[Senate Hearing 119-197]
[From the U.S. Government Publishing Office]
S. Hrg. 119-197
BEYOND THE SMASH AND GRAB:
CRIMINAL NETWORKS AND ORGANIZED THEFT
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HEARING
BEFORE THE
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
JULY 15, 2025
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Serial No. J-119-29
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Printed for the use of the Committee on the Judiciary
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
www.judiciary.senate.gov
www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
61-886 WASHINGTON : 2025
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COMMITTEE ON THE JUDICIARY
CHARLES E. GRASSLEY, Iowa, Chairman
LINDSEY O. GRAHAM, South Carolina RICHARD J. DURBIN, Illinois,
JOHN CORNYN, Texas Ranking Member
MICHAEL S. LEE, Utah SHELDON WHITEHOUSE, Rhode Island
TED CRUZ, Texas AMY KLOBUCHAR, Minnesota
JOSH HAWLEY, Missouri CHRISTOPHER A. COONS, Delaware
THOM TILLIS, North Carolina RICHARD BLUMENTHAL, Connecticut
JOHN KENNEDY, Louisiana MAZIE K. HIRONO, Hawaii
MARSHA BLACKBURN, Tennessee CORY A. BOOKER, New Jersey
ERIC SCHMITT, Missouri ALEX PADILLA, California
KATIE BOYD BRITT, Alabama PETER WELCH, Vermont
ASHLEY MOODY, Florida ADAM B. SCHIFF, California
Kolan Davis, Chief Counsel and Staff Director
Joe Zogby, Democratic Chief Counsel and Staff Director
C O N T E N T S
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OPENING STATEMENTS
Page
Grassley, Hon. Charles E......................................... 1
Durbin, Hon. Richard J........................................... 2
WITNESSES
Glawe, David J................................................... 5
Prepared statement........................................... 30
Responses to written questions............................... 80
Lemm, Donna...................................................... 6
Prepared statement........................................... 42
Responses to written questions............................... 93
McBride, Scott................................................... 8
Prepared statement........................................... 64
Responses to written questions............................... 96
Summer, Stephan.................................................. 10
Prepared statement........................................... 71
Responses to written questions............................... 105
APPENDIX
Items submitted for the record................................... 117
BEYOND THE SMASH AND GRAB:
CRIMINAL NETWORKS AND
ORGANIZED THEFT
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TUESDAY, JULY 15, 2025
United States Senate,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice at 10:16 a.m., in
Room 216, Hart Senate Office Building, Hon. Charles E.
Grassley, Chairman of the Committee, presiding.
Present: Senators Grassley [presiding], Cornyn, Blackburn,
Britt, Moody, Durbin, Whitehouse, Klobuchar, Coons, Hirono, and
Padilla.
OPENING STATEMENT OF HON. CHARLES E. GRASSLEY,
A U.S. SENATOR FROM THE STATE OF IOWA
Chairman Grassley. Good 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've all seen videos of mobs ransacking
stores of thousands of dollars of goods and doing it in a very
short period of time. Somebody measured one time, 2 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 launder ill-gotten
proceeds. These groups steal large quantities of merchandise
from retail stores and the supply chain then attempt to resell
these stolen items online through other illicit channels.
One Homeland Security Investigation operation called King
of Thieves uncovered organized retail crime ring, which had
sent millions of dollars in criminal proceeds overseas. That
same group finance coyote fees for deported individuals to
return to the United States.
Earlier this year in Katy, Texas, law enforcement
discovered that mall thieves were linked to cartels responsible
for over $100 million in thefts across the United States. So
far, law enforcement officials have linked 98 individuals to
this ring. This threat has evolved to our supply chains
exposing significant vulnerabilities.
The Justice Department recently indicted 11 defendants,
including 9 illegal immigrants with stealing nearly $500
million dollars' worth of Nike shoes. The defendants' new
valuable goods were in a train car based on visible high
security locks. The defendants cut the air hose to the train's
braking system, which can cause derailments and serious
injuries. Criminals see this type of crime as a low risk, very
high reward way to fund their enterprises with no regard for
the people that they endanger.
It's not just luxury goods these thieves are after. Items
in food and beverage categories are among the most stolen in
supply chain crime. These goods are transported in specific
ways to maintain food safety from infant formula to basic
groceries. Once a seal is broken and 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're
acts of violent, sophisticated criminals exploiting a patchwork
system. 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 this sweeping cross jurisdictional crime that impacts
all Americans.
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. This is one
of the many reasons 38 States attorneys general support Senator
Cortez Masto and my bill. The bill goes by the title of
Combating Organized Retail Crime.
Many of the signatories on this letter are from Members of
this Committee's home State. They wrote, ``This legislation
would provide the necessary resources at the State and Federal
level to bring organizations and individuals behind this
nationwide problem to justice.''
So, without objection, I'll enter the letter into the
record.
[The information appears as a submission for the record.]
Chairman Grassley. And now, I call on Ranking Member,
Senator Durbin, for his opening statement.
OPENING STATEMENT OF HON. RICHARD J. DURBIN,
A U.S. SENATOR FROM THE STATE OF ILLINOIS
Senator 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 on online
marketplaces.
This is not a new problem. Back in 2008, I met with Home
Depot. They told me the story about a drill that they sold
exclusively that was being found for sale new in the box, and
at a discount by sellers online. It had to have been stolen
some part of manufacturing or sales process, and it wasn't 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 as the
Chairman said, food and other things.
I remember when the CEO of Walgreens came in to see me
based out of Illinois, and I said, ``Now, why do I have to call
a clerk at your drug store when I want to buy underarm
deodorant so they can unlock the shelf and I can buy the
underarm deodorant? Are these so precious that they have to
have special surveillance and guarding?'' And he said the fact
of the matter is retail theft takes these things in volume and
sells them in volume. And of course, it's not the individual.
It's likely to be the one to sell it. It's some sort of an
operation, which we're going to talk about today.
This is a problem that affects everybody. Higher prices,
lost jobs, and lost community investment when shops that can't
keep up with the rising cause of theft are force to close their
doors. I've worked on this issue for a long time. As Chairman
of the Committee years ago, I held a hearing on cleaning up
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.
This law requires online marketplaces to collect, verify,
and disclose information about high volume sellers who offer
new or unused consumer products for sale on the platform.
Remember that Home Depot drill that I talked to you about
earlier when they found out that it was being sold online and
clearly had been stolen? They contacted the online operation
and said, this is a stolen product. There's no doubt about it.
And the online operation said, ``So what? That's not our
responsibility. That's somebody else's.''
Well, this bill, the Informed Bill changed that. The
Informed Consumers Act is guided by three principles,
verification, transparency, and accountability. If someone's
going to sell large volume of goods online on the marketplace,
they should tell the marketplace who they are. Home Depot
couldn't figure out who was selling these drills. The online
operation wouldn't identify their user. The sellers should be
verified.
Second, if a product sold online and turns out to be a
fake, stolen, or dangerous, consumers should be able to report
it and find the seller, and the marketplace must to ensure the
seller can't just disappear and pop up later with a new account
name. Third, if a consumer orders a product from one seller
online and the order's actually filled by another company, the
marketplace should let the consumer know.
I'm sad to report to you that despite 2 years since we
passed this bill, the Federal Trade Commission has literally
dropped the ball on enforcing the Informed Consumer Act. It's
been more than 2 years since this law went in effect. The
Federal Trade Commission hasn't even promulgated regulations in
2 years to implement it.
The FTC has received hundreds of complaints regarding
violations of this law. But how many enforcement actions has
this agency taken? None. Zero. This is unacceptable and it must
change. The Federal Trade Commission 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 May, in my home State of Illinois, Cook
County Regional Organized Crime Task force brought together
more than 100 law enforcement agencies and 30 major retailers
for a crackdown that resulted in hundreds of arrests across 28
States. That that is a success we must build on.
Federal law enforcement also has an important role to play,
but we must acknowledge this administration has announced
different priorities instead of combating crimes. Like I
described, the Trump administration has diverted critical
resources toward the President's mass deportation agenda.
Homeland Security Investigations, better known as HSI, plays a
leading role in combating criminal networks and organized
crime, including organized retail theft. But under this
administration, HSI has been diverted toward rounding up
immigrants, many of whom pose no threat whatsoever to this
country.
