WEB EXCLUSIVE: FBI Report Indicates Copper Thefts Still Threaten U.S. Critical Infrastructure

This Web exclusive comes from the FBI. It was originally released in September 2008.

Copper thieves are typically individuals or organized groups who operate independently or in loose association with each other and commit thefts in conjunction with fencing activities and the sale of contraband. Organized groups of drug addicts, gang members, and metal thieves are conducting large scale thefts from electric utilities, warehouses, foreclosed or vacant properties, and oil well sites for tens of thousands of dollars in illicit proceeds per month.2

The demand for copper from developing nations such as China and India is creating a robust international copper trade. Copper thieves are exploiting this demand and the resulting price surge by stealing and selling the metal for high profits to recyclers across the United States. As the global supply of copper continues to tighten, the market for illicit copper will continue to increase as it has done since 2006.3

For example, in April 2008, five tornado warning sirens in the Jackson, MS, area did not warn residents of an approaching tornado because copper thieves had stripped the sirens of copper wiring, thus rendering them inoperable. Less than one month earlier (March 2008), nearly 4,000 residents in Polk County, FL, were left without power after copper wire was stripped from an active transformer at a Tampa Electric Company (TECO) power facility. Monetary losses to TECO were approximately $500,000.

In April 2008, highly organized theft rings specializing in copper theft from houses and warehouses were operating in Minneapolis, MN. These rings or gangs hit several houses per day, yielding more than $20,000 in profits per month. The targets were most often foreclosed homes.4

An organized copper theft ring used the Cuyahoga County Sheriff’s foreclosure lists to pinpoint targets in Cleveland, OH. Perpetrators had 200 pounds of stolen copper in their van, road maps, and tools. Three additional perpetrators were found to be using the US Department of Housing and Urban Development’s list of mortgage and bank foreclosures to target residences in Cleveland, South Euclid, Cleveland Heights, and other cities in Ohio.5

The global copper supply tightened due to a landslide at a copper mine in Grasberg, Indonesia in October 2003 and a worker’s strike at the El Abra copper mine in Clama, Chile in November 2004. These events contributed to copper production shortfalls and led to an increase in recycling, which in turn created a market for copper.6 And in 2006, the demand for copper from China increased substantially due to the construction of facilities for the 2008 Olympics.7

From January 2001 to March 2008, the price of copper increased more than 500%.8 This has prompted unscrupulous and sometimes unwitting independent and commercial scrap metal dealers to pay record prices for copper, regardless of its origin, making the material a more attractive target for theft.

The global demand for copper, combined with the economic and home foreclosure crisis, is creating numerous opportunities for copper-theft perpetrators to exploit copper-rich targets. Organized copper theft rings may increasingly target vacant or foreclosed homes as they are a lucrative source of unattended copper inventory. Current economic conditions, such as the rising cost of gasoline, food, and consumer goods, the declining housing market, the ease through which copper is exchanged for cash, and the lack of a significant deterrent effect, make it likely that copper thefts will remain a lucrative financial resource for criminals.

Industry officials have taken some countermeasures to address the copper theft problem. These include the installment of physical and technological security measures, increased collaboration among the various industry sectors, and the development of law enforcement partnerships.9 Many states are also taking countermeasures by enacting or enhancing legislation regulating the scrap industry––to include increased recordkeeping and penalties for copper theft and noncompliant scrap dealers. However, there are limited resources available to enforce these laws, and a very small percentage of perpetrators are arrested and convicted. Additionally, as copper thefts are typically addressed as misdemeanors, those individuals convicted pay relatively low fines and serve short prison terms.

Footnotes

1 WAPT.com, “Copper Thieves Silence Tornado Siren,” 8 April 2008, available at www.wapt.com.

2 The Orlando Sentinel, “Theft Causes Power Outage,” 21 March 2008, available at www.orlandosentinel.com.

3 Murphree, Julie. “Copper Theft in Arizona at Epidemic Levels,” Arizona Farm Bureau: Arizona Agriculture, March 2007, Vol. 60, No. 3, available at www.azfb.org.

4 Tevlin, Jon. “The New Underground Currency,” StarTribune.com, 12 April 2008, available at www.msnbc.msn.com.

5 The Plain Dealer, “Copper Theft Ring Worked From Foreclosure Lists, Cleveland Heights Police Say,” 28 March 2008, available at www.cleveland.com.

6 According to an extensive study sponsored by the Chief Security Officer web site (www.csoonline.org) – Scott Berinato, “Copper Theft: The Metal Theft Epidemic,”1 February 2007, http://www.csoonline.com/read/020107/fea_metal.html.

7 Xinhau News Agency. “Bejing to Spend More on Infrastructure for Olympics,” CHINA.ORG.CN, 9, October, 2006, available at www.china.org.cn.

8 NYMEX Daily Spot Settlement Price, http://www.nymex.com (accessed on 9 March 2008).

9 US Attorney Anti-Terrorism Advisory Council Meetings with industry and law enforcement 25 April 2008 and 29 July 2008; LexisNexis; (U) Hassan, Anita. “Jackson Lee Says She Will Introduce Legislation That Enlists Help of FBI,” The Houston Chronicle, 6 September 2008.