Boosting trucks laden with pharmaceuticals is a low-tech, low-risk road to riches for organized criminals
By Daniel Grushkin
At twilight on June 17, 2009, Ricky Gene McNew pulled his plum-red big rig into a TravelCenters of America (TA) truck stop in Denmark, Tenn. McNew had been driving all afternoon, starting from Louisville (Ky.), and hauling $10 million in pharmaceuticals. He was bound for Memphis, to the warehouse of a medical supply wholesaler. McNew filled his tank and headed into the truck stop for a shower. When he came out, his truck was gone.
The thieves had stolen goods worth about 100 times the average taken in a bank robbery, and there wasn't a single witness. McNew's cell phone had been inside the truck, along with the spare key, so he had to go into the cashier to call his dispatcher. The dispatcher called the owner of the trucking company, Steadfast Transcontinent.
Thus began a chain reaction that threatened the nation's drug supply. The drugs were owned by the U.S. division of Tokyo-based Astellas Pharma. It was Astellas's first experience with a stolen truck, and a shock to the company's directors. On the advice of the Food & Drug Administration, they started calling everyone in the supply chain that night, from wholesalers to hospitals, to warn them that the stolen drugs might surface in their facilities. The lost truck had contained 18 pallets with 21 different medicines. They were concerned about the release of all the medicines, but an immunosuppressant called Prograf was especially troubling. The drug prevents patients from rejecting transplanted organs such as hearts, livers, and kidneys. The pills are sensitive to temperature and humidity, and if left in an uncooled trailer or warehouse, can fail and result in major complications for a transplant recipient.
Within a week, Astellas withdrew all the drugs on the marketplace from the same lots as those on the stolen load. Pills—even legitimate ones—in drugstores and hospitals nationwide had to be destroyed. The $10 million theft ballooned into a $47 million loss. It wiped out 10 percent of the company's North American sales for the quarter—a sudden, multimillion-dollar setback that's becoming increasingly common for companies who rely on America's highways.
FreightWatch International, an Austin-based cargo security firm, collected reports of $425 million in stolen cargo in the U.S. last year. Conversations with numerous FBI employees suggest thieves could be making off with far more, with estimates ranging from $10 billion to $30 billion a year.
"You name it, they're taking it," says Susan Chandler, executive director of the American Trucking Assn.'s Supply Chain Security and Loss Prevention Council. "Do I think there's a surge? Absolutely."
With more than 2 million trucks on the road in the U.S., some 63 percent of all freight travels in trailers. Thieves exploit the weak links in this supply chain, including poorly guarded warehouses and truckers who fail to heed shipping rules. McNew, for example, had told the police that he knew he was supposed to fuel up before leaving the warehouse, in order to be able to outrun would-be thieves, but he left with the tank a quarter full and had to stop, the police said.
The biggest vulnerability, however, is a lack of coordination across jurisdictions. Police departments are geared for local crime, but when the target and the crook are both passing through, the location of the theft becomes incidental. By the time patrolmen begin investigating the lost trailer, the truck is likely out of the county. If a criminal is arrested, the sentences are often so light that many county attorneys don't bother prosecuting.
"The problem is that it's so lucrative and the risk is so low," says Ed Petow, the former commander of the Tomcats, a task force in Miami-Dade County that unites local and state police detectives with federal agents to combat cargo crime.
"By comparison, every bank robbery in the U.S.—whether they take $10 or $10 million—is ultimately investigated by the FBI," says Chuck Forsaith, chairman of the Pharmaceutical Cargo Security Coalition. "Cargo theft is different. A tractor-trailer stolen in Opelika, Ala., with $10 million in fragrances, or pharmaceuticals, or tobacco—you know who's going to investigate that? The midnight guy in the Opelika P.D."
Though it can be hard to estimate the full extent of cargo theft—defined by the FBI as goods stolen mainly from trucks but sometimes from shipping containers, cargo planes, and warehouses—the boosting of freight in transit is clearly on the rise. FreightWatch reports a 30 percent increase in heists since 2007.
Nearly half of all cargo thefts are committed by organized specialists, Petow says. A number of these, according to Petow and members of the FBI, are carried out by a syndicate based in South Florida, many of them Cuban. These crews roam the country's interstates, targeting trucks carrying cosmetics, designer clothes, and electronics. The crews average $471,000 a load, according to FreightWatch intelligence director Dan Burgess.
