The latest dose of farfetched paranoia? Not possible within the hallowed walls of your company, you say? Better think again. A recent University of Chicago study found that gangs increasingly are adopting a middle-class appearance, while duplicating techniques used by organized crime. According to the FBI, more than 400,000 gang members live and work in 700 cities nationwide. And you can pretty much double or triple that number if you factor in wannabes and affiliates. Although the crime committed by gang members accounts for a small fraction of the estimated $120 billion a year in workplace theft, gangs also are impacting our companies by setting up shop for extortion and drug sales. Members increasingly cloak their illicit activity behind the legitimacy of the workplace. And, according to Van Ella, many also seek health benefits to cover huge medical bills that can result from gang-related shootings and other activities.
No industry or company is exempt. The growing list of firms that have had scrapes with gangs is shocking. Many are household names or are among the Fortune 500. Even the U.S. Military and Chicago Police Department have discovered gang members in their ranks. In Chicago, a major pharmaceutical firm recently discovered it had hired gang members in mail delivery and computer re pair. The crooks were carting off close to $1 million a year in computer parts and then using the mail department to ship them to a nearby computer store they happened to own. The same gang also was peddling drugs on the premises. Nearby, a well-known hospital discovered that a supervisor in the laundry department was a gang member who used the position to obtain Social Security numbers for undocumented workers, and then extorted money from them every payday.
This new breed of gang member includes all races and increasingly involves women. The gangsters are smart, and they have connections. They may not live up to the big screen image of Robert De Niro and Joe Pesci—stuffing bodies into a car trunk or dumping them into a river—but they can be as highly organized as any business. Some street gangs send their leaders to college so they can understand high finance and business practices. Another tier of gangs—Asian and sometimes South American—use their education and knowledge to steal electronics and high-tech components. Many have overseas connections and associates in the United States who operate legitimate businesses, thus making distribution easy.
The crimes they commit also are becoming more violent and brazen. Gangs have taken to hijacking trucks and storming factories in pursuit of microchips and electronic components that have become more valuable by weight than gold or diamonds. During the first half of 1995, Silicon Valley, California firms alone were hit with more than 50 armed robberies, and the average heist netted robbers $400,000. "There's a growing level of sophistication and opportunism," says Keith Lowry, a detective in the High-tech Crime Unit of the San Jose Police Department. Adds Van Ella: "Many of today's gangs operate along the lines of what's normally thought of as organized crime. They're becoming harder to detect and more difficult to weed out during the hiring process."
Look beyond stereotypes.
Experts say that nearly any company can become a target—or at least be viewed as an attractive place for gangs to engage in illegal activities like theft, extortion and dealing drugs. And because there's no law against being a gang member, HR and security face a complex set of concerns and challenges. As a result, it's essential not only to understand how gangs function, but also the clues they leave behind. "Gangs know how to get inside companies and exploit vulnerabilities. They have learned that they can get a lot further—and make more money—by appearing legitimate, articulate and well-dressed," says Frank Johns, director of risk assessment services for Pinkerton Security Services located in Arlington, Virginia.
One of the biggest problems, he points out, is that the workplace of the '90s isn't the same as in years past. "There are some subtle changes in society that make penetrating a company today much easier than it was 30 years ago. Despite a greater emphasis on screening applicants and providing security, there's greater opportunity for abuse," he adds. To be sure, it's easy enough to tick off a list of contributing factors: a decline in loyalty, higher turnover, stricter and more narrowly defined labor laws, and the growing trend toward outsourcing—which can often translate into less control over exactly who has access to merchandise, files and information.
Sometimes, disgruntled or loose-lipped workers simply provide the information that a gang might be looking for over a few drinks at a local watering hole. In other instances, money might change hands or thieves might pry hot information by knowing a worker's specific weakness: infidelity, gambling debts or a problem with drugs or alcohol. Some gangs are successful at planting members within a company—often inside dispatching, shipping or accounting—and others gain access by posing as temporary workers or using their position with an outside vendor to make their way into a steady stream of companies.
