Despite the implied transience of the mobile home lifestyle, Trailer Haven has a look of permanence about it. Among the cypress trees and the knee-high wooden fences separating one leafy lot from the next, residents of the San Leandro trailer park have tricked out their lots with all the trappings of home: windmills and goofy lawn signs and statuary painted a not-quite-convincing shade of gold. But not lot #190. No more than an asphalt parking space on the outer edge of the camp next to the pay phone and the exit gate, lot #190 is meant for people who don't plan to stick around for long.
Staking out the park on June 12, 2002, Brian Odell and Matt O'Brien were worried that the three inhabitants of that lot were about to leave town in a hurry. Both men work as investigators for Home Depot, the nation's second-largest retail chain. They believed that the people whose trailer was parked on lot #190 were engineering a massive bar-code scam that had defrauded their company of hundreds of thousands of dollars. For weeks, Home Depot's loss-prevention department had been tracking the trio's movements as they refunded their way through Texas, Arizona, and then California. By the time they'd swept through the Bay Area, they'd hit stores in Pittsburg, Concord, San Ramon, and Pleasanton. They'd been to El Cerrito, Emeryville, Union City, and Milpitas. They'd been as far north as Sacramento and as far south as Salinas.
But until now, Home Depot's investigators had always been at least a day behind the three. They'd pored over in-store surveillance tape of a large, balding, middle-aged man, later identified as John Patrick Hay, who apparently entered the store with pre-cut bar-code stickers, photocopied en masse at a copy shop. He affixed them over the existing bar codes on the items he wished to buy, selecting the same products every time: a kitchen faucet retailing at $169, which he would relabel with a sticker for a lower-end model worth only $39. He did the same with an outdoor lighting kit worth $249, which he would cover with the bar codes for a cheaper model worth $55. The sales for the more expensive items would then be rung up at the lower price. Later the same day, the group would show up at a neighboring Home Depot and a second graying, middle-aged man later identified as Anthony Davenport would peel off the homemade sticker, then return the items for their original prices. With each exchange, he would pocket the difference between the two grades of home fixture. Since he usually exchanged several faucets and light kits at a time, each visit to the refund desk yielded between $1,000 and $1,500. When asked for identification, the men often presented English or Irish passports; later investigation would reveal that they had more than a dozen of these, each with a different serial number.
Davenport's wife, Linda Broderick, was the third member of the group. Although she had only been captured once on a Home Depot camera, the investigators believed that her name was on the multiple bank accounts into which the trio's profits were funneled. As part of the stakeout, O'Brien had trailed Broderick and Davenport to a San Leandro Bank of America, where Broderick transferred a $300,000 cashier's check to her account with the Bank of Ireland. Although the trio still had several days left on their rent at Trailer Haven, the banking transaction seemed like a sure sign that they were planning to split.
After weeks of surveillance, the Home Depot security officers knew they were onto something big, but they didn't quite know how big. They didn't know that the events of that day would unleash a bizarre yearlong investigation that will culminate in Oakland next week with the beginning of the sentencing process for Davenport, Hay, and Broderick on federal charges of conspiracy to commit wire fraud. They didn't know that the trio's trail would lead through at least 24 states, and that the investigation's nationwide scope would draw in the FBI and the US Attorney's Office. They didn't know that the dent the three managed to make in Home Depot's pocketbook, originally estimated at $400,000, would soar toward an estimated $1 million. They didn't know that the scam artists' methodology would turn into a case study on how to beat the bar-code system with nothing more than a Xerox machine and a polite insistence that the customer is always right. And they didn't know that the three would be linked to the Irish Travelers, a shadowy ethnic subculture with a reputation among law enforcement officials for conducting home improvement and shoplifting scams. All they knew was that their suspects were in sight, and that they were getting away.
Nobody knows exactly when Davenport and Hay began switching bar codes, but by the summer of 2002 the drifters had created a well-honed system. "This is what they did for a living," says Cathy Pickard, the fraud detective who conducted the San Leandro Police Department's investigation. "They'd wake up in the morning, get in the car, and that was their job."