Pharmaceuticals, however, are the top prize. An average stolen truckload of drugs is worth $3.8 million, according to Burgess, and in the past five years, the number of pharmaceutical cargo thefts has multiplied more than four times. According to officials in the FDA office of criminal investigations, the thieves often pair with launderers who channel stolen or counterfeit prescription drugs, sometimes expired, back into the market. Only a week before the Astellas load disappeared, a patient walked into The University of Texas MD Anderson Cancer Center in Houston with abnormal glucose levels. The Novo Nordisk (NVO) insulin (branded as Levemir) he had bought at a local pharmacy had failed. It had come from a trailer stolen in Conover, N.C.
In March 2010, thieves pulled off the highest-value cargo theft in history, in a night raid on an Eli Lilly (LLY) warehouse in Enfield, Conn. They cut a hole in the roof and rappelled down to avoid the security system. Once inside, they disabled the alarms, then pulled a tractor-trailer to the loading bay and cleaned the warehouse of $76 million in antidepressants, including Prozac and Cymbalta. The police never found the drugs or the trailers.
"I don't call them cargo thieves. I call them entrepreneurs," says Petow. "In cases where we've been able to track stolen cargo, it pretty much mirrored the legitimate export process. The best guess—and it's strictly a guess—is that 50 percent of the stolen goods are exported to South America and the rest redistributed inside the country."
Walt Robinson, 46, is a detective on the Palm Beach Auto Theft Task Force. He stands 6 feet, 2 inches, with a salt-and-pepper goatee and a military haircut, and favors a polo shirt and cargo pants, along with a utility belt holding handcuffs, a flashlight, a badge, and a Glock. In the back of his SUV, he keeps two lockers stocked neatly with items such as grease cleaner, steel brushes, and screwdrivers, which he uses to scrape away the grit obscuring vehicle identification numbers on stolen trucks. When he's done, he wipes his tools clean and places them carefully in their designated drawers.
As the Palm Beach Sheriff's Office detective charged with investigating cargo theft, Robinson has had his hands full since 2008. Thieves weren't only targeting out-of-state haulers. They were picking off easy hits around town. Between 2007 and 2008, the incidence of trailer thefts in Palm Beach rose from three to 22.
"That's when I really opened my eyes to cargo theft," says Robinson. Contacts at the Tomcats, the cargo theft task force, taught him that crews of four travel in two rental cars—rented, because the plates are harder to track—and a "bobtail," a truck without a trailer. Their pursuit often begins when a rig leaves the manufacturer. The average trucker takes a load 500 miles, giving the thieves a number of opportunities along the way. If the driver steps away, a thief can break in and drive away within two minutes. All it takes is a dent puller, which is normally used to smooth dings from car bodies, and a flathead screwdriver (total price on Amazon: $19.69). The thief yanks the ignition key cylinder out with the dent puller, and then twists it with the screwdriver as if that were the key.
The first half-hour is the riskiest. The thief must travel far enough from the truck stop to switch the trailer to his own bobtail, then paint over any logos on the trailer and disable the GPS transmitters with which most trucks are equipped. With all that done, the trailer can't be tracked, and if the truck does get pulled over by police, the driver has the proper paperwork and no identifying marks on the trailer.
Catching a thief in the act boils down to luck—being at the right truck stop at the right time. In order to shut down an operation, detectives focus on the warehouses where stolen goods get stowed. "Put yourself in the thieves' shoes," says Alex Peraza, an FBI special agent based in Miami and a member of the Tomcats. "Once they steal it, where the hell do they put the thing?"
In April 2007, before the Astellas load went missing, Robinson received a tip from detective Willie Morales of the Miami-Dade County Police Dept. A member of the Tomcats, Morales had just returned from an East Texas jail, where he'd interrogated a cargo theft ringleader who had been in a cell for two weeks waiting to post bail. The man was angry, not at the police, but at his own gang; they had refused to give money to his wife and newborn baby while he was in jail.
Crews like these are tight, according to Petow. They abide by a pact that if one gets caught, the others help. They post bond, pay for a lawyer, and most important, take care of the family. The leader had been betrayed, and his revenge came as an account of his crew and their operations.
The jailed informant, whose name has been withheld at the request of Morales, said he'd been replaced by his partner, Armando Canaura. Canaura lived in Robinson's jurisdiction, in an unassuming single-story beige home with a stone façade, a manicured lawn, and a white pickup in the driveway. At that time there was no known link between Canaura and the missing Astellas pharmaceuticals.
As further thefts occurred, Morales's network of informants on the Miami black market said the goods came out of Canaura's alleged network. The trick was to find his warehouse, and that meant studying Canaura—where he went, whom he spent time with, what he did. Robinson convinced his boss, Lieutenant Mike Wingate, to lend him all eight members of Palm Beach's Auto Theft Task Force to stake out Canaura.
