(U) Changes - Intelligence Bulletin: Changes in Drug Production, Trafficking, and Abuse 2008 (UNCLASSIFIED)

From January 1, 2008, through December 31, 2008, NDIC FPSs reported, and intelligence analysts studied, a number of developing issues in various drug markets throughout the United States, including the following:

Increased pseudoephedrine "smurfing" for methamphetamine production.
The diversion and distribution of pharmaceuticals by street gangs and outlaw motorcycle gangs (OMGs).
Drug-related thefts of various metals in California, Illinois, Mississippi, Oregon, and Washington.
Increasing sophistication of pharmacy burglars.

Individuals and criminal groups are increasingly circumventing pseudoephedrine sales restrictions by purchasing numerous packages of pseudoephedrine products from multiple retail locations. In some areas of the country, individuals and criminal groups are facilitating methamphetamine production by evading pseudoephedrine sales restrictions through multiple small-quantity pseudoephedrine product purchases at or below threshold levels from numerous retail locations. This practice is commonly known as smurfing. (See text box.)

Law enforcement reporting from the Great Lakes, Pacific, Southeast, Southwest, and West Central Organized Crime Drug Enforcement Task Force (OCDETF) Regions (see Figure 1) indicates that individuals and criminal groups are increasingly organizing pseudoephedrine smurfing operations and selling the medications to methamphetamine producers or trading them for the drug. (See Table 1.)

State	City	OCDETF Region
Arizona	Phoenix	Southwest
California	Los Angeles Oakland San Diego San Francisco San Jose Santa Cruz	Southwest Pacific Southwest Pacific Pacific Pacific
Colorado	Colorado Springs Denver	West Central
Georgia	Atlanta Canton	Southeast
Illinois	Carbondale Springdale	Great Lakes
Indiana	Indianapolis	Great Lakes
Kansas	Fort Scott Pittsburg	West Central
Kentucky	Owensboro	Great Lakes
Missouri	Joplin Kansas City St. Louis	West Central
Nebraska	Columbus North Platte	West Central
North Carolina	Statesville	Southeast
Oklahoma	Tulsa	Southwest
South Carolina	Greenville	Southeast

Central Valley California High Intensity Drug Trafficking Area (HIDTA) officials report that many methamphetamine laboratory operators in their area, including those who produce methamphetamine at superlabs operated by Mexican drug trafficking organizations (DTOs), are acquiring pseudoephedrine through organized smurfing operations in central and southern California, particularly in San Diego County. Central Valley California HIDTA officials also advise that smurfs are utilizing global positioning system (GPS) devices in their automobiles preprogrammed with routes to all pharmacies and retail businesses selling over-the-counter pseudoephedrine medications in their areas of operation.
Officers with the Fresno Methamphetamine Task Force (FMTF) report that they frequently find evidence of pseudoephedrine smurfing, including bags of blister packs2 containing pseudoephedrine medication and thousands of empty blister packs, at laboratory dumpsites. According to FMTF, the illicit resale price of pseudoephedrine medication in California increased from approximately $1,500 per pound in 2006 to $7,000 per pound in August 2008.
During an April 2008 pseudoephedrine smurfing investigation in Fresno, FMTF officers recovered a list of pseudoephedrine medication resale prices, store receipts, pseudoephedrine medication packaging, and paper shredders. Officers also discovered bulk quantities of blister packs that had been removed from their boxes and placed into plastic shopping bags for resale to "pseudoephedrine brokers."
An FMTF investigation initiated in October 2007 revealed that two suspects had been soliciting homeless individuals daily to drive with them to multiple retail locations to purchase pseudoephedrine medications. In exchange, the suspects paid each person approximately $30 and sometimes gave them alcohol. Evidence seized from the car included packages of pseudoephedrine medications, pharmacy listings torn from an area telephone directory, and several cellular telephones.

