Law enforcement agents have charged four Michigan residents with stealing and reselling plastic pallets as part of an alleged organized crime operation targeting industrial areas in southeast Michigan.
The Michigan Attorney General's Criminal Division in Lansing said the group was involved in a suspected racketeering operation. They allegedly stole plastic pallets used by the automotive industry from industrial yards and fenced them through legitimate and illegitimate businesses.
According to court documents, the group operated through two companies, Rags to Riches (RTR) Sales Inc. in Farmington Hills, Mich., and Jim's Pallet Recycling Services Inc. in Carleton, Mich.
The group fenced the pallets, many of them to businesses that thought they were dealing with a legitimate distributor, or sold them to recyclers as regrind, said Joy Yearout, a spokeswoman for the attorney general, by phone.
The Livonia (Mich.) Police Department, with assistance from the attorney general's office and General Motors Co. in Detroit, conducted an undercover operation to get to the bottom of a rash of pallet thefts that started about a year ago, said Livonia Police Lt. Thomas Goralski.
Over several years, the group stole pallets and containers from about 70 businesses in southeast Michigan, and may have started branching out to businesses in Ohio, he said by phone.
Neither Yearout nor Goralski would disclose the names of companies affected by the thefts.
Law enforcement agents seized about 1,400 pallets and shipping crates, valued at $300-$500 apiece, from two warehouses in Farmington Hills, according to court documents, but the total number of stolen containers was probably much higher.
“This particular group stole an excess of millions of dollars over the last couple of years,” Goralski said.
The four suspects — Damian Massa, David Wendler, and husband and wife James Tabor and Zaklina Tabor — face 27 criminal charges, including conducting a criminal enterprise, conspiracy and receiving and concealing stolen property.
Massa and the Tabors each entered pleas of not guilty at their July 6 arraignment. Wendler pleaded not guilty on July 12.
If convicted, they could each pay thousands of dollars in fines and face up to 20 years in prison, authorities said.
“This was an expansive, complicated scheme to defraud companies. That's what led to these charges,” Yearout said.
The four suspects were the leaders of a large pallet theft operation, a criminal enterprise, Goralski said.
The investigation is ongoing, but in the next few weeks charges are likely to be filed against other members of the operation, he said.
Pallet theft operations have also been uncovered in California. A law enforcement task force that investigates and busts industrial plastics theft operations in Southern California has recovered nearly $6 million worth of stolen plastics since its inception in September.
The automotive industry spends tens of millions of dollars each year buying plastic pallets and reusable containers, but typically, plants don't track pallets as rigorously as they do parts, according to Jim Zamjhan, supply chain program manager for the Automotive Industry Action Group.
“It's hard taking inventory of these things. They don't stand still long enough,” he said in a recent phone interview.
The industry is aware of the problem and knows that it's time to do something about it, he added, pointing to the recent crackdown as evidence that the industry is “stepping up.”
AIAG, based in Southfield, Mich., has scheduled meetings with manufacturers, suppliers and other auto industry players to develop a plan to track the movement of containers, he said.
Goralski recommended that businesses “secure those pallets better than you are.”
Pallets and crates are generally stored outside, sometimes in unlocked or unfenced lots, and appear to be easily accessible, he said. Businesses that have never experienced a theft might not even realize it's a problem, he said.
“You'd just think it was common sense — why steal something so large that's hard to steal?”
He suggested that businesses start fencing yards, installing cameras or bringing pallets inside.