Despite the fact that many organizations now are aware that such problems exist, the bar constantly is rising to greater heights. Gangs often figure out ways to short-circuit screening procedures, such as using friends as references or listing jobs at businesses that have shuttered their doors. Many of these individuals also change cities on a regular basis and use a fellow gang member's address as their own. Knowing that many company's conduct nothing more than a cursory check of local records, these applicants don't expect their convictions in other cities to show up. Moreover, it appears as though they have lived in the community for months or years.
Mara Wassar knows just how huge a challenge it is to keep the gangs out. The director of loss prevention at Elek-Tek—a Skokie, Illinois company that operates a chain of 10 computer superstores in the Midwest as well as a large mail-order business—concedes that the company has unwittingly hired gang members. Elek-Tek spends $45 to $65 per employee to conduct pre-employment screening, a criminal background check and drug testing. Still, "there's absolutely no way to know that some of these people belong to gangs. They don't wear gang colors or markings, they appear well-educated, and they have spotless records," says Wassar.
That's a far cry from a decade ago, when gangs proudly wore their colors and prominently displayed their markings—even at job interviews. However, gang members almost always remain true to their nature. "Although they're more sophisticated and appear more respectable, it's only a matter of time before they flash a gang signal, mark something with graffiti or intimidate another employee at work or offsite," says Richard H. Williams, a former Chicago police officer who now works as vice president of investigation and security at James E. Van Ella & Associates.
Don't underestimate the level of sophistication and violence.
Of course, the growing wave of gangs that hijack trucks and storm factories have no intention of being subtle. Although they too depend on inside information to know when to pull a heist—often paying off shipping clerks or casing the facility with the help of a temp worker—they use ruthless techniques to get the loot they desire. Security guards have been pistol whipped and shot, and employees have been severely beaten and had plastic bags tied over their heads. "Not only is the crime organized," says Mike McQuade of the American Electronics Association, "it's organized to the point that gangs are stealing to fill orders. They understand the electronics business, they know what they want and they know how to get it."
They also know how to skirt the law. Consider that a microchip weighing less than an ounce can easily fetch a couple hundred dollars on the street. A SIMM strip (single in-line memory module) that carries several chips can run into several hundred dollars. And a Pentium 133-megahertz processor—the brain that runs many of today's personal computers—weighs just over an ounce and is worth upwards of $800. It's possible to stash more than a dozen Intel Pentium chips into a briefcase and unload them on the gray market within minutes. In fact, a legitimate computer store can easily buy from a gang posing as a distributor without knowing it.
Unlike cocaine or heroin, there's no law against possessing semiconductors or CD-ROM drives. "A police officer who stops someone with a briefcase full of SIMMs can't assume they're illegal. There are many legitimate people in the business who carry chips around, just the way diamond brokers in New York City carry around their goods," explains the San Jose Police Department's Lowry. And while it's possible to request paperwork, that can prove time consuming and ultimately ineffective because the crooks easily can disappear in the interim. What's more, most chips aren't traceable as they make their way through distribution channels, and the vast majority of police officers don't have the training to understand this type of crime.
That's why some law enforcement agencies, like in San Jose, have begun to establish special units. The FBI also has created a task force to deal with the situation. Their goal is to focus on this problem by creating teams of specially trained officers and agents who understand technology and are better equipped to conduct investigations. By working together, law enforcement is better able to focus on both national and international implications.
Tracking down the crooks is truly vexing. The chips can change hands several times—sometimes within several hours. They wind up in computer stores that gangs own and operate, as well as other major stores and outlets that are completely legit. Ultimately, the chips can appear in a PC that you buy at your local computer store, or be shipped off to an overseas destination. They also end up at swap meets and computer expos. Because the demand for chips is so great and prices are high, many buyers don't ask questions. They look at less expensive chips as an opportunity to save money and earn a greater profit. The Chubb Group, an insurance company based in Warren, New Jersey, estimates up to $8 billion in components are stolen each year. It pays out $10 million a year in claims related to high-tech theft.