According to Robinson, Canaura's associates had one thing in common. At one time or another, they had all used his address as their own. Robinson couldn't prove it, but he suspected that the men joined the theft ring in exchange for being smuggled into the country. "They would come through him and then they'd owe him. That's how he'd recruit guys for work," says Robinson.
That's common, according to Morales. The 1996 Cuban Adjustment Act grants asylum to any Cuban who sets foot in the U.S., and young men willingly risk incarceration for a way into the country. "They'll start out as lumpers offloading trucks," says Morales, "then move up to going around the country on heists. They have no past, so in most places they'll be able to bond out if they're caught, and they can't be deported."
While the other detectives investigated Canaura's associates, Robinson says he parked his car in a cul-de-sac opposite Canaura's home, just behind a row of high bushes. For nine hours a day, Robinson recorded the numbers on the plates of the cars that continually pulled up to Canaura's house. When his shift ended, another detective in another unmarked car would replace him. People went in and they went out, but the shades on Canaura's windows were always closed. No one even took the trash out.
When he wasn't on stakeout, Robinson made his way through records of phone calls intercepted at cell towers, hoping to tie Canaura or one of his men to the scene of a theft. In his office, Robinson built a criminal hierarchy, putting together a chart over his desk of Canaura and his associates, most of whom lived nearby, noting their criminal records, spouses, properties, and finances.
Robinson began to draft what he believed was a modus operandi for Canaura. The trailers were mostly stolen in Tennessee, Kentucky, and sometimes Texas. Logos were always painted over. The tractor was abandoned immediately, and the goods were always high value.
From his car, Robinson would sometimes watch Canaura—thickset and bald, with a jutting forehead and acne scars over his cheeks—lug a fishing rod and cooler of bait over to the canal. He often wore an old T-shirt, a loose-fitting pair of shorts, and flip-flops. He never seemed to have to go to work.
After three weeks, the investigation started to peter out, and the recruited detectives drifted back to their own cases. Canaura never seemed to go anywhere but his brother Jose's house down the street, or fishing. To save manpower, Robinson requested a court order to hide a tracking device on Canaura's pickup. To install it, the police would need to steal the vehicle and install the beacon back at their own garage. The operation became more difficult when Robinson got a call from his sergeant about a police run-in with Canaura.
On May 15, 2008, at about 10 p.m., a driver tried to tow Canaura's truck, which had been parked illegally on the street, according to the police report. The driver, Albert Lee Clark, was about to pull away with it on the back of his truck, when Canaura and six other men poured out of the house and surrounded his cab. They beat on the windows with their hands and yelled in Spanish. Clark, according to the report, watched Canaura cock a handgun and put it to his side. Within a few minutes, three policemen arrived.
A scuffle ensued, and ended with an officer shooting Canaura with a stun gun. Canaura pled guilty to improper exhibition of a weapon and resisting an officer.
Robinson made his move a few weeks later, at three o'clock in the morning. Two detectives from his cadre, detective Mike De Bree of the Delray Beach Police Dept. and Chris Suarez, an auto crimes detective with the Boca Raton police department, crawled into the scrub opposite the house. They lay flat and trained rifles on Canaura's front door, in case he burst out with a gun. From down the street, a detective snuck toward Canaura's truck. He tried to open the door with a specially made key, but he was so shaky he couldn't get the key in properly, according to De Bree. Robinson called the operation off.
For his next attempt Robinson paired with repo men, who towed Canaura's truck away in the middle of the night. The following morning Canaura called the police to report the vehicle stolen. Within days, an officer called back to say the vehicle had been found. Canaura didn't know it, but the truck returned loaded with a tracking beacon.
Again, "Canaura went nowhere," Robinson says, at least not in his truck. Robinson had been following Canaura for 18 months, and he had nothing.
Throughout, Robinson had spoken daily with the Tomcats. Among his contacts was Detective Juan Gross, a Tomcat veteran of 15 years who ran a web of informants that helped him track stolen goods. On Oct. 17, 2009, Gross passed on a solid lead. One of his informants had bought samples of cigarettes and Bacardi Select from a man driving a white Acura licensed to the wife of a man named Denis Perez De Castro, according to the affidavit for a search warrant Robinson would later request. Robinson recognized Castro's name; he had lived in Canaura's house. By looking at the packaging, Gross could tell that the cigarettes—including Marlboros, Camels, and Basics—came from a warehouse heist in Georgia three days earlier.
When the man in the Acura, not identified in the warrant, asked the informant to borrow his truck to transport the stolen cigarettes, Gross fitted the truck with a transmitter. He watched the beacon from his computer. On a map, a blinking dot left Miami and headed up the Florida Turnpike, past Fort Lauderdale, Boca Raton, and Delray. At Palm Beach it turned inland into Loxahatchee, a town of farmers and horse breeders. The beacon located the truck within a radius of a few blocks.