Pseudoephedrine smurfing quite likely has contributed to recent increases in methamphetamine production in some regions. Methamphetamine laboratory seizures increased in the Great Lakes, Southeast, Southwest, and West Central OCDETF Regions from 2007 to 2008 after decreasing every prior year since 2004, according to the National Seizure System (NSS). (See Table 2.) Also according to NSS, 51 of the 60 tablet extraction laboratories seized in 2008 were located in the Southwest and West Central Regions--regions where smurfing has increased. While smurfing was noted in California, NDIC did not receive reports of increased smurfing in the northern Pacific Region and noted decreased methamphetamine laboratory seizures in the Pacific Region. One factor that quite likely contributed to decreased seizures in the Pacific Region was the passage of state-level legislation directing the Oregon Board of Pharmacy to adopt rules classifying products containing ephedrine, pseudoephedrine, and phenylpropanolamine as Schedule III controlled substances by July 1, 2006.3 This legislation most likely had an ultimate effect of little to no smurfing activity in that state.

OCDETF Region	2004	2005	2006	2007	2008	Change 2007-2008	Percent Change 2007-2008
Florida/Caribbean	216	200	103	103	64	-39	-38%
Great Lakes	1,680	1,357	956	796	929	+133	+17%
Mid-Atlantic	236	182	109	55	54	-1	-2%
New England	7	17	10	3	2	-1	-33%
New York/New Jersey	35	22	35	13	10	-3	-23%
Pacific	1,288	582	260	172	115	-57	-33%
Southeast	2,854	1,694	1,346	954	1,105	+151	+16%
Southwest	1,205	528	365	189	220	+31	+16%
West Central	2,493	1,428	759	686	729	+43	+6%
Total	10,014	6,010	3,943	2,971	3,228	+257	+9%

Street gang and OMG members are increasingly diverting and distributing pharmaceuticals. The percentage of law enforcement agencies nationwide reporting street gang involvement in the diversion and distribution of pharmaceuticals trended upward from more than 32 percent in 2004 to more than 44 percent in 2008, according to NDIC National Drug Threat Survey (NDTS) data. However, the level of street gang involvement in pharmaceutical diversion and distribution varied regionally during the same period. According to the NDTS data, the 5-year (2004 through 2008) average percentage of law enforcement agencies reporting street gang involvement in pharmaceutical diversion and distribution ranged from 30 percent in the Mid-Atlantic and New England Regions to 49 percent in the Southwest Region. (See Table 3.) The following anecdotal law enforcement reporting from officials throughout the country illustrates the NDTS findings:

Fresno and Clovis, California, law enforcement officials report that African American street gangs have begun to distribute OxyContin� in their areas, including to local high school students.
Bloods gang members in Rochester, New Hampshire, are acquiring OxyContin� from distributors in Lawrence, Massachusetts, and selling it to local abusers, according to local law enforcement reporting.
Thurston County, Washington, Drug Task Force officers indicate that some African American street gang members are involved in the distribution of diverted pharmaceuticals in their jurisdiction.
Female associates of street gang members in Plano, Texas, earn income primarily by selling diverted pharmaceuticals that they obtain through prescription fraud, according to local law enforcement reporting.
Richmond, California, law enforcement officials report that on November 13, 2008, several members of the "Deep C" street gang were arrested, and nearly 10,000 dosage units of pharmaceuticals were seized during law enforcement operations.

Table 3. Percentage of Law Enforcement Agencies Reporting Street Gang Involvement in Pharmaceutical Distribution, by Region and Nationwide, 2004-2008

OCDETF Region	2004	2005	2006	2007*	2008	Amount of Increase/Decrease 2007-2008	Amount of Increase/Decrease 2004-2008	Five-Year Average 2004-2008
Florida/Caribbean	28.3%	45.6%	37.9%	43.7%	54.7%	+11.0%	+26.4%	42.0%
Great Lakes	33.6%	34.2%	40.0%	36.1%	40.5%	+4.4%	+6.9%	36.9%
Mid-Atlantic	21.7%	25.4%	29.0%	39.4%	34.8%	-4.6%	+13.1%	30.0%
New England	23.9%	32.7%	31.8%	35.9%	27.8%	-8.1%	+3.9%	30.4%
New York/New Jersey	27.5%	40.8%	39.8%	46.3%	45.7%	-6%	+18.2%	40.0%
Pacific	36.2%	41.7%	43.9%	49.0%	45.2%	-3.8%	+9.0%	43.2%
Southeast	35.8%	40.8%	40.3%	47.0%	52.4%	+5.4%	+16.6%	43.3%
Southwest	42.0%	48.0%	49.4%	52.8%	53.0%	+.2%	+11.0%	49.0%
West Central	31.5%	35.2%	38.7%	38.9%	40.7%	+1.8%	+9.2%	37.0%
United States	32.5%	37.9%	39.7%	42.8%	44.2%	+1.4%	+11.7%	39.4%