Gang robberies take place more often than you might expect. In May of last year, more than a dozen Asian men attired in sport coats and ties pushed their way into Centon Electronics—an Irvine, California firm—and carted off an estimated $9.9 million in chips, making it the largest known semiconductor heist in history. The Asian gang ruffed up employees and threatened several at gunpoint, before disappearing into the night. A later theft at a nearby company almost identically matched the Centon robbery. Neither case has been solved.
Dallas-based Cyrix Corp., a leading producer of microprocessors and a competitor of Intel, is still smarting from a hit it took in December 1994. At approximately 11 p.m. on a Sunday night, more than half a dozen armed men overpowered an employee who was outside for a smoking break. They grabbed his access card and forced their way into the facility, where they blindfolded and tied up several other workers. After forcing everyone to lay on the floor, they ransacked two caged areas, grabbed $379,000 worth of 4x86 Cyrix chips, and then headed out an employee entrance and into an awaiting car. The case remains unsolved.
Gang-related crimes such as those at Centon and Cyrix are a relatively new phenomenon. As a result, many companies have found themselves unprepared for the rash of robberies that have rippled through the industry. But that's beginning to change. Chubb Insurance and the American Electronics Association have both begun a campaign to educate companies about the growing threat. And many firms, like Cyrix, take the threat of gangs seriously after having endured the pain and turmoil of an armed robbery. "It's not necessary to create a Fort Knox—but you do have to discourage thieves and make [robbery] a challenge that's not worth their time and effort," explains Karl Flusche, the company's director of security.
Indeed, Cyrix has beefed up its physical security and now boasts one of the best systems in the industry. One strategy was to install maximum security turnstiles, which allow only one person per access card to enter a restricted area. The company also has installed double doors that make entering and exiting the building a much slower process. It banned smoking outside the building. A new smoking patio was built—and it's protected by fencing, gates, alarms and video surveillance. And all visitors now wear bright red ID cards that draw attention to the fact they aren't employees. "That makes it easy to spot someone who's loitering or engaging in suspicious activities," says Flusche.
Of course, ensuring that trucks get to their destination with cargo intact can be a bit more challenging, since it's difficult to control what happens on public highways and byways. Many gangs have resorted to overpowering a truck driver and hauling off hundreds of thousands of dollars of computer components, auto parts and any other product that can be sold on the gray market. As a result, many trucking companies are closely scrutinizing applicants and instituting far more stringent guidelines. They're also working to educate drivers about how to spot potentially dangerous situations, and equipping them with cellular phones.
Arm yourself with effective HR weapons.
Of course, much of the solution lies within the universe of human resources. Background checks and screening procedures are more important than ever, and experts say there are subtleties to detecting crooks. For example, many thieves and gang bangers earn their GED in prison, a fact that might not be apparent without a little digging. And because many gang members move from one city to another, a local criminal check can be almost worthless. Many firms that offer screening services for $10 or $15 simply don't pick up past convictions outside the local area.
"Many companies are lax about screening applicants, and others are hesitant to spend the money," says Peter Rosen, vice president of HR at Norrell Corp. in Atlanta, a leading provider of managed staffing and personnel used for outsourcing. "They say they're conducting reference checks and background checks, but if you actually map the process you see they're cutting corners and doing things in a haphazard fashion. Ultimately, they can wind up spending more money and experience bigger headaches trying to deal with the aftermath of the problem."
Rosen will go to great lengths to ensure that prospective employees have a solid work history. He spends as much as $60 per applicant to gather background data. He also refuses to yield to time pressures, waiting the 48 to 72 hours it takes to get information back about an applicant. And by letting prospective employees know that the company conducts thorough checks, some applicants take themselves out of consideration immediately. Depending on the exact position, an outside firm reviews past employment records, driving history, Social Security data and conviction records—the latter over a minimum of a five- to 10-county area.
