Midwestern Theft Ring Busted Amid Rising Cargo Thefts

By Denise Johnson | September 4, 2015

Cargo theft increased 11 percent this year, according to CargoNet, a division of Verisk Crime Analytics, and law enforcement is taking notice.

Earlier this year, Tim Lynch, government affairs director, for the National Insurance Crime Bureau, spoke to Claims Journal to discuss anti-fraud legislation in 2015. Illegally seized cargo, like baby formula and pharmaceutical equipment, are sold on the black market, he said.

“Some states including Georgia, Kentucky and others over the past couple of years have passed legislation to make sure that cargo theft is specified as a crime and has strong penalties on the books to put the people that commit those crimes…well if not behind bars, at least prosecuted. Texas is considering cargo theft legislation this year,” Lynch said.

Recently, the U.S. Attorney’s Office for the Southern District of Indiana reported that a cargo theft ring was busted as a result of a multiyear investigation. A twenty-three count indictment was issued charging eight individuals in an organized scheme to steal tens of millions of dollars in merchandise from shipments of cargo moving through the state of Indiana and elsewhere.

The joint investigation included the involvement of the Federal Bureau of Investigation, the Kentucky State Police, Louisville, Ky., Metropolitan Police Department, Wythe County, Va., Sheriff’s Department, Indiana State Police, Illinois State Police, Virginia State Police, Georgia Bureau of Investigation, Fayette County, Ohio Sheriff’s Department, Oklahoma City, Okla., Police Department, and the Tennessee Highway Patrol, as well as CargoNet and the National Insurance Crime Bureau.

According to the indictment, between August of 2012 and May of 2015, the suspects allegedly stole millions of dollars’ worth of cargo that was being transported via interstate commerce by semi-tractor trailers. The eight individuals would then transport the stolen merchandise to several states in order to sell it.

cargo trucksProducts were stolen from various locations during their shipment throughout the U.S., including Virginia, Illinois, Indiana, Kentucky, North Carolina, South Carolina, Ohio, Oklahoma and Tennessee. The defendants conducted surveillance of distribution warehouses used by national companies to ship their products and followed semi-tractor trailers leaving the distribution facilities.

These are patient criminals, said NICB supervisory special agent Steve Hall, a seasoned cargo theft investigator who originally started a joint cargo theft task force with the Louisville Police Department and the Kentucky State Police. They will set up surveillance and watch warehouses and truckers for several weeks.

Once a driver of a cargo load stopped to rest or refuel his/her truck, the suspects would steal the entire truck and trailer loaded with merchandise.

The suspects would usually abandon the stolen tractors after the trailer loaded with cargo was transferred to a tractor owned and/or operated by one of the members of the theft group. In an effort to conceal the identity of the trailer and evade law enforcement, the defendants would paint over any logos on the stolen trailer.

According to the indictment, on 11 separate occasions the group stole cargo loads traveling within the Southern District of Indiana and used interstate highways to transport stolen merchandise to other states. Stolen cargo included computers and computer equipment, cellular telephones, electronics, appliances, perfume, cosmetics, clothing, baby formula and tires. The value of merchandise stolen in or unlawfully transported through Indiana alone is alleged to exceed $17.5 million, according to authorities.

Hall said this cargo theft group operated much the same way most do – they target warehouses, follow trucks out to destinations and see if drivers deviate. They will steal anything, from candy to high value items, he said.

In this case, the defendants could face up to 10 years in prison for each count of possession or transportation of stolen goods in interstate commerce and up to five years on the conspiracy charge. In addition, they could be sentenced for up to three years of supervised release following their prison term.

Though more attention is paid to it now, cargo theft is still considered a low risk, high profit crime, Hall said.

As far as the victims and their insurers, there are several issues to consider, he said. Those include jurisdictional issues because stolen goods have typically crossed state lines, sometimes several times, as well as liability issues in terms of who the actual victim is – the shipper, the distributor or another entity entirely.

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