SAN FRANCISCO (CBS SF) — Five suspects were facing a variety of charges and approximately $8 million in stolen merchandise has been recovered after state and local law enforcement officers busted a major retail theft ring, California Attorney General Xavier Becerra announced Tuesday.
Becerra said Edgar Geovany Robles Morales, Isis Vasquez Villanueva, Jose Villatoro, Danny Louis Drago and Michelle Renee Fowler had been arrested and faced charges for allegedly buying stolen goods and reselling them for profit.
The arrests came as a result of a joint investigation by the Division of Law Enforcement’s White Collar Investigation Team, the San Mateo County Sheriff’s Office’s Crime Suppression Unit, the California Highway Patrol, and the San Francisco County District Attorney’s Office.
On September 30, during a search and arrest warrant operations in the San Francisco Bay Area, agents seized and recovered approximately $8 million of stolen merchandise from retailers across the San Francisco Bay Area including CVS, Target and Walgreens as well as $85,000 in cash from the suspects’ residences, a warehouse and storage facilities.
“Last Wednesday’s arrests are an example of what can be accomplished when law enforcement agencies partner together to address serious crimes impacting our communities,” Becerra said in a press release. “Combining our officers, investigators and resources paid off. The arrested suspects will now face judgment before a court of law.”
Trailer after trailer, bin after bin, sack after sack — stored on pallets, stacked floor to ceiling, two stories tall. It took a team of 30 people two days to catalog it, mostly merchandise from CVS, as part of ‘Operation Proof’ of Purchase, $8 million dollars worth in all.
“It’s a lot of stuff, sure is,” said Ben Dugan.
Dugan is one of CVS’s top experts on organized crime, and says they’ve been tracking the so-called boosters, professional shoplifters, as they enter their stores and stuff bags with merchandise. The boosters then met up in the Tenderloin and according to investigators, sold the items to so-called “crew leaders” or “street fences”, Villanueva, Villatoro and Morales.
Detectives say Morales actually posted a photo on social media of trunk full of stolen goods, and a stack of hundred dollar bills.
“They pay those thieves approximately $1 or $2 an item. And then they sell it to an illicit wholesale operation,” said Dugan.
From there, investigators say Drago, their distributor, A.K.A. the Medicine Man, buys the stolen items.
Video from a police stake out shows Drago unloading trunkloads full of merchandise at one of his warehouses — mouthwash, cleaning supplies, shampoo, foot spray, over the counter medicine, and more than $1 million dollars worth of razors. Drago allegedly directs the boosters to steal small, compact items, with long expiration dates, and high resale value.
“Based on our reconnaissance, they were going across the Bay, they were going into San Francisco, and it just got larger and larger, and more people were getting involved,” said Captain Mark Duri with the San Mateo County Sheriff’s Department.
Captain Duri realized bad guys know no boundaries, so he called in the cavalry: The California Highway Patrol-Golden Gate Division’s multi-agency Organized Retail Crime Task Force made up of investigators from CHP, SFDA, SFPD and the United States Postal Inspection Service along with CHP Cargo Theft Interdiction Program investigators.
CHP Lt. Kevin Domby heads it up.
“Any one of these police departments is not going to be able to connect the dots on their under-$1000 theft. Retailers know they’ve had ten stores hit throughout Northern California. They might have 10 different law enforcement agencies working on those smaller crimes, but the retailer knows they’re connected to something larger,” said Lt. Domby.
Working with the task force, investigators tracked the stolen goods to 16 different storage lockers, warehouses and homes across the Bay Area. Much of the goods were then sold online through what law enforcement says was a shell company run by Drago, called D-Luxe OTC.
When law-enforcement raided the home of Drago and his wife, they found cash, a high-speed bill counting machine, and multiple vehicles. At the home of Edgar Morales, the crew boss, behind the picture frames they found stacks of hundred dollar bills. Drago’s money was laundered through real estate transactions and other businesses.
The stolen goods eventually find their way to Ebay, Craigslist, Facebook Marketplace and Amazon, where they are sold at a steep discount. Dugan says there’s a big societal cost to saving a few bucks.
“I don’t think anyone would intentionally further a criminal enterprise you know most people are good and don’t want to contribute to anything illegal, but, like everyone else everyone’s looking to get what they need at the lowest price so certainly it’s understandable. And even though the price may look good, you might be contributing to something bigger that you don’t understand,” said Dugan.
The suspects have all been charged with criminal profiteering, money laundering, conspiracy to commit a felony, possession of stolen property and organized retail theft.
The San Mateo District Attorney has filed the charges against the suspects in San Mateo County Superior Court.
Over the course of the investigation, which began in April, investigators also uncovered evidence exposing the international scope of the theft ring. The suspects allegedly transported, stored and sold stolen goods in other countries and laundered the money back to the United States.
CVS estimates organized retail crime costs California about $40 million in lost sales tax revenue. That means each family pays $500 more per year in increased prices. Meanwhile funding for the Organized Retail Crime Task Force ends July 2021. With much more work ahead, the hope is that it will be renewed.
Meantime, if you or someone you know has been the victim of fraud, learn more about what to do and report it here: https://oag.ca.gov/consumers.