But it's Sun Microsystems that has developed one of the most sophisticated and effective methods for screening out crooks and gangs members. The Mountain View, California company, with more than 14,000 employees in 145 locations worldwide, has developed Sunscreen, an internal program that allows it to investigate job applicants for about $50 each, compared to the $75 to $250 the company used to spend for an outside service. Two full-time Sun employees trained in full background checking to verify degrees, references and driving and criminal records, if applicable. According to Joe Chiaramonte, the firm's senior manager of corporate investigations, Sunscreen has saved the company $500,000 to $800,000 a year. More importantly, it has weeded out approximately 8% of all final applicants because of questionable backgrounds.
However, Sun Microsystems doesn't limit Sunscreen to its own applicants. Outside contractors, consultants and temporary workers also are subject to the process, depending on how much time they spend inside Sun and what areas of the firm they have access to. "Temp agencies tell you they're conducting checks," says Chiaramonte, "but when you do your own check you find out they're often not doing an adequate job." Although HR has the final word on whether to accept or reject any applicant, the findings of the two trained staffers are given considerable weight.
Sunscreen isn't the company's only strategy for fighting crime, either. Last November, the Silicon Valley computer hardware and software firm held a special meeting for all its vendors and clients to discuss ways to discourage gangs, after one of its suppliers had a gang follow a truck from the facility. In that case, the driver was alert enough to realize he was being followed by a van with no license plates, so he drove the truck and its $5 million cargo into a police station parking lot. For the workshop, Chiaramonte brought in FBI agents, a representative of the District Attorney's office and an array of other experts who discussed ways to increase awareness and minimize problems. "The problem affects everybody, and unless companies work together it's only going to get worse," he says.
Educating employees about how to spot gang activity and how to deal with it also is crucial. Elek-Tek's Wassar has found that employee meetings and training sessions are essential. Not only is it important to teach workers about gang signals, graffiti and drug dealing, it's essential to help them understand how it could affect them. "We try to communicate that it's their workplace that's being violated and that it's a threat to their safety and well-being," says Wassar. Indeed, Elek-Tek offers a toll-free number so workers can anonymously report problems and concerns. And it encourages open channels of communication between sales clerks and supervisors. Finally, the company has a zero-tolerance policy toward any crime. Not only does that reduce the risk of violence against employees and customers, it limits liability and keeps insurance costs in check, according to Wassar.
And if a robbery or violent event does take place, experts say it's essential to provide immediate counseling. Besides the tremendous anxiety and distress over the event, morale and productivity can plummet. In many instances, valued employees simply quit, while others require ongoing medical and psychological treatment to deal with the trauma of the event. "The effects can linger on and can wreak havoc for weeks, months or years," says Van Ella.
Unfortunately, the problem isn't likely to disappear anytime soon. As gang members become better educated and more organized—hiding behind legal businesses in the United States and forging broader links to international crime syndicates in South America, Asia and Europe—the scope of the problem is likely to grow. "A lot of these people, particularly those from other countries, don't have arrest records, and many of them are extremely smart," says Pinkerton's Johns. "They are raising the stakes and becoming increasingly bold. They're learning to mimic techniques used by organized crime."
Yet, as Cyrix, Elek-Tek, Sun Microsystems and many other companies have learned—sometimes the hard way—there's no reason to look down the barrel of a loaded weapon. It is possible to battle gangs and come out the winner. Van Ella explains: "You can't deny employment to somebody because he or she belongs to a gang. But you certainly can use background checks, advanced security techniques and employee education to create an environment in which gangs can't flourish. It's an ongoing battle, but it's one that a company must take very seriously."
Personnel Journal, February 1996, Vol. 75, No. 2, pp. 46-57.