Leaving Money on the Table: How Business Reopening
and ORC Norms Can Affect Recoveries

By James Welborn, Attorney and Manager of ORC Recoveries, The Zellman Group

While none of us can predict exactly what will occur with shoplifting and Organized Retail Crime (“ORC”) during business reopening, one thing is certain; retail theft will increase and perhaps exponentially explode from traditional norms. According to the NRF, shoplifting and ORC impacts all retail market segments with over 92% of all retailers reporting some degree of impact, 25% of retailers reporting a significant increase from 2018 and 43% reflecting an increase with average losses of $700,000 per one billion in revenue increasing at 7% per year. However, once retailers begin to reopen, shoplifting and ORC will see significant increases well over the 7% previously noted. Over 30 million people have filed unemployment claims since mandated or voluntary store closures and the majority of these people have not as yet received any compensation, with many used to living on a week-to-week basis. To exacerbate this, many states have substantially increased their felony thresholds, have “no arrest” orders in place for certain crimes and retailers have traditionally been slow to bring back or add loss prevention personnel after revenue downturns. As a result, there will probably be an explosion of shoplifting and ORC gangs will return to their usual strategies with a vengeance.

Shoplifting is an opportunistic crime by one person while ORC involves multiple perpetrators utilizing sophisticated strategies. However, shoplifting and ORC investigative procedures by retailers end much the same. Once the case has been turned over to the police, loss prevention personnel may assist with further investigation and be required to appear in court. However, once the criminal matter is concluded there is very little if any follow up regarding restitution for the retail victim’s loss. No matter whether at the state or federal level, the restitution process is quite complex, involving multiple departments within each criminal justice system. Questions that add to the complexity, among others, are whether there are multiple victims, crimes across state lines, the extent and type of assets recovered or forfeited. Cash recoveries where there is a single victim, are the simplest, although that is exceedingly rare. Restitution will require, at a minimum, a Victim Impact Statement (“VIS”) or equivalent loss itemization with a detailed explanation of the loss. A simple statement with an unsubstantiated amount of loss will not work and will almost certainly require a restitution hearing where much more evidence will need to be presented. Doing it right the first time will conserve recourses and be looked on favorably by the court.

The Zellman Group has extensive knowledge and experience in drafting VIS’s in all U.S. jurisdictions, knows how to access the correct data and complete a VIS acceptable to a court, obviating the need for a hearing on the matter. Further, the quicker a case is received by The Zellman Group, specializing in ORC restitution recovery and non-ORC restitution recovery, the faster the recovery process (timely and complete VIS, the ability to communicate with court officers and the possibility of expedited recoveries) will happen. While many retailers prefer to obtain maximum criminal sentences regardless of restitution, communication with court officers and defense attorneys can allow for extremely acceptable sentences while the retailer receives acceptable restitution amounts well before it normally would, if ever. Of course, the retailers’ informed consent is absolutely required and both the prosecutor, court and defense attorney must all find any settlement acceptable and agreed upon.

Unfortunately, acquiring a restitution order is just the beginning of the restitution process although most retailers have closed their files after such an order is issued. At this point, the judge and prosecutor(s) have all but closed their files and moved on to other matters. Let’s say the police or courts have recovered ill begotten cash, merchandise and/or real property. While it matters little whether the case was in state or federal court, I will henceforth use terms more associated with federal proceedings. Cash is the easiest to recover back to the retailer and multiple victims presents less of a problem as apportionment of losses is fairly straightforward. Also, a return of stolen merchandise back to the retailer can also be a fairly easy process so long as the merchandise can be specifically identified. Conversely, when the assets recovered involve unidentifiable merchandise or real property, the restitution process can take years requiring follow up and documents retailers are generally not prepared for or are incapable of completing or producing. After the criminal matter has concluded, any assets recovered will generally be placed with the court Clerk’s Office. Within each court system there is generally a separate division, sometimes called a Financial Litigation Unit, that works to reduce unidentified merchandise or real property or combination thereof to cash. This division may require some type of Petition for Restoration. Some jurisdictions will help with this and others may not. This is just one area where a failure to follow procedure or even be aware of such a requirement can result in no recovery. The division handling restitution must be continually followed up with and cajoled to expedite the matter as most could really care less so long as they do their job. Persistence in follow up is the name of the game. Also, it has been my experience that retailers will not see a penny in restitution until all assets have been liquidated. Staying on top of where in the process the retailer is and what is needed is paramount to timely recoveries. While the above may be a more complicated scenario, the import of this is that even if the restitution matter appears simple, a knowledge of individual court procedures, documentation and motions must be followed up on or retailers will surely leave money on the table.

To provide a service to the industry, The Zellman Group utilizes sophisticated applications to stay current with case status’. Although some of the applications may also be available to a retailer, many retailers will find the cost of independently acquiring such sophisticated applications are not outweighed by cost per use (most applications require a monthly subscription under a contract for a term), the training needed to utilize them correctly and the ability to recognize what data is pertinent to enhance the timing and amount of recovery. Further, online nationwide court dockets are notoriously difficult to navigate, many have costs associated with use and, even then, it is difficult to know what docket entries are needed and those that are not. Application costs can be shocking and it would make little sense to acquire them for sporadic use. Even if your company has substantial resources and top-notch investigators with decades of experience navigating the local jurisdictions they are responsible for, by the time crucial restitution decisions need to be made, many times a year or years later, the original investigator may have been reassigned, promoted or poached by another company. Any new investigator may have little or no knowledge of the case and/or have little experience with the local jurisdiction, etc. This happens all the time and you now have an “orphaned” case. Utilizing the services of The Zellman Group ensures your case will never be orphaned.

James F. Welborn is an attorney licensed to practice law in New Jersey and the Manager of ORC Recoveries for The Zellman Group, LLC. This article is for general, informational purposes and does not establish an attorney-client relationship.