According to one recent report, and I quote, ``HSI,
supervisors have waived agents off new cases so they have more
time to make immigration enforcement arrest.'' One veteran
agent said, ``No drug cases, no human trafficking, no child
exploitation. It's infuriating.'' Instead, he said, ``HSI is
arresting gardeners.''
These are not the actions of an administration serious
about combating crime, diverting Federal resources and dangers
Americans, and leaves us less equipped to target and disrupt
criminals like those in organized retail theft. We have to have
an open and honest discussion about the role of the Federal
Government in reducing organized retail crime. I look forward
to that dialog today. Thank you, Mr. Chairman.
Chairman Grassley. Thank you. Before I introduce our
witnesses, I'll say thank you for the time that you put in to
prepare for this and going out of your way to be with us to
help us solve this very important issue.
Our first witness, Honorable David J. Glawe, President,
Chief Executive Officer, National Insurance Crime Bureau. In
this role, Mr. 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 in law enforcement
for 20 years or more before retiring from public service. He
was the Senate-confirmed Under Secretary of Homeland Security
for Intelligence Analysis, and he happens to come from the
State of Iowa.
Ms. Donna Lemm is Chief Strategy officer of IMC Logistics,
an intermodal carrier, and the largest marine short distance
transport provider in our country. She's a known leader in the
industry, having worked in logistics and transportation for
over 30 years. IMC is based in Memphis, Tennessee, one of the
Nation's largest freight hubs.
Scott McBride, the Chief Global Asset Protection Officer
for American Eagle Outfitters. After serving as a Marine, Mr.
McBride started his career at American Eagle as a store
associate in 1993. He's 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. He recently received Loss Prevention Magazine,
Founders Award for Excellence in Leadership.
District Attorney Summer Stephan. Ms. Stephan is the
current President of the National District Attorney's
Association. She's 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, Ms. Stephan created a specialized
team to investigate and prosecute organized retail crime cases,
working closely with businesses and law enforcement. She's
recognized as the national leader in combating human
trafficking and sex crimes, as well as organized retail theft.
Now, I'm going to ask you folks to stand so we swear you
in.
[Witnesses are sworn in.]
Chairman Grassley. They all have said yes. Now, you may
give your opening statement from Glawe across the table there.
So, please begin, Mr. Glawe.
STATEMENT OF HON. DAVID J. GLAWE, PRESIDENT & CEO, NATIONAL
INSURANCE CRIME BUREAU, OAK BROOK, ILLINOIS
Mr. Glawe. Chairman Grassley, Ranking Member Durbin and
Members of the Committee, thank you for the invitation to
testify and holding this important hearing on organized retail
and cargo theft.
I'm the President and Chief Executive Officer of the
National Insurance Crime Bureau. NICB is the Nation's premier
non-for-profit organization committed to detecting, preventing,
and deterring insurance crime and fraud through intelligence-
driven operations. NICB has been fighting insurance-related
crimes since 1912. We are supported by over 1,200 property and
casualty insurance companies.
For nearly 115 years, NICB has been at the intersection of
insurance industry and law enforcement, serving as the hub for
information sharing to protect consumers, including for reports
of suspected insurance crime and fraud. In fact, NICB is
codified by name into many States' insurance crime reporting
laws. This gives NICB unique visibility into organized crime
trends nationwide.
Equipped with this expertise, NICB trains and assists law
enforcements in the investigation of crimes affecting consumers
as well as our members at the Federal level. NICB is especially
proud of our longstanding relationships and partnership with
the U.S. Department of Homeland Security and the Federal Bureau
of Investigation. As an example, NICB special agents working
with our Federal partners leveraged our expertise on vehicle
identification numbers, also known as VINs, to help identify
the vehicles in the 1993 World Trade Center and Oklahoma City
bombings. NICB also assisted State and local law enforcement to
recover over 6,000 vehicles in wake of the Maui and Los Angeles
wildfires.
These public and private partnerships continue today and
are joint efforts to combat threats that transcend State and
national borders, including organized thieves. These
sophisticated transna-tional criminal organizations, which
effectively operate as billion-dollar corporations profit from
these crimes, cargo theft exploits, supply chain vulnerability.
Its big business, big money, and big opportunity. The
impacts are felt at kitchen tables across the country through
higher costs. In 2024, cargo theft increased to historic highs,
up 27 percent from 2023 with estimated losses exceeding $1
billion. This year, we expect it to rise another 22 percent.
Other estimates suggest that 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 more to
over 70 recoveries valued at nearly $40 million.
Cargo thefts are not the result of small operations. 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,
everything from sports drinks to sports cars are routinely
exported into illicit markets to finance other criminal
activities including drugs, weapons, and even terrorism.
As an example, NICB recently assisted law enforcement in
uncovering a cargo theft ring that used business email
compromises to successfully export stolen industrial equipment
to resale overseas. In 2024, we assisted in a multi-state
investigation that resulted in more than 50 arrests and the
recovery of vehicles to include weapons, drugs, and more than
$8 million of cargo stolen from a major railroad. And recently,
NICB assisted U.S. Customs and Border Protection in
intercepting stolen TVs that were bound for Panama.
NICBs investigations confirmed that transnational criminal
organizations are exploiting supply chain vulnerabilities by
posing as legitimate or fictitious carriers through identity
theft and synthetic IDs. These complex tactics compel a
coordinated response from the public and private sectors.
In the public sector, deterrents and coordination are
critical. Criminals currently benefit from a legal framework
with inadequate deterrence and fragmented law enforcement
coordination. The private sector must commit to stronger
carrier vetting protocols and adopting other industry standards
for preventing theft. Congress can help by passing the
bipartisan Combating Organized Retail Crime Act.
CORCA would increase deterrence by enhancing current
criminal statutes. The bill also establishes a coordination
center within the Department of Homeland Security. Currently,
there is no central hub for intelligence sharing and operation
coordination, thus making it difficult to confront the full
scope of the threat. A coordination center would address this
gap. 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 requested
expertise, intelligence, operational support, and resources.
NICB applauds the bipartisan work in the Senate to combat
transnational criminal organizations and cargo theft, which
harms all consumers.
Thank you again for this opportunity to testify, and I look
forward to answering your questions.
[The prepared statement of Mr. Glawe appears as a
submission for the record.]
Chairman Grassley [off mic]. Thank you, Mr. Glawe. Now, Ms.
Lemm.
STATEMENT OF DONNA LEMM, CHIEF STRATEGY OFFICER, IMC LOGISTICS,
COLLIERVILLE, TENNESSEE
Ms. Lemm. Chairman Grassley, Ranking Member Durbin, and
Committee Members, thank you for the opportunity to testify
about the exponential rise of cargo theft. We need your help.
My name is Donna Lemm, and I am the Chief Strategy Officer
for IMC Logistics. Our company is a nationwide intermodal and
drayage provider. IMC and our ATA motor carriers are on the
front line of this crisis.
A few years ago, cargo theft was barely on my company's
radar. In 2021, we had 5 cargo thefts reported. In 2024, we had
876 cargo thefts reported. That's alone a 17,520 percent
increase. The landscape has shifted, moving from criminals to
organized theft groups sabotaging our supply chain.
So much of our cargo moves intermodal. Our partner
railroads share with us drone footage of thieves cutting air
brakes, containers thrown across the desert and criminals
emptying these containers in minutes. These containers arrive
for motor carriers pickup and our large intermodal rail hubs,
Chicago, Memphis, St. Louis, Kansas City, and Dallas.
These contents and containers sometimes arriving empty or
with contents half gone. Cargo theft impacts all of us,
including our food and agricultural shippers who are caught in
this explosion of organized thefts. Full trailer loads of food
and beverages that have been targeted have been stolen and
gone, 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. The level of violence surrounding
these acts becomes more threatening.
On a local level cargo theft has also taken a very large
toll. Just 8 weeks ago, our Memphis terminal was stormed by
seven vehicles. Our gates were 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 3 minutes.
In our Riverside, California terminal, similar stories.
Three masked criminals cut our gates in broad daylight and
opened six containers before interrupted by our guard. We're
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's an example of the value if
we do. We had two containers of appliances stolen in St. Louis.
