Man Sentenced To More Than Eight Years In Prison In Multi-million Dollar Stolen Goods Case

CHARLOTTE, N.C. – On Monday, September 28, 2015, U.S. District Court Judge Max O. Cogburn, Jr. sentenced the leader of an organized retail crime ring that sold and distributed over $12 million in stolen over-the-counter (“OTC”) drugs and health-and-beauty (HBA) products, announced Jill Westmoreland Rose, Acting U.S. Attorney for the Western District of North Carolina.  Steve Hale, 66, of Terrell, N.C., was sentenced to 97 months in prison followed by three years of supervised release after serving his prison term.  Hale also was ordered to pay a $3,100 special assessment, to forfeit a sports boat and $332,195 in seized funds and to pay restitution to his victims, the amount of which will determined by the Court at a later date.

Acting U.S. Attorney Rose is joined in making today’s announcement by Matthew Quinn, Assistant Special Agent in Charge of the United States Secret Service, Charlotte Field Division; Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI); Chief James W. Buie of Gaston County Police Department; and Chief Robert C. Helton of the Gastonia Police Department.

In April 2014, a federal jury convicted Hale of interstate transportation of stolen goods conspiracy, interstate transportation of stolen goods, making false statements in income tax forms, failure to collect employee income and FICA taxes, and obstruction of justice.

Hale was the last of eight defendants convicted and sentenced for organized retail crime offenses resulting from arrests made in “Operation Cash Back,” a multi-agency investigation into the buying and selling of stolen OTC drugs and HBA products that began in September 2010.  Hale’s codefendants were previously sentenced to prison terms ranging from 18 to 86 months.  In addition to the prison terms, prior forfeiture orders included more than $29,000 in seized cash, 20 motor vehicles, two real estate properties and a forfeiture money judgment of $7 million.

According to filed court documents, court proceedings and evidence submitted at Hale’s trial, Hale and his conspirators participated in what is known in the retail industry as Organized Retail Crime (“ORC”) and Organized Retail Theft (“ORT”).  Court documents show that from 2006 to March 2011, the defendants engaged in a scheme whereby they bought and sold stolen over-the-counter products, including medications and dietary supplements, and health and beauty aid products. According to court records, organized retail theft begins with individuals, known as “boosters,” who shoplift popular OTC and HBA products from the shelves of various pharmacy and retail stores.  The individuals who operated as “boosters” in this conspiracy stole OTC and HBA products from stores in North Carolina, South Carolina West Virginia, Georgia, Pennsylvania and Connecticut.  The “boosters” then sold the shoplifted goods far below retail and wholes prices to first-level “fences.”   First-level fences in turn served as middlemen between the “boosters” who stole the OTC and HBA products from retail merchant stores and second-level fences who further distributed the stolen goods to a higher-level fence or distributor, who then distributed the stolen products back into the retail marketplace.

According to court records and court hearings, Hale’s conspirators served as first-level fences, purchasing stolen OTC and HBA products from “boosters.”  The first-level fence conspirators then sold the stolen OTC and HBA products to Hale, a second-level fence, at prices far below the retail and wholesale prices of the stolen goods.  Hale paid cash to his first-level fence conspirators, who in turn paid cash to “boosters” for the stolen OTC drugs and HBA products.

According to court records and court hearings, OTC and HBA goods stolen by “boosters” must be “cleaned,” which means removing retail store security labels, tags, stickers, and pricing labels, before they can be reintroduced into the retail marketplace through the various levels of fences.  Hale provided the necessary cleaning services for stolen OTC drugs and HBA products before shipping the stolen goods to higher-level fences in illegal distribution channels. One of Hale’s previously convicted conspirators, Jeff Telsey, owner and operator of JCA Enterprises in Boca Raton, Florida, served as a third-level fence who repacked the stolen goods in industry-standard “case packs” for resale into the retail marketplace. The amount of stolen property involved in the investigation from 2006 to 2011 exceeded $16 million.

Hale’s bond was revoked in April 2014, and remains in federal custody.  He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility.  All federal sentences are served without the possibility of parole.

The investigation was handled by the Secret Service, IRS-CI, the Gaston County Police Department and the Gastonia Police Department.  This prosecution was handled by Assistant United States Attorneys Tom O’Malley and Ben Bain-Creed of the Western District of North Carolina.