Source: National Drug Threat Survey.
* In 2007, Arkansas was included in the Southeast OCDETF Region; from 2003 through 2006 Arkansas was included in the West Central OCDETF Region.

The percentage of law enforcement agencies nationwide reporting OMG involvement in pharmaceutical diversion and distribution also trended upward between 2004 and 2008--from approximately 22 percent to 26 percent, according to the NDTS; however, percentages fluctuated regionally. (See Table 4.) The 5-year (2004 through 2008) average percentage of law enforcement agencies reporting OMG involvement in pharmaceutical diversion and distribution ranged from 20 percent in the Southeast Region to 32 percent in the Pacific Region. The following anecdotal law enforcement reporting from officials throughout the country illustrates the NDTS findings:

Some members of the OK Riders (a "support club" of the Bandidos OMG) are actively involved in hydrocodone and OxyContin� distribution in Arkansas and Oklahoma, according to local law enforcement officials.
Law enforcement officials in Memphis, Tennessee, report that OMGs in their area obtain diverted pharmaceuticals from a source of supply in California and ship them to Memphis by package delivery services for local distribution.
The Virginia State Police indicate that some members of the War Lords OMG are involved in trafficking Schedule II and III prescription drugs within Virginia.

Table 4. Percentage of Law Enforcement Agencies Reporting OMG Involvement in Pharmaceutical Distribution, by Region and Nationwide, 2004-2008

OCDETF Region	2004	2005	2006	2007*	2008	Amount of Increase/Decrease 2007-2008	Amount of Increase/Decrease 2004-2008	Five-Year Average 2004-2008
Florida/Caribbean	17.7%	21.7%	23.7%	26.6%	30.4%	+3.8%	+12.7%	24.0%
Great Lakes	25.8%	26.1%	25.7%	27.5%	28.3%	+0.8%	+2.5%	26.7%
Mid-Atlantic	16.9%	19.7%	26.2%	28.6%	24.7%	-3.9%	+7.8%	23.2%
New England	26.3%	32.4%	33.5%	30.2%	28.9%	-1.3%	+2.6%	30.2%
New York/New Jersey	19.2%	27.1%	23.3%	24.0%	23.6%	-.4%	+4.4%	23.4%
Pacific	23.3%	31.9%	33.6%	40.4%	32.4%	-8%	+9.1%	32.3%
Southeast	19.4%	20.1%	19.1%	22.6%	21.0%	-1.6%	+1.6%	20.4%
Southwest	22.8%	26.9%	26.5%	31.2%	29.3%	-1.9%	+6.5%	27.3%
West Central	23.1%	24.3%	22.4%	25.9%	20.6%	-5.3%	-2.5%	23.2%
United States	22.2%	25.3%	25.2%	27.7%	25.9%	-1.8%	+3.7%	25.3%

Source: National Drug Threat Survey.
* In 2007, Arkansas was included in the Southeast OCDETF Region; from 2003 through 2006 Arkansas was included in the West Central OCDETF Region.