It was reported for insurance purposes, but no arrests were
made. Several months later, we got a call from the ATF. They
had stumbled across our appliances in a warehouse that they
raided. These refrigerators were being stuffed with cash to
smuggle money across the southern border.
This is not just an insurance matter. Cargo crimes, if
connected, can help us link these operations orchestrated by
transnational criminals. Brazen heist like these put our whole
supply chain and our workers in harm's way. Our employees and
our drivers are our most valuable asset. We invest millions of
dollars in multi-layered security, including surveillance
equipment, vehicle barriers, tracking technology, engine
immobilizers, SOS buttons for our drivers and for our guards.
We also have very advanced cyber security protocol, but
these criminal groups are highly organized. They have
formidable cyber capabilities of their own. 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 placards on the side of the
truck to impersonate a real motor carrier. They stole five
loads and chassis valued at more than a million dollars.
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 a leading role in
coordinating enforcement efforts.
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? All of us?
I thank the Committee for their focus on this issue, and I
look forward to your questions.
[The prepared statement of Ms. Lemm appears as a submission
for the record.]
Chairman Grassley. Thank you, Ms. Lemm.
[Off mic.]
Now, Mr. McBride.
STATEMENT OF SCOTT McBRIDE, CHIEF GLOBAL ASSET PROTECTION
OFFICER, AMERICAN EAGLE OUTFITTERS INC., PITTSBURGH,
PENNSYLVANIA
Mr. 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 to you and Senator Cortez Masto
for reintroducing the CORCA Act of 2025 and inviting me to
testify.
My name is Scott McBride. I'm 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 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 2-year term as
chair, and now currently, chair emeritus.
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'm describing a
successful retail company, but this group also uses
intimidation and violence, electronic countermeasures to hide
from and evade detection, and manipulates financial instruments
like gift cards, and executes nefarious reverse logistics
tactics to sell or move stolen product offshore.
ORC is far more than simple shoplifting. It represents a
sophisticated criminal enterprise, 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
operation, including reverse logistics, illicit liquidation,
financial crimes and recruitment. They repeatedly victimize
retail stores and disrupt our supply chains. This is how an
organized retail crime group operates.
While ORC is not new, its verdict, its veracity,
sophistication, and frequency and geographic reach have
dramatically increased in the post-Covid era. 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 exfiltrate
stolen product out of the country.
Simultaneously, retailers have invested in new technology
to provide a clear insight into the scope of these thefts.
Pinpointing the last known location of the missing items,
timestamping video of incidents, and enhancing collaboration
with law enforcement in all jurisdictions.
Despite our efforts, the problem continues to grow.
Consider the recent case where Homeland Security Investigations
working alongside State and local law enforcement successfully
interdicted an exfiltration scheme. Stolen apparel was being
collected for packing into SeaLand containers destined to cross
the Texas/Mexico border.
With the assistance of corporate investigators HSI
recovered almost 2,000 pairs of American Eagle jeans with the
other retailer merchandise totaling almost $2 million. The
retail jeans were valued at $100,000 of that $2 million. RFID
research revealed that those stolen AEO jeans came from 35
stores in 13 States. Evidence of the 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 of any local understanding of law
enforcement or agency, given the magnitude of the crimes and
the multitude of jurisdictions.
This example clearly underscores the urgent need for a
national-level involvement to support local and State
government, district attorneys, and State's attorneys general.
National visibility and link analysis are crucial to
comprehending the entire scope of the criminal involvement,
enabling the appropriate agencies and offices to make their
legal determinations commensurate with the full scope of the
criminal activity and lead to the disruption and dismantling of
organized crime groups.
In conclusion, the Combating Organized Retail Crime Act is
an essential missing layer. It would establish the Organized
Retail Crime Group and Cargo Theft Coordination Center,
bringing together Federal, State, local law enforcement with
private sector experts to share vital information and
collaborate on strategies to keep our stores and supply chain
safe.
Thank you for providing me this opportunity to tell our
story, and I look forward to answering your questions.
[The prepared statement of Mr. McBride appears as a
submission for the record.]
Chairman Grassley [off mic].
Chairman Grassley. Thank you very much, Mr. McBride. Ms.
Stephan.
STATEMENT OF HON. SUMMER STEPHAN, PRESIDENT, NATIONAL DISTRICT
ATTORNEYS ASSOCIATION, DISTRICT ATTORNEY, SAN DIEGO COUNTY, SAN
DIEGO, CALIFORNIA
Ms. Stephan. Good morning, Chairman Grassley, Ranking
Member Durbin, and respected Members of the Committee. My name
is Summer Steffan. I'm San Diego County's district attorney. 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 Attorney's Association. I bring both the
national and local experience to you to help bring a local
prosecutor's view and law enforcement view 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. 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've had in years
past.
I went to an Ulta store where there's 20-year-olds aspiring
to become makeup artists. This is a store that is a chain that
sells makeup, which is a target of organized retail theft. The
way that those young clerks looked was very different than the
past. They're looking over their shoulder, they're waiting for
something bad to happen. And why they are waiting for that is
because a crew of organized criminals attacked the Ulta stores
and stole $700,000 worth.
How do I know this? We were angry in San Diego to see the
fear in our community. I brought an organized team working with
ORCA, 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.
The same thing. I went to a small store, Sunny Perfumes,
the owner, and the immigrant in the San Ysidro area near the
border. Again, this man had a different look. Not one of
excitement like our business owners that our heart of America
should have, 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's going to come in and take his
product.
So, what I want to focus on is not just that Capital One
said this was a $45 billion industry. I want to focus on our
fight in San Diego where we've tried to preserve jobs. We know
that the U.S. Chamber of Commerce has said that 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. But in addition to that, because of our efforts in San
Diego, we've been able to identify and prosecute in 2 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.
Even despite these successful efforts and task forces that
came together, we were unable to get beyond to be able to track
the product and the shot callers that are providing the
shopping list for people to go in and steal hundreds of
sunglasses worth $350,000, or makeup, or jeans, or Legos as was
our LA latest case. Or our recent $8 million jewelry heist
where two other States suffered from the same crew, but it was
unsolved because there was no alert system in the national
scope that alerted us that their coming to us potentially.
These were part of identified and were prosecuted as part
of a South American transnational group that's been identified
by the FBI. They've also been the people responsible for a
hundred residential burglaries and in the cases we've done,
these residential burglaries have linked to multi-State
residential burglaries.
Again, proving that this cannot be solved locally, it must
be solved by local, State, and national, and this is why NDAA
and San Diego DA's office supports the CORCA Bill because we
need to bring bigger solutions to a really big problem that's
affecting daily lives in every neighborhood. Thank you.
[The prepared statement of Ms. Stephan appears as a
submission for the record.]
Chairman Grassley. Before I ask my questions, I got a
couple things. So, one for 30 seconds. Last month, Matt Allen
from the DEA told this Committee that criminal investigations
go hand in hand with the Immigration Enforcement Homeland
Security Investigation. Special Agent in Charge, Jason Stevens
agreed that these crimes don't operate in isolation.
Reconciliation made millions that is intended to and will allow
agents to tackle violent crime including organized crime.
Then, I also want to put in the record either statements or
letters on this legislation from over two 260 member companies
the National Retail Federation, the National Retail Industry
Leaders Association, Ulta Beauty Incorporated, 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 Association. Without objections, they
will be entered in record.
[The information appears as a submission for the record.]
Chairman Grassley. So, I'm going to start my questioning.
Oh, by the way, I'll announce that on the Democratic side, the
order is Durbin, Whitehouse, Klobuchar Blumenthal, Hirono. On
my side, it's Grassley, Cornyn, Blackburn, Britt, Moody.
Ms. Stephan, you're a strong supporter of my bill. You just
made an outstanding statement. The bill amends current law to
enable prosecution of organized retail and supply chain crime
groups using interstate and foreign commerce and establishes
the Organized Retail and Supply Chain Crime Coordinator Center
at HSI.
How would this legislation improve the ability of both law
enforcement and prosecutors like you to tackle organized retail
crime?
Ms. Stephan. I believe that, Senator, that 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, internationally. In fact, the
retailers tell us that their trackers are sounding off in the
middle of the seas heading to different countries, but the
investigations stop at the local level.
