Plastics thieves operating in plain sight cost Southland firms millions

One night past midnight behind Superior Supermarket in the City of Industry, a man was hard at work loading plastic containers into a white truck under the glow of streetlights.

It was a sight Los Angeles County Sheriff’s Deputy Shelley Jones had observed many times while on patrol, and if it hadn’t been for a call she’d received a few days before, she wouldn’t have given the man a second glance.

A local dairy executive had phoned to report a mysterious phenomenon: Every night, plastic pallets used to distribute goods from warehouses, dairies and farms to stores were disappearing from Southern California businesses by the tens of thousands. It was costing businesses in the region millions of dollars a year, he said.

Jones pulled her patrol car over and took the man in for questioning. He admitted to being a thief. Each night, he said, he helped himself to perfectly good plastic pallets, milk crates and baker’s trays wherever he could find them. Then he drove to a corner in South Los Angeles, where another man bought them.

In essence, the man told Jones, he was stealing the plastic to recycle it.

The plastic crates were ground into pellets and sold to plastic manufacturers, who turned the pellets into the same sorts of plastic pallets and milk containers that the man stole. Manufacturers then sold the new pallets and crates back to some of the same companies — supermarkets, dairies and bakeries from where they were stolen.

California businesses are easy marks for plastic thieves. Some of the stolen contraband may be shipped to factories in Asia. But authorities say a growing percentage of it is processed by recycling operations in Southern California, some of which rely on government contracts. The prices plastic recyclers pay vary, but lately they have hovered around 15 cents a pound for non-ground plastic, industry officials say.

Sheriff’s Sgt. Nabeel Mitry said the scheme was similar to another, better-known recycling crime — stealing copper wire, statues and other metals — but plastic theft is “more accessible, and they can do it in plain sight and nobody cares.”

“Your average street cop watching someone behind a store collect this stuff would not … think twice about it,” he said. “It’s not a sexy crime.”

The sometimes substantial losses are passed along to consumers in the form of higher prices for milk, bread, soda, beer and other items.

Downey-based Rockview Farms dairy loses almost 1,200 plastic milk crates a day, at an annual cost of $1.4 million.

Several years ago, Rockview hired Joe Harrington, a Redondo Beach business consultant, to study the problem. He found many retailers took few prevention measures, and recyclers were happy for the business. Crate manufacturers had no incentive to intervene.

“For them, it was built-in demand,” he said. “All they did was take [more] orders.”

The theft is a nationwide problem, but officials say it is particularly acute in Southern California because material can be shipped overseas from the Port of Los Angeles, and the region’s recycling infrastructure is well-developed. Sara Lee spends about $5 million a year replacing plastic bread trays nationwide — about a third of which are lost in Southern California, a company official said.

Plastic crates and pallets have been disappearing since their invention, in part because they make for cheap makeshift furniture and shelves. But as the price of oil began to rise more than a decade ago, it drove up the cost of plastic, and thefts escalated.

“It was almost like us losing the value of a small car every day,” said John Keith, formerly of Dean Foods and now at Hollandia dairy.

Jones’ encounter with the thief behind the supermarket confirmed that there was a local black market in stolen plastic, Keith said. The thief was released without being charged because at the time no one in law enforcement knew enough about plastic theft to bring a case they could win.

That began to change last fall, when the Sheriff’s Department formed a five-person Industrial Plastics Task Force, which is believed to be the only such team in the nation. It is wholly funded by the City of Industry, which is home to many of the affected businesses.

Task force members staked out the loading docks of supermarkets and big box stores. Within weeks, they tracked thieves to a warehouse in Compton where they found $2 million worth of stolen plastic. They also found hundreds of thousands of dollars in cash and more than $100,000 worth of marijuana.

In November, they found $250,000 worth of plastic in a nondescript warehouse off Slauson Boulevard in South Los Angeles. In December, two more cases came to light.

Again and again, their investigations led them back to tiny warehouses — available for rent by the month — packed in industrial sections of South Los Angeles near the Alameda Corridor. Black-market recyclers set up plastic grinders inside, and loading docks offer easy access for vans pulling in with stolen plastic and leaving with 2,000-pound bags of ground pellets.

Not all operations are so obviously illicit, however. Sheriff’s officials said they have found that many legitimate recycling operations — including those with government contracts — also process stolen plastic.

So-Cal Plastics in Anaheim was raided in June; officials said they found $450,000 worth of stolen plastic on site that day. The owner, Hector Palacios, pleaded guilty to possession of stolen property.

Juan Arellano, owner of New Horizons Plastics on Stanford Avenue in South Los Angeles, was arrested a few months earlier. In his warehouse deputies found large stacks of pallets with the logos of firms such as Trader Joe’s, Domino’s Pizza and Anheuser-Busch.

Arellano, who also had a contract with the city of Los Angeles to process its broken garbage bins, said he didn’t know the pallets at his yard were stolen. Ultimately, he pleaded guilty to possessing stolen property, officials said.

In the last year, the task force has turned over 47 criminal cases to prosecutors. More than 50 people have been charged with possessing stolen property, and most have pleaded guilty. The team has recovered more than $6 million in stolen plastic.

And yet, some beverage company officials said, it has done little to stem the tide of thefts.

“They’re doing a lot, but we’re still losing 1,100 milk crates a day,” said Bill Kroese, the director of safety and loss prevention for Rockview Farms. In his view, the state has done too much to encourage recycling, without doing enough to make sure recycling laws are being followed.

“Anyone can just buy a grinder, set up shop and start grinding up plastic,” he said.

sam.quinones@latimes.com

jessica.garrison@latimes.com