Metal thieves linked to drug abuse are becoming more brazen. According to law enforcement and open-source reporting, drug abusers and some low-level distributors are increasingly stealing metals such as aluminum, brass, bronze, copper, palladium, platinum, rhodium, and stainless steel and selling them to junk dealers, recycling businesses, and salvage yards to finance drug purchases and/or drug operations. Metals are at historically high prices, rendering the theft of recyclable metals particularly lucrative. Such activity is reflected in the following examples:

From September 2007 through February 2008, three men allegedly stole red brass vases, World War II plaques, religious statues, and headstones from nine Cook County, Illinois, cemeteries, affecting nearly 1,500 Chicago area families. They sold the brass to support their heroin addictions. Law enforcement officials reported that the person to whom the thieves sold the brass, valued at over $500,000, "just didn't care." As a result, some cemeteries no longer allow bronze items unless families sign a release stating that they will not hold the cemetery responsible for stolen items.
In January 2008, three men in Cowlitz County, Washington, were arrested for stealing more than 3,500 pounds of telephone wire from poles in southwest Washington; they subsequently sold the wire as scrap for approximately $3,000. The crimes caused major disruptions in telephone service, and Qwest Communications, the service provider, spent more than $121,000 to replace the wire. One of the men had 13 prior felony convictions, including drug violations.
In January 2008, three men in Jackson County, Mississippi, were arrested after authorities found a methamphetamine lab and a large amount of stolen property from shipyards at the home of one of the defendants. Investigators believe that this defendant had traveled by boat to shipyards between Gulfport, Mississippi, and Bayou La Batre, Alabama, and had stolen aluminum, brass, and copper. Authorities believe that he also traveled by boat to seafood plants to steal anhydrous ammonia, which is used in methamphetamine production. A National Crime Information Center check revealed that one of the other defendants was wanted by Harrison County, Mississippi, authorities on methamphetamine-related charges.
In January 2008, two people in the Portland, Oregon, area were arrested for allegedly stealing two large metal sculptures depicting a mother and child, with an estimated value of $81,000, from an art patron's Portland estate and selling them to a local recycler for $264. The metal recycler became suspicious and alerted authorities when he noticed a metal hand in what was supposed to be "scrap." The investigation revealed that one of the suspects worked as a security guard on the estate; she had stolen the sculptures to support her methamphetamine addiction. In August 2008, she was convicted and received a 45-month prison sentence.
In March 2008, two men in Modesto, California, were arrested for stealing 65 water meters containing brass, with an estimated value of $15,000, and attempting to sell them to a scrap yard. One of the suspects was wanted for violating bail conditions for a prior drug case; police found him carrying one of the stolen water meters into his residence. When they entered his home, they found dozens of water meters in various stages of being stripped of their brass components. The man led police to the other suspect, a contractor hired to install the water meters in new homes.
Catalytic converters are stolen from vehicles nationwide for their palladium, platinum, and rhodium; easy targets for drug abusers, catalytic converters are part of the exhaust system designed to reduce pollution and can be removed from high-clearance vehicles with battery-powered saws or common socket wrenches in as little as 90 seconds. Popular theft sites are dealer car lots, park-and-ride lots, airport parking lots, and even police impound lots--where thieves can move quickly from vehicle to vehicle.

Many state governments have enacted legislation to combat the increasing problem of metal thefts, and numerous state governments are currently considering anti-metal theft legislation. According to the National Conference of State Legislatures, as of December 2008, 33 states had enacted metal theft laws, and 27 states were either considering new legislation or revisiting existing legislation. For instance, a bill before the Florida Legislature would require scrap dealers to gather and archive information on people who sell them metal products. The bill would also stiffen penalties against those who damage essential services and systems in the course of stealing metals. Proposed legislation aimed at combating metal theft was introduced in Congress during early 2009; it is drawing opposition from private interests representing scrap recycling industries. (See text box.)

Businesses are implementing their own measures to combat metal theft. For example, electric utilities and local government in Oregon have formed a metal theft task force in an attempt to reduce thefts. The Eugene Water & Electric Board, composed of five electric utilities in Eugene, and the Bonneville Power Administration, headquartered in Portland, designed a program in which each utility selected a different color to paint all of its otherwise unidentifiable copper grounding wires; they then printed a corresponding flyer listing each utility's name and respective color to help scrap metal recyclers and law enforcement trace the wiring. Another utility, American Electric Power Ohio, is replacing its copper wire with copper-clad wiring that has no scrap dollar value and is very difficult to cut. Also, electric utilities across the state of Georgia are offering a $500 reward for information leading to the arrest and conviction of individuals involved in the theft of copper and other metals from their properties. In August 2008, telecommunications company AT&T California began offering statewide rewards, up to $10,000, for information leading to the arrest and conviction of individuals who are cutting and stealing its telephone cable from utility poles throughout California.