This is a national problem that's draining the economic
resources from Americans, hardworking Americans, but it's 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, local
solutions work when we are dealing with, for example, elder
scams. We brought a national task force with the FBI. That's
the only way we were able to identify nationals from China that
had organized these scams and were able to actually bring both
RICO actions on the Federal and my office brought State
actions. Fentanyl; we've been able to drop that in San Diego by
37 percent. Absolutely would not happen without working with
Customs and Border Protection on a fast team where we got that
done.
Chairman Grassley. Thank you. Mr. Glawe, you've served at
the top level of law enforcement and intelligence. We know from
DHS reports that cartels, terrorists, and human traffickers
either facilitate organized retail and supply chain crime, or
uses proceeds to finance other crimes.
How are transnational criminal organization using organized
retail and supply chain crime to further their criminal
activities?
Mr. Glawe. Chairman Grassley, thank you for the question.
We are embedded with the Department of Homeland Security, HSI,
and Customs and Border Protection in all the major ports and
with the FBI, and we're embedded with all 50 fusion centers or
50 States and multiple fusion centers as well. NICB as involved
is the information hub for the insurance carriers the private
sector and these organizations. We've done this for 115 years.
We have seen goods moving overseas. In Mexico we
repatriated over, 2,000 vehicles that ended up south of the
border. We know that the stolen goods are going to West Africa
and the Middle East. From my prior role as the Under Secretary
and as an FBI agent here in Washington, we know that the supply
chains are interdicted with Lebanese Hezbollah. We've seen that
through Hamas, and we know that Mexican drug cartels are
involved with the goods going south of the border.
A coordination center, a center for excellence to
coordinate intelligence from the private sector and my partners
to my left and from the local law enforcement as well as
coordinating operations is critical. This Committee's well
aware of OCDETF and SOD, the Counter-Terrorism Center,
Counterproliferation Center. These centers provide the hub for
information and operational-sharing information and
coordinating resources as well as tactical level response. We
know the model, we know the successful model, and this bill
would get us there or partially there.
Chairman Grassley. Ms. Stephan, Title 18 makes 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?
Ms. Stephan. Aggregation is critical because it
distinguishes between somebody who is drug addicted who goes
into to steal something, food, 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.
In California, we recently, after a long tenure fight, made
a change in Proposition 36 that allowed us to aggregate. And
it's already making a difference because we used to have
criminals coming in with the calculators to go right under
$950, thus leaving them at a citation misdemeanor level. That's
what caused all our products to become locked up except the
criminals that were committing the crimes.
Chairman Grassley. Thank you. Senator Durbin.
Senator Durbin. Thanks, Chairman Grassley. Ms. Stephan,
thanks for what you do, and thanks for endorsing this bill. It
sounds like a good one, but it is an expansion of the federal
enforcement as it would not apply to your jurisdiction,
correct?
Ms. Stephan. Well, it actually is an--I think, an
expansion. If the task force, I read it a few times, puts
together this fusion 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 task forces
on fentanyl where we work with DEA, like that it's going to
bring that fusion together to assist locals as well.
Senator Durbin. But the leadership under this legislation
is federal, correct?
Ms. Stephan. Absolutely, yes.
Senator Durbin. That's the point I want to make. And the
reason I'm making that point is going back to what I said in my
opening statement, the investigations of these crimes at the
federal level depends on the Department of Homeland Security.
Does it not?
Ms. Stephan. That's what I read. Yes, sir.
Senator Durbin. That's the way I understand as well. In
February, the Department of Homeland Security in Washington
ordered its entire investigations division composed of 6,000
agents to divert focus on drug dealers, terrorists, and human
traffickers, and shift priority to the Trump administration's
mission of deporting people in the United States who are in the
United States illegally.
The new focus for the DHS, Homeland Security Agency,
current and formal officials say is in keeping with the
President's executive orders that demand a wholesale shift in
federal law enforcement resources toward immigration,
crackdowns, and removal. But they warn the shift will undermine
high profile investigations into some of the most dangerous
transnational threats Americans face, including Mexican drug
cartels, smuggling deadly fentanyl across the border from
Mexico. Chris Campanelli, former HSI supervisory agents 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's
involved in illegally being in the United States, undocumented
or otherwise, and is engaged in criminal activity that is
dangerous to themselves and others, they should be removed,
period. Prosecuted, period. Are never let in in the first
place, period.
But what about those who are living here, who've been here
for years, working a job, showing up every day, raising a
family, which is mainly American citizens and paying their
taxes. Is that a priority over what we're discussing today? Not
in my book as far as I'm concerned. We should go after with
limited law enforcement resources at the federal level, the
most dangerous and threatening situations imaginable.
I've described a few of them where the subject of this
hearing is another one in retail theft. I don't doubt for a
second that what's been described to us today is part of a much
bigger network, even reaching into drug syndication. But to say
we're worried about whether someone who is cutting grass on a
golf course today is undocumented, and we ought to put the
resources of Federal Government into putting them in a
detention facility and deporting them, I don't think that's as
high a priority as the subject of this hearing today.
Ms. Stephan, let me ask you about criminal forfeiture. Can
you describe, or in most general terms, this is not a quiz or a
bar exam. Why criminal forfeiture being added to this bill is
important?
Ms. Stephan. Because all of the crime, this works on greed
and on money. So, you being effective means you have to
forfeit. You have to take away the things that they stole. It's
absolutely important because that's what they rely on, which is
profit.
Senator Durbin. I'm asking you to get down to a little
lower level in your primary education course here on what
criminal forfeiture is.
Ms. Stephan. Criminal forfeiture is where you take moneys
from bad doers, wrongdoers, because they've committed a crime
and you're able to take cars, their homes, any homes, exactly
anything that is related to their criminal activity.
Senator Durbin. And there's an expansion of that in this
new bill as I understand it. Is that what you see it as well,
criminal forfeiture?
Ms. Stephan. I saw criminal forfeiture. I didn't see that
it expanded beyond what is normally allowed, which is a nexus
between the crime and the activity. But I can go back and study
it, Senator.
Senator Durbin. I should do the same thing. I'm not being
critical of the bill or of your analysis of it, but I'm saying
that the notion for dealing with some network and you find the
kingpins that their personal possessions could be on the table
as well if they're found guilty. Is that correct?
Ms. Stephan. That's right.
Senator Durbin. Right. I'm all for it.
Ms. Stephan. Yes.
Senator Durbin. That sounds good. Thank you, Mr. Chairman.
Chairman Grassley. Before I call on Cornyn, I think this
speaks a little bit to what you were just talking about.
Congress and State legislature authorized asset discouragement
for more than 200 years. This legislation asset discouragement.
For convictions of interstate shipment of stolen goods,
transportation of stolen goods and sale or reseed of stolen
goods. 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.
Senator Durbin. Mr. Chairman, let me just add at this point
I support that, and I think you do too.
Chairman Grassley. You bet. Senator Cornyn.
Senator Cornyn. Thank you all for being here. I was struck
by the fact that in each of your testimony, you highlight the
transnational aspects of this problem. In other words, this is
not just a local crime that DAs would prosecute in San Diego
County necessarily. These are international networks and
criminal organizations.
And unfortunately, it reminds me of what we've become
familiar with in places like Mexico where the cartels do a lot
of different things, but it's all designed to generate money
for the cartels, whether they steal food, fuel, traffic, and
drugs, or in people. And now, it seems like it's crossed our
borders into the United States, because I note that in the Katy
Mills Mall case that occurred in April 2025, at Katy Mills Mall
in Texas, two of the individuals that were apprehended had
Mexican IDs.
And then, in the news we hear about, for example, marijuana
farms in California where unaccompanied minors who were allowed
into the country without any real restriction during the Biden
administration were part of the roundup there. ICE, Immigration
and Customs Enforcement estimates that there are as many as
662,000 illegal immigrants currently in the country who have
either criminal convictions or criminal charges pending against
them.
And 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. And when people get into the United States who
are unvetted and who have criminal convictions or make crime
their life's work, they've got to be doing something.
And I wonder, Mr. Glawe, do you think that part of the fact
that we've had these open border policies in recent years that
have allowed unvetted people, these aren't just people who want
to come here to work and have a better life. These are people
who are unvetted. We don't know who they are, but if it
includes such a large contingent of people with criminal
convictions or who are currently charged with crimes, aren't
they part of the workforce that are used by these organized
criminal organizations to do what we're talking about here
today?
