment.

In the court transcript, one merchant boasted of making $500,000 in a year. And at River City Trading, owner Angela Ives, who has been indicted, recalled for an undercover wholesaler how another secondhand store owner made enough to buy "his Harley motorcycle, his motor home, his children (through his wife's in-vitro fertilization)," the affidavit says.

Ives' lawyer declined to comment.

At Curt's Cash Corner, employee Laurent, whose lawyer could not be reached for comment, said he had worked out how to hide cash from the feds, according to the affidavit.

"I'd bury it," Laurent said, "in the backyard or basement or something."

The Police Bureau's failure to go after the black market confounded security managers at big retailers such as Best Buy.

After he had given up on getting help from police, Malone said he walked into a secondhand store, where he spotted video games and gadgets with the yellow Best Buy tags.

Brad Lebowsky, who left the general manager position at the Northeast Portland Best Buy last month after nearly two years, said he complained "very regularly" to Portland police, including once to a secondhand-shop detective.

"They knew what was going on but didn't seem to do anything," Lebowsky said.

At that point, Lebowsky said, "we took our own internal action, locked stuff up. We didn't deal with the problem, we just tried to circumvent it."