Additionally, the Director of Metal Theft Prevention and National Law Enforcement Liaison of ISRI reports that stakeholders in metal theft--law enforcement, recyclers, railroad investigators, telecommunications companies, and utility companies--are taking preventative measures such as materials marking, aggressive patrol, better surveillance, stakeouts, stings, GPS usage (installed on farm machinery), and the promotion of partnerships between law enforcement and recyclers.

Burglars who target pharmacies for prescription drugs are becoming more sophisticated, using knowledge of alarm systems and police procedures to their advantage. Recent law enforcement reporting and anecdotal information indicate that pharmacy burglars are using burglary techniques involving technical knowledge of alarm systems and police responses to alarm calls to evade detection. One technique involves burglars disconnecting power supplies to disable alarm systems of targeted pharmacies prior to breaking and entering. Once an alarm system is disabled, burglars hide, waiting to make entry until the police have responded, checked the building, and departed. Although police notify the store owners or points of contact that the store alarm was activated, the owners/points of contact rarely visit the businesses--particularly in early morning hours--when advised by police that the sites are secure. Another technique employed by pharmacy burglars is to break into adjacent stores and cut holes through common walls to access the pharmacies. Pharmacy burglars also breach building security measures by cutting holes in pharmacy roofs, rather than by breaking and entering through doors or windows. These burglars lower themselves into buildings using climbing equipment to avoid tripping alarm sensors. For instance:

In December 2007, a burglar tunneled into an Orange County, California, pharmacy through a wall from an adjoining utility room. The burglar stole Vicodin� (hydrocodone) and cash.
In March 2008, police officers responded to a burglar alarm at a pharmacy in Staten Island, New York. As a result of prior pharmacy break-ins in which the perpetrator entered through a hole in the roof, the officers established a perimeter upon responding to ensure that the burglar did not escape. Officers used a K-9 unit to find the burglar, who was inside the pharmacy. The burglar confessed to committing four other crimes in the same manner.
In December 2008, police officers responded to an audible alarm at a pharmacy in King George, Virginia. A man who exited the building was arrested after leading police on a high-speed chase; police recovered 500 oxycodone pills and a pint of hydrocodone. The man had broken into the pharmacy by cutting a hole in the roof; he also tried to disable the pharmacy's alarm system by ripping out several wires.
In February 2009, an Upper Darby, Pennsylvania, pharmacy was burglarized; $400,000 worth of prescription drugs were stolen. The suspect, wearing a ski mask and carrying a portable scanner to monitor police communications, cut the phone lines to the pharmacy, dismantled its alarm system, and disabled the pharmacy's surveillance cameras. Using a diagram of the building's interior, the suspect then entered the pharmacy through an air-conditioning system on the roof. Once inside, he opened two safes and stole Percocet�, fentanyl, Valium�, Xanax�, and OxyContin�. The suspect placed the drugs in a gym bag bearing his name in the trunk of a car with the car keys dangling from the trunk lock. A neighbor called police after he noticed the car, with the keys still in the trunk lock, unattended for several days.

Footnotes

2. Blister packs are the most common form of packaging for pseudoephedrine-containing medications distributed in the United States. A blister pack consists of a clear plastic overlay that houses each tablet, capsule, or caplet individually. The clear plastic housing is affixed to a backing that typically is constructed of foil or a combination of foil and paper from which the medication must be removed before use.
3. State of Oregon, Oregon Medical Board, Current Events, "Schedule III listing now includes pseudoephedrine, related substances," information retrieved from http://www.oregon.gov/OMB/CurrentEvents.shtml on April 1, 2008; 73rd Oregon Legislative Assembly-2005 Regular Session, Measure 2485 C, Staff Measure Summary, Senate Committee on Rules, information obtained from http://www.leg.state.or.us/comm/sms/sms05/hb2485csrules07-25-2005.pdf on April 1, 2008.