Mr. Glawe. Senator Cornyn, thank you for the question. And
in my current role and past role, we know transnational
criminal organizations know no boundaries. These are billion-
dollar businesses. The Sinaloa Cartel is one of the best known.
It runs like a Fortune 500 company moving people and moving
goods. It's all about the money. These organizations have
connectivity to nation- states and terrorist organizations.
We've seen that. This Committee's well briefed on that and has
oversight on some of those cases.
Regarding the vetting of individuals and goods, it is
critical component to protect the United States. As the Under
Secretary for Intelligence, I was the head of intelligence at
Customs and Border Protection. I know that very well. And
identifying those criminal actors, those criminal networks,
those terrorists that are coming in and out of the United
States and the goods that are being supplied in and outside of
the country.
The vetting process is critical, and I think this law,
CORCA is a good step in creating a center to identify the
illicit goods and the people involved with traffic those goods
globally. It's an excellent first step. And we well know this
model, and it works. It's a center of excellence model to our
target and illicit activity that's affecting the United States
and affecting the consumers. Thank you.
Senator Cornyn. And Senator Durbin raises 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 that they're being diverted
from other law enforcement activities, but I'll note that
recently, we voted for $170 billion addition to the funding for
ICE for detention facilities and for personnel and training,
and all of our Democratic colleagues voted against it.
So, I don't know. You really can't have it both ways. But
do you believe that as I do, Mr. Glawe, that that these go hand
in hand in terms of addressing this problem? You can't get at
this problem without dealing with the people who are on the
ground committing these crimes on a daily basis, who are then
connected with these international organizations. Can you?
Mr. Glawe. In intelligence sharing on individuals and
organizations and the supply chain is critical to have a hub
for information sharing to identify those nefarious actors and
operationalize a response.
Senator Cornyn. Thank you.
Chairman Grassley. Senator Hirono, you're next.
Senator Hirono. Thank you, Mr. Chairman. Thank you-all 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 what we should have
a better system of determining how much of this is going on? I
realize that you're here because it is a serious concern, but I
do think that since a lot of this data is not reported to the
National Incident Bank-based reporting, for example, that that
is an area that could be improved. Wouldn't you agree, any of
you?
Ms. Lemm. I'd just like to comment that I agree. And one of
the things that's been so interesting as we prepare for this
testimony, our own statistics. I agree with you that the stats
that are being reported are maybe a fraction of really the
actual theft that's going on.
Motor carriers are the eyes and ears of our supply chain.
We see everything. We're the first ones to see if that seal's
broken, right and we're the first ones, because we are held, as
soon as we out gate, responsible for that load. And so, when we
looked at our own statistics for the past 4 years, it's
staggering. And that's why I made the comment about in 2021, we
had 5 reports of cargo theft, 5, and by 2024, we had 876
reports. It's huge.
Senator Hirono. I think that to the extent that it is
increasing, it would be also helpful that we should have all of
our large cities in particular reporting in on the incidents of
these kinds of crimes to the national incident-based reporting
system that we put together.
Now, all of you testified that it's going to require, that
the enforcement of whatever legislation that we enact will
require a collaborative enforcement involving federal, State,
local, and the private sector all working together. And that is
one of the things that you hope will be created under this this
law that you that we are contemplating, is that a critical part
of any kind of a law enforcement effort to get at this crime?
And I would ask, Ms. Stephan.
Ms. Stephan. Yes, exactly. I think being able to put
together--we did that on a State level and it enhanced our
ability, and this is why we've been able to get to 218
organized criminal actors, but we know that it goes well beyond
that. So, being able to organize a similar thing on a national
level.
Because I can cite you multiple cases, Senator, where this
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. We're
unable to prosecute them for those out of State crimes, but we
were able to join our 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's coming our way in this
big jewelry heist that I mentioned? I hope I was--maybe there's
another question.
Senator Hirono. With regard to the data sharing and all
that, that this is something that Homeland Security would
supply, is that your expectation under this bill that would
require Homeland Security to be the depository or repository of
a lot of the enforcement activity under the contemplated bill?
Ms. Stephan. I expect a federal agency to do it because of
my experience with federal agencies, for example, in the area
of elder scams, we were simply guessing until the FBI took on
the leadership of our Elder Justice Task Force. We were able to
then connect the dots and find out that my seniors were losing
$98 million a year.
Senator Hirono. Excuse me, I am running out of time. So, to
the extent that there's going to be a much bigger federal
involvement in enforcement there, there is a concern about what
is happening at Homeland Security as well as the Department of
Justice and the diversion of resources and bodies to other than
prosecuting and going after these kinds of crimes. And
literally dozens of experienced people who are normally of
focus on these kinds of crimes, are no longer there.
So, we can pass whatever laws we want, but unless there is
that commitment to enforcement at the federal level, we are
going to continue to run into resource problems. Thank you, Mr.
Chairman.
Chairman Grassley. Thank you. Senator Blackburn.
Senator Blackburn. Thank you, Mr. Chairman. Ms. Lemm,
welcome. We know that you and IMC do a great job in Memphis,
and we appreciate that you are here today before the Committee.
How long have you worked in logistics?
Ms. Lemm. Actually, Thirty-eight years.
Senator Blackburn. Thirty-eight years. So, you have seen
this as Tennessee has grown to be a logistics hub, an
intermodal hub there in Memphis where you have all of the class
one railroads. You have the very active port of Memphis which
is moving a lot of cargo and containers up and down the
Mississippi River. We have FedEx that is there. And then of
course, because of that, we have all the trucking organizations
that are well located in Memphis.
I noted in your testimony, you talked about the increase
from 21 to 24 was a 5,000 percent increase. So, this is an
astounding number. Now, we all know that weak DAs and weak
judges that will not abide by sentencing guidelines and lock
these people up and prosecute them is one of the reasons that
we have seen this cargo theft explode. So, I want you to talk
for a minute about what you think has caused this explosion.
Ms. Lemm. Well, I absolutely agree that, you know, part of
it is that there is there's no arrest and there's no
prosecution. We do have a problem with that, but 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. I will tell you they do respond.
Senator Blackburn. Chief Davis.
Ms. Lemm. Tremendous job.
But in so many ways, cargo theft, we speak almost a
different language, our terminology many things are very
different. And so, often when the local police do come, they
may write this whole theft up as vandalism. They're not able
immediately to even qualify and quantify what was taken, what's
the value of what's taken. They see the damage when the fences
are cut, and it's vandalism as we know it.
And so, I think what we like so much about the CORCA bill
is this outline in this standardization of what is cargo theft?
What is it? How do we aggregate it? I was talking about motor
carriers being the eyes and ears of our industry, because we
are, we don't have a voice. We don't know where to report. We
need a centralized place to report.
I explained the incident in St. Louis where we, you know,
basically had the ATF calling us right, to tell us that, ``Oh,
we've got your refrigerators.'' And so, it's this ability to
connect the dots, local, State, and Federal that we don't have
today. And you asked the question, you know, about what is it,
what could we do better in the State of Tennessee? What could
we do better in Memphis? I think we're doing all that we can.
Senator Blackburn. Right. Let's talk for a minute--pardon
me about, about that, because you're right, it takes passing
legislation, reframing the conversation, if you will, and then
putting the parameters around that. But one of the things that
we've looked at is utilization of technology.
Ms. Lemm. Yes.
Senator Blackburn. Because of what you're talking about
with cutting the fences, and then local law enforcement having
to say, is it 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?
Ms. Lemm. Well, 100 percent agree that there are ways
perhaps we can use technology to help us better record those
instances. And I think that could be very, very helpful part of
this whole discussion, too, of reporting resources needed to do
it. Technology can help us do it faster, more efficiently, more
effectively.
So, I really appreciate you even bringing that up. I think
you know we've got a very strong technology team in Memphis
would love to invite you to our headquarters and to have this
maybe a further discussion about how we could bring in this
whole idea of technology to help us in this area of cargo theft
where we badly need standardization, communication, and more
speed in our ability to collaborate.
Senator Blackburn. Thank you. Thank you, Mr. Chairman.
Chairman Grassley. Yes, Senator Klobuchar.
Senator Klobuchar. Let Senator Padilla to go before me.