According to property records, Castro's wife owned a second home in the town that sat opposite a preschool on Okeechobee Boulevard, a sandy street of farms that dead-ended at a drive-through safari park. It was a beige, single-family home with a chocolate brown roof, hidden behind a row of high bushes. It had a very large separate garage, big enough to conceal a trailer. When Robinson went up, he found two container trailers parked on the side lawn.
Three days later, Robinson assembled the Auto Theft Task Force in undercover cars and vans a few blocks from the house in a lot down the street. Robinson says Gross had told him that Castro had been peddling the cigarettes and rum in Miami again, but the buyer hadn't shown. Gross expected Castro to return to the warehouse with a full trailer. By 7 p.m. Robinson still didn't know whether or not Castro had returned. He hoped that the trailer was inside the garage. If they raided an empty house, the 18-month investigation would be destroyed. The element of surprise would be gone, and Robinson feared the operation would be rebuilt somewhere else. As Robinson tells it, his boss, Lieutenant Wingate, pressed him to serve the warrant anyway. Or as Wingate put it, "S—t or get off the pot, Robinson."
Wingate was asking Robinson to embrace chance, and that countered every one of his methodical steps to build the case. Finally he said, "Ah, you know what, f--k it, let's do it."
Just as Robinson started his car, a pickup truck followed by a tractor-trailer came down the road. Robinson pulled out behind the trailer, and followed them to the house.
The six undercover police cars pulled up around the truck, lights flashing. Robinson cuffed Castro, who argued that he was just on his way home. The other detectives charged out of their cars to secure the truck, the garage, and the house. Suarez and De Bree banged on the front door, and a Guatemalan man answered. Inside there were guys everywhere, drinking beer in front of a small television, sleeping in a closet, cooking in the kitchen. The detectives marched them outside onto the driveway and ordered them to sit.
De Bree moved to the garage where the detectives expected to find pallets of stolen goods. He unhinged the side door. The concrete and cinderblock husk of a room was empty except for a rusty forklift. The two trailers on the grass were empty, too. But when the detectives pulled the latch on the trailer hooked to the truck they found boxes stacked high with $2.3 million worth of cigarettes.
While the detectives examined the trailer, one of the men who was in the house slipped into a red Chevy. Suarez caught him before he could drive off. The man's name was Servando Gomez, and he turned out to be Castro's brother-in-law. As Suarez cuffed him, he noticed a bottle of Bacardi stuffed in a shopping bag on the passenger floorboard. "Is that yours?" Suarez asked.
"Someone gave it to me," Gomez said. Detective Suarez asked if he had more back at his home. "No," he said, and then added, "I'll show you." Suarez and three other detectives drove Gomez to his house, just a few blocks away. Together they walked up a little slope to the white stucco home. It was about 9 p.m. when Gomez introduced his wife, mother, and son to the group of detectives.
Inside, the detectives found Gomez had been bluffing. They discovered cell phones, razors, and lotions from stolen loads—in all, goods from nine out of the 22 trailers stolen in Palm Beach, according to Robinson. Gomez's wife pulled back the child safety gate that led to a small basement beside the garage, and Wingate went downstairs. There were 400 boxes of Astellas pharmaceuticals, including Prograf. "I think we've got the mother lode," Wingate said. Including the cigarettes and the pills, Robinson's team found $13 million in stolen goods.
In February 2011, after 16 months in the justice system, Gomez pleaded guilty in Palm Beach County Court to grand theft. He received three years' probation. Castro faces trial for grand theft in July; his lawyer did not return three calls for comment. His wife was not charged. Canaura, meanwhile, appeared to have slipped through Robinson's fingers, until November 2010, when four trailers were stolen from an Elizabeth Arden Distribution Center in Roanoke, Va. Three of the trailers were found abandoned in New Jersey. According to public sources, Canaura, along with his brother Jose and Castro (who was out on bail), were found in the back of a gardening center in Winchester, Va., painting over the logo on the fourth truck, which contained $63,000 in perfume.
Canaura is charged with grand larceny. "He hasn't been arraigned yet, so we don't have a plea," says his lawyer, Roger Inger. "So far, I guess, it's not guilty." He is expected to go to trial before a Frederick County jury in June.
Police continue to investigate nearly 20 men connected to the ring. Robinson has joined the Tomcats. He's now investigating a case with agents from the FBI. In Loxahatchee, a couple has moved into Castro's house. They've never heard of the theft, let alone the fact that they live at its epicenter. They have started a tomato farm on the field behind the warehouse. The trailers are gone.
Grushkin is a Bloomberg Businessweek contributor.