It's fine. He was waiting.
Chairman Grassley. Go ahead.
Senator Padilla. Thank you for the courtesy. Thank you, Mr.
Chair. Colleagues, it's clear that across the country,
policymakers are grappling with how best to respond to this
dynamic of increasing reports of organized retail crime. It's
on the news constantly. And as a result, it's not just federal
officials that are thinking about it, and what can we do about
it, State officials, local officials, but through our
collective experience, you know, that effective policymaking
also, it depends on accurate data.
And right now, much of what we hear based on ``shrink
estimates'' often conflates theft with inventory loss, employee
error, and internal fraud. And I just can't help but observe
that without standardized disaggregated data, there's a risk
that we may find ourselves legislating based on more
assumptions than actual evidence.
So, my first question is for Mr. Glawe. The National
Insurance Crime Bureau often cites retail shrink data to
describe the scale of organized retail crime. How do you
distinguish between organized retail crime as opposed to
employee theft, inventory mismanagement, or other forms of
loss?
Mr. Glawe. So, Senator, thank you for the question. We have
been the hub for information sharing for the insurance industry
and law enforcement for 115 years. So, the claims associated
with crimes involved, we have access to that.
Since 2023, we've seen almost a 50 percent increase in
cargo theft. So, the cans, in the goods that are inside the
cans, in the last 18 months, we've seen 240 theft
investigations and 70 recoveries totaling $40 million that our
organization's been involved.
So, we're actually embedded in the investigations and with
the analysts at State and local levels. Regarding the
shoplifting and the shrinkage inside organizations. That data
is not something that the NICB actually tracks specifically,
it's the larger volume, the criminal organizations and the
cargoes associated with it.
Senator Padilla. So, that in and of itself, I think is an
important distinction because the nightly news may not always
frame it accurately. Would you agree or disagree with that?
Mr. Glawe. I would say the cargo theft, we can speak
specifically who we have the data associated with that, the
data regarding organized retail theft the crimes, which we know
are associated with some criminal organizations where the
supply chain goes overseas, but the actual data associated to
that, I think this legislation would be a good first step in
providing some granularity.
Because local law enforcement is really one--you're talking
about that theft reporting of where they get their data from,
it doesn't resolve necessarily to the federal system or into
the claims data that we would access according to crimes.
Senator Padilla. Right. Let me jump to a different topic.
Time goes by quickly in this Committee. Organized retail theft
crosses the State lines and implicates complex networks, which
you began to touch on, Mr. Glawe, from theft, to transport, to
resale. But addressing the issue effectively requires the right
federal partners as well. It's a public-private partnership, if
we're going to crack down on this with the right tools and
oversight.
Now, the Department of Justice, and the FBI, in particular,
have a long history of handling multi-jurisdictional property
crimes with prosecutorial discretion and judicial
accountability. But CORCA, you referenced the proposal, will
shift that rule to the Department of Homeland Security raising
questions about mission creep or surveillance.
So, Mr. Glawe, given your background to both national
security and fraud prevention, do you think DHS is the best
agency to address an economic property challenge?
Mr. Glawe. Senator, again, 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, you know, Customs and Border
Protection, we're embedded with them on identifying illicit
activity in goods going overseas.
Specifically, vehicles, were in multiple major ports. We've
covered a lot of high value stolen vehicles at the ports and
those goods transiting the ports. CBP is an important
Interlochen on people and goods traveling across the borders
and identifying illicit activity. HSI has a long history of
working transnational criminal organizations as well. We worked
with them when they were former customs special agents as well
before 9/11 when DHS was formed.
DHS is a logical point of being the center here. But I
think in partnership is critical with the FBI, our local law
and State partners, as well as national security, which we
didn't touch on, is we need to identify these networks that are
associated with national security threats being terrorism and
nation-state. So, a center where this can be done is very
important, and this bill is a good step.
Senator Padilla. So, I agree when it comes to the cargo
dynamic and ports of entry. When it comes to retail as retail
shops and theft being conducted at that level, I think that's a
different question, needing a different set of tools,
experience, and expertise from the Federal partners.
Last question. Now, my time is up, but if the Department of
Homeland Security were to gain access to both business and
consumer data, again, 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?
Mr. Glawe. Senator, I think the prioritization, as Ranking
Member Durbin said before on violent criminals, transnational
criminal organizations that are a threat to the United States
that transit the borders is critical. This center, the vetting
of people and goods that travel for threats to the United
States that are associated with violent criminal organization,
Mexican drug cartels, as well as terrorist organizations, is
critical in this center to be a good first step to do that.
Senator Padilla. Thank you. Thank you, Mr. Chair.
Chairman Grassley. Senator Britt.
Senator Britt. Thank you, Chairman Grassley, for convening
today's hearing. And thank you to all the witnesses for taking
time to be here.
I'm proud to be a co-sponsor of the Chairman's bill, and I
agree that both deterrents and a coordinated response are
essential to addressing the issue. We know organized retail
crime and supply chain crime have been a growing problem in
recent years.
So, as my time before I came to the U.S. Senate, I was
President and CEO of the Business Council of Alabama. This is
something we dealt with our members across the State, and we
learned that it's a multifaceted problem and it poses law
enforcement, economic, and national security challenges.
While these activities involve theft, in which and of
itself is a crime that must be addressed, one of my concerns is
to the extent in which organized crime in the retail and supply
chain area are carried out in furtherance of additional illicit
crimes and to the extent in which that often involves a
sophisticated criminal network.
My first questions are for Mr. Glawe and Ms. Stephan. Based
on your experience, what are some of the downstream illicit
activities that are tied to or furthered by the retail and
supply chain theft?
Ms. Stephan. Thank you, Senator, for that question. What we
do know is when, for example, our ORCA, our organized theft
task force does these investigations, hundreds of search
warrants. It's not uncommon to find the retail theft goods
along with guns and drugs. So, we see that interconnection
right there.
We don't have the federal tools currently to be able to
then tie those to specific activity into what cartels, what
organized crime is involved in this particular shipment that we
have right there, and that's where the bill that you're
supporting really can come into play and help us.
We also know, just from our experience, that the
intersection of crime, we know that cartels in Mexico, they
work with our Mexican mafia which is our, LaEme and they then
issue orders to our local gangs, which then control the human
trafficking activity. It's very hard to separate. These
criminal organizations are there based on greed and profit, and
wherever they can do that, that's what they're doing. They are
not always specialists, just specialists in retail theft.
In a recent case that we did that had the South American
theft groups that were linked to hundreds of residential
burglaries, especially targeting our Asian communities, where
they would watch as they're in their business and they would
attack their homes while they were away. They would survey in
those cases, you know, they had pictures on social media, that
same group with guns and with inviting escort services, which
is really human trafficking and other things.
So, the intersections abound. And I think that having
those, connecting the dots at a federal level will allow us to
see the whole framework and be able to then attack that monster
in a better, more precise, strategic way.
Senator Britt. Thank you so much, Ms. Stephan. And Mr.
Glawe, before you answer not only the downstream illicit
effect, but also how does this fit into the larger picture of
these transnational criminal organizations? And kind of speak
directly to that as well.
Mr. Glawe. Thank you for the question. And actually,
working on the transnational organized crime strategy under two
administrations, I can speak specifically how important it is
to have centers so the intelligence and the operation
coordinating can be put together. The national security threats
and transnational criminals organizations cannot be stated more
emphatically that we need these centers to be able to run this
information against classified data bases to understand if
these are being sponsored by nation-states, being it North
Korea, Iran, China, Russia, or these are by terrorist
organizations.
And we know all too well this Committee had oversight on
the Lebanese Hezbollah bulk cast smuggling involving vehicles
in 2010, 2015 era. There's historical cases that show the model
works, but you have to have a center oversight is appropriate
where you can run classified and unclassified data together
that brings State, local law enforcement, federal, and the
private sector together to identify those criminal networks
that are associated with the highest threats to the homeland.
Senator Britt. And let me ask you, in my few remaining
seconds, you obviously mentioned the center. Can you speak to
any gaps in information-sharing that may need to be addressed
in how we actually through the coordination and creation of
this center can work to actually fill those gaps?
Mr. Glawe. So, every center from the Organized Drug
Enforcement Task Force to the Counterterrorism Center, that we
know well, the models works there. It'll take time for the
policies and the strategies to get in place, and of course, to
correct oversight and the legal parameters to go with it, but
the public private sector partnership is critical. But also
bringing together disparate law enforcement organizations from
the Federal Bureau of Investigations, Homeland Security
Investigations, to CBP and our national security partners to
identify the threats that are the biggest to the United States
is critical. And the center is a good first step.
Senator Britt. Excellent. Well, thank you all for being
here. I have some more questions, but I will submit those for
the record.
Chairman Grassley. Senator Klobuchar.
Senator Klobuchar. Hello. Thank you so much for being here.
I was talking to Senator Whitehouse there about my previous job
when I was a prosecutor, and we actually set up a whole group
of prosecutors to work on this retail theft. It seems like our
problems were simple back then compared to now.
But I guess I'll start with you, Ms. Stephan. Could you
tell me how this federal legislation would ensure that
criminals who engage in what is actually different than it was
back then, I'll say that's now organized retail theft, face
accountability.
Ms. Stephan. Thank you, Senator Klobuchar. The cases that
we've done, which have been 218 cases in over 2 years with $2.6
million loss, show us that there's a footprint and it's outside
our State. It's across the Nation and an international
footprint, 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, to
prevent the same type of jewelry heist had happened in the
State of Washington, but we received no information, our local
task force to tell us there's this trend be on alert to it
because it's extremely sophisticated.
Senator Klobuchar. That's why that retail crime
coordination center would be so important----
Ms. Stephan. Exactly.
Senator Klobuchar [continuing]. If you get that
information. Mr. Glawe, could you tell me how transnational
criminal organizations use cargo theft to actually fund other
illicit operations?
Mr. Glawe. We have seen an exponential increase in cargo
theft over the last 3 years. In 2023, we saw almost a 27
percent increase. We're seeing another 22 percent increase,
that's a 50--well, we estimate in the end of 2025, we'll up be
50 percent. We know this supply chain is going overseas. We
know it's going over our border. These stolen goods essentially
have 100 percent markup. You steal it, and your profits are 100
percent.
So, the question is how do we identify those nefarious
actors, those networks that are the biggest threat to the
homeland. As Senator Britt's was talked about, is that's the
need for those classified data bases to be run against these
criminal networks. And, you know, well, Senator, this bill
would provide us the strategic and tactical intelligence to
address these biggest threats to the homeland, which we have no
doubt that these supply chains are being used to facilitate
for.
Senator Klobuchar. Thank you. And Mr. McBride, I think this
is an important point. How do the threats of violence by these
organized retail crime cartels not only threaten the safety of
store employees, but also make it hard to keep the stores open?
Mr. McBride. Thank you for the question, Senator. Yes, it's
the threat of violence and the actual violence that some of my
peers have experienced is 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're operating their shops. The intimidation
tactics to come back and to be able to revictimize the retail
locations over and over again is grown so much that we've had
to implement additional countermeasures, had to implement
training to keep our employees safe, we've had to lock up and
hide.
All of that leads to a reevaluation of the investment
that's being made in new stores different locations and those
types of things. And has in some cases with the entire retail
sector led to product deserts in some parts of this country
because stores have had to close up and leave because they
could no longer sustain a viable operation because of the
violence, the crime, the theft, and the losses that they are
incurring.
Senator Klobuchar. Very good. Ms. Lemm, last but not least,
so first of all, thank you for the support for the Ocean
Shipping Reform Act, the bill that Senator Thune and I did.
Yes. And as many of you know, that was about the pricing during
the pandemic that was hurting our farmers and our retail making
it really difficult.
And after we passed that bill on a bipartisan basis, then
President Biden signed it into law, it actually--the rates went
down for a number of reasons, but I think the threat of that in
the Maritime Commission eventually doing rules made a
difference, and it wouldn't have happened without companies
like yours.
So, just one question on this topic. Do you agree that
cargo theft poses a risk to the security of our food supply
chain?
Ms. Lemm. I absolutely do.
Senator Klobuchar. Can you explain that quickly, why?
Ms. Lemm. Yes, Senator, and thank you for the question.
First of all, food and beverage is the number one targeted
commodity in cargo theft. Number one. And why? Demand, of
course. It's so difficult to track. It's so easy to distribute.
And what is so devastating about that is, you know, the price
of food we know already is so high. The average American
cringes every time they go to the grocery store.
And what happens with these targeted thefts on food is once
you have something that's precious, any kind of food, you pick
it. We see 2, 3, 4 percent stolen. Those costs are immediately
passed on to the consumer. And you've been very helpful with us
as we discuss ag exports and what's happened is actually
targeting agricultural exports, beef, poultry, perishables.
And what we also see that's happening because of so much of
this transnational cargo organization, crime that's happening
on our railroads, pilferage, yes it may be secondary. We
believe these thieves are after high value cargo, but in the
meantime, destruction to our Ag exports as they cut the seals
and the integrity of load is lost.
Senator Klobuchar. Thank you. Appreciate it.
Chairman Grassley. Senator Moody.
Senator Moody. Thank you, Mr. Chairman. Thank you for
introducing the Federal legislation, Combating Organized Retail
Crime Act. I am incredibly proud to be a co-sponsor of that.
And it is timely, certainly, and needed now more than ever. 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, and that's putting it mildly, is
when we're dealing with issues like organized retail crime,
whether that's cargo, or smash and grab, or organized retail
theft, really this should be a bipartisan effort and how we
approach it.
But I'm always incredibly surprised to hear questioning
that. Is it really that bad? Like, shouldn't we attribute that
to something else? Or why is FBI and DHS helping? So, what I am
finding is that I think in whether it's a Governor or a mayor
in so many places, and just to be clear, that's the executive
branch whose responsibility to it is to enforce the law. There
is almost an ignorance or willful blindness, or maybe it's
self-promotion over the success and stability of their State or
city.
I don't know what it is, but it is increasingly hard for
somebody like me that served as a judge and a Federal
prosecutor and is the wife of a law enforcement officer to
watch these statements. For example, in one Governor, Newsom
out of California, went to a cargo theft site and was like, ``I
don't know what's happening. This looks like a Third World
country.''
In fact, I don't think it's a coincidence that in the last
3 years, the incident rate of cargo theft has gone up 17,000
percent. And we've also seen unvetted people come into this
country by the millions and invited into California, and
nobody's picking up on that. How many times have we heard the
word transnational criminal organization, transnational
criminal organization.
In fact, we just rolled out more arrests since Trump's been
in office of people here that have been deported time and time
again with criminal backgrounds and are stealing from cargo
freight. In Florida we just arrested a ring of people here from
Venezuela with ties to Tren de Aragua, who were found to have
been responsible for dozens of retail thefts in Florida.
Now, what I'm happy about is we now seem to have proposed
legislations that are going to do what we did in Florida. So,
when I was Attorney General, we launched a data base that
started tracking these cross jurisdictions. So, where one might
look like a single theft incident, we were able to then show,
``Oh no, this was nine jurisdictions, $20 million in loss, 20
different retailers,'' and we charged it that way and
prosecuted that way and locked them up for the true crime.
We also did legislation that expanded the time period on
which you could tie in these multiple hits and 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's not bad when the numbers are staggering.
It's costing Americans when we're trying to figure out how
we're going to afford to put food on the table with
skyrocketing prices, we don't need built into those prices
theft 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.
When you have DAs abdicating their responsibility and
saying, ``I'm not going to lock anybody up for theft,'' that
just flows gasoline on the fire. And what did we do different
in Florida, we actually removed the DAs that wouldn't enforce
the laws they didn't like. So, in New York, it shouldn't have
been surprising when they were catching people stealing and
they said, ``Well, we steal here, but we go in Florida to spend
our money because in Florida, if we get caught, they'll lock us
up.''
We need a national approach that says we're taking this
seriously. That is costing Americans money. It's costing us the
ability to share information across not just county lines
within a State, but across State lines and then across nation-
states. This is so important. I cannot stress how important it
is otherwise. Mr. McBride, you referenced this and I want to
say to you, you said, ``look, it's costing us so much money.
Can we even stay open?
Miracle Mile was about a third empty, Miracle Mile in
Chicago, and 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 in an executive branch, 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?
Mr. McBride. So, I cannot speak exactly to a number. I can
tell you that the losses are absorbed by corporations for as
much as they possibly can stand. But it does end up coming back
to the consumer in a lot of different ways, whether there's
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, the cost of rehiring associates
when they no longer feel safe enough to want to work in those
locations.
So, it is a very exponential 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 way by these crime groups.
Senator Moody. Thank you, Mr. Chairman.
Chairman Grassley. Senator Whitehouse.
Chairman Grassley. And then I don't know whether Senator
Tillis--are you going to ask questions? I've got to go vote.
So, you guys will have to work this out here.
Senator Whitehouse. [presiding]. We'll manage.
[Laughter.]
Senator Whitehouse. Ms. Stephan, I think you're the
prosecutor here on the panel. Is that correct?
Ms. Stephan. I believe so, and I'm one that doesn't mind
prosecuting. So, there have been some comments.
Senator Whitehouse. Well, that's usually a good attribute
in a prosecutor. I wanted to first of all let my colleagues
know that I'm very happy to work on legislation to focus on the
organized nature of these theft rings. 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. So, I just wanted to open with that point.
One of the very powerful laws for dealing with criminal
organizations, specifically criminal enterprises, as you will
have figured out from my use of the word enterprise, is the
RICO statute and both transporting, and 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 that then obviously have to transport,
sell, or have somebody receive the stolen goods, and where
you've run across or your colleagues in law enforcement have
run across legal impediments to using the RICO statute against
this predicate offense?
Ms. 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 why in our, for example, fentanyl
task forces and in our Elder Justice Task Force, the cases that
are solved in the task force are provided where the federal
prosecutor takes those cases that involve a RICO element
because it's such a powerful tool. And the State prosecutors--
--
Senator Whitehouse. So, California does not have a State
RICO law?
Ms. Stephan. On the State side, no, we don't.
Senator Whitehouse. One of few.
Ms. Stephan. We're fighting. We fight for different--we
have conspiracy laws, but they're not the same as a RICO
statute.
Senator Whitehouse. So, you would have to go to the U.S.
attorney----
Ms. Stephan. Exactly.
Senator Whitehouse [continuing]. And work with them in
order to get a prosecution together. How about your colleagues
around the country who have State RICO laws? Have they been
able to bring cases involving transportation sale or receipt of
stolen goods under those State statutes?
Ms. Stephan. They've done, I mean, through NDAA. I know
there's been a lot of successes in bringing organized retail
theft cases. San Diego, we've brought 218 cases even under----
Senator Whitehouse. But not under RICO?
Ms. Stephan. 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's
organized retail theft, or RICO, are absolutely imperative.
Senator Whitehouse. Well, I'm going to close out here and
turn the gavel over to Senator Coons, who is the last Senator,
can get us in all sorts of trouble alone in the room.
Senator Coons. I move the confirmation
Senator Whitehouse. Exactly. I would love if you have a
chance, if there is any particularly helpful document out there
from the NDAA, for instance, about the use of State RICO
statutes in this area, or if you have any personal experience
from your colleagues that would help inform our deliberations
or if there've been any good uses of your colleagues bringing
cases to Federal U.S. attorneys and getting RICO prosecutions
that resulted. I'd love to get that from you. So, I'll make
that as a question for the record, if I may.
Senator Whitehouse. And I thank all the witnesses for being
here, and I yield back my time.
Senator Coons. [presiding]. Thank you, Senator Whitehouse.
Senator Whitehouse. Over to you, Senator.
Senator Coons. Thank you to the witnesses. And I'd like to
thank Chair Grassley, and Ranking Member Durbin, and their
staff pulling together this hearing.
Look, 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's a focus for Delaware's Law Enforcement Fusion
Center. Interstate organized networks present challenges for
any one State. And so, I'm very open to seeing how we can
coordinate federal resources and federal legislation to help
address this and to coordinate intelligence sharing and
prosecution.
How we disrupt organized networks. I think is also
important that we avoid wasting precious federal resources on
just minor shoplifters as opposed to those who are actually
part of an organized effort. I've long been concerned about the
criminalization of poverty. That's why I've led the bipartisan
Driving for Opportunity Act with the support of Senators
Grassley, Tillis, Whitehouse, 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 the NDAA's long support of my
Driving for Opportunity Act. I appreciated how your testimony
recognized the importance of distinguishing between petty theft
from sophisticated ringleaders. Could you say just a little bit
more about that? What sort of indicators are there in
investigation that you're dealing with, just casual petty theft
versus those who are committing casual petty theft in order to
feed into an organized criminal ring?
Ms. Stephan. Thank you so much, Senator. And part of having
the data and having organized task forces helps us make those
distinctions in a more factual manner, not stereotyping. So,
being able to look at a track record at the data points. How
many times has this person been captured doing the same thing
and stealing the exact same item, which they can't possibly
need 200 sunglasses. There's got to be another use that isn't
one that makes it a necessity or something that should be dealt
with at a lower level, not an organized crime level.
So, relying on data. And I think that is part of why I
support this Federal, is not only to make more prosecutions,
that's really important, but to distinguish the correct
organized level and hold those who are really pulling the
strings. And sometimes they're using vulnerabilities such as
homeless people trying to feed an addiction. A young kid who's,
you know wants to have a phone, different things. We've seen
those solicitations of young people vulnerable people.
So, having the correct data at the national level, the
State level, the local level allows prosecutors to make good
decisions that comport with justice.
Senator Coons. Thank you. I also have to vote. One last
question, if I might. Mr. Glawe, on behalf of the National
Insurance Crime Bureau, any thoughts about how we would get
better data? I mean, you gather data in a very broad way,
neutral way. How do we make sure that we've got that data, and
that we're sharing it effectively and broadly?
Mr. Glawe. Senator, thank you for the question. So, we
bring together over 1,200 property and casualty insurance
carriers, and the claims associated with crime and suspicious
activity. We've done this for 115 years. We started with auto
thefts. We were actually the hub for all auto thefts back in
1912. So, this is what we do. And I would say we do it really,
really well.
But that engagement and partnership with State, local law
enforcement, and the private sector, and my partners to my left
is critical to this. And we've seen the centers, and I've said
this throughout my testimony; the Organized Crime Drug
Enforcement Center, the Counterterrorism Center, the
Counterproliferation Center, a center to bring us all together
and unite us public and private sector, but as well as running
the information against national security threats so we're
prioritizing resources against the biggest threats to the
homeland of Mexican drug cartels, terrorist organizations,
nation-states; Iran, North Korea. We know they're involved in
organized crimes.
Some of the biggest cases I had in the FBI was against
those organizations. So, a holistic approach. And this bill,
CORCA, would have that first good first step for us to start
building that center so we can prioritize resources, and all
have strategic and tactical intelligence to address this
threat.
Senator Coons. Thank you. That makes great sense to me. I
appreciate all of your testimony. This will conclude our
hearing. And any written questions can be submitted for the
record for 1 week from today. I'll ask the witnesses to answer
and return those questions to the Committee within 2 weeks.
Thank you again, and this hearing is hereby adjourned.
[Whereupon, at 11:55 a.m., the hearing was adjourned.]
[Additional material submitted for the record follows.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
A P P E N D I X
The following submissions are available at:
https://www.govinfo.gov/content/pkg/CHRG-119shrg61886/pdf/CHRG-
119shrg
61886-add1.pdf
Submitted by Chairman Grassley:
American Trucking Association, statement......................... 2
Association of American Railroads (AAR), statement............... 5
The Home Depot, statement........................................ 13
Intermodal Association of North America (IANA), letter........... 17
National Association of Attorneys General, letter................ 18
National Association of Manufacturers, letter.................... 24
National Insurance Crime Bureau (NICB), letter................... 25
The National Police Association, Endorses the Combating Organized
Retail Crime Act, letter...................................... 28
National Retail Federation (CORCA) Support, statement............ 31
National Retail Federation, statement............................ 36
Office of Global Public Policy (ICSC), Organized Retail Crime
Legislation, statement........................................ 46
Retail Industry Leaders Association (RILA), statement............ 50
Ulta Beauty, statement........................................... 53
Submitted by Ranking Member Durbin:
The Home Depot, statement........................................ 13
Retail Industry Leaders Association (RILA), statement............ 50
[all]