Their method was simple: they kept moving, never staying in one area for more than a few weeks. One guy would buy and another guy would return, making them less likely to be recognized. To a clerk not intimately familiar with the products in question, the packaging for the low-end and high-end faucets and light kits looked strikingly similar. The two men said they were contractors refurbishing hotels across the country who went to Home Depot to return unused parts. Both men looked unassuming and acted pleasantly; the only thing slightly odd about them was that they frequently used passports instead of driver's licenses when asked for identification. (Both Davenport and Broderick are Irish nationals; Hay is from Scotland.)
If a store employee demanded a receipt, Davenport would take out a folder containing hundreds of old receipts and haplessly thumb through them as though looking for the right one. Usually, the clerk would lose interest and just give him the refund. If anyone questioned either man too closely, they'd just walk away. After all, there was always another Home Depot just down the road. They'd conducted hundreds of returns, sometimes hitting as many as six stores a day, before Home Depot noticed something was amiss. "If you look at it in the big scale you'd go, 'How could you not have known?'" Pickard says. "But when you look at it on the day-to-day level, it's brilliant."
Then in late 2001, Home Depot stopped offering cash refunds without a receipt, instead reimbursing customers with gift cards. For Hay and Davenport, this had a downside: the cards weren't money. But there was a benefit, too: ID wasn't scrutinized very closely when a customer redeemed a gift card. So although sometimes the men simply used these gift cards to fund the next purchase, they often converted them back into cash by selling the cards at a discount to a handful of steady customers. Each card was usually worth around $1,200.
Just about everyone who has touched the Home Depot case agrees on two things: that the bar-code switching scheme was simple but clever, and that it might have gone on indefinitely if it hadn't been for Dennis Dees and his apparent love of cabinetry.
Dees, a Mesquite, Texas man in the process of building a new house, proved to be one of the scammers' best clients. After responding to a newspaper ad, he bought roughly $100,000 worth of cards for seventy cents on the dollar. But Dees wasn't canny enough to spend the cards in small quantities over a long period of time. Instead, he inadvertently set in motion Home Depot's internal investigation last year when he walked into his local store for a set of kitchen cabinets and plunked down more than $20,000 worth of gift cards that had originated in five different states. As Pickard puts it drily: "That's a lot of birthday presents."
The unusual transaction caught the eye of Darren Jackson, the Home Depot loss-prevention investigator for the retailer's southwest Texas region. Jackson says that after tracking the gift cards back to Davenport and Hay, then analyzing their transactions, he quickly realized that the two men were pulling a bar-code switch, and had cleverly chosen to purchase similar-looking home fixtures that had a substantial price differential between the high- and low-end versions. "What would be the value of making ten dollars on an item?" he asks philosophically. "It's not even worth your time." At that point, Home Depot was only able to track the group through thirteen states, but it was clear that they'd covered plenty of ground. Jackson found proof that they'd been doing refunds all the way from Georgia to California, and from as far north as Ohio down to the Gulf States.
Now the challenge was to catch up with them. Realizing that the group was moving up the California coast, Jackson began working with Odell, his East Bay counterpart, and the two put out the word to Bay Area stores. "I was on the phone every day with the stores, telling them the scenario: 'This is what the guy looks like, this is what he's returning, did he have a passport?'" Jackson recalls. He had Bay Area stores fax him their refund slips to check if the trio already had passed through; meanwhile, Odell began deactivating the gift cards that he knew had already been issued to them. Odell admits that this move may have tipped his hand to the people he was pursuing. "They were realizing those last couple of days that something was going on," he remembers. "And then they were getting refused. They were getting questioned a little more." At one point, when a suspicious manager at the Sunnyvale Home Depot demanded receipts, they simply left the store. But still nobody had managed to catch them in action or figure out where they were headed next.
Then the agents got a lucky break. A shoplifting prevention agent in the Milpitas store recognized Davenport from one of the surveillance photos that the security officers had sent to Bay Area stores. Three years earlier, he'd arrested Davenport at a San Mateo Home Depot. Davenport's arrest report from that incident showed a history of petty theft, and listed his address as Trailer Haven. And in another stroke of luck, when Odell called the trailer park to see if anyone matching Davenport's description was staying there, it turned out that he was back, albeit under his frequently employed pseudonym, "Andrew Baguley." Better yet, as trailer park manager Robert Granada says, Davenport hadn't exactly been subtle about his ties to Home Depot. He had unsuccessfully offered to sell Granada and one of his neighbors thousands of dollars worth of the store's gift cards. "He had $5,000 worth of credit on it, and he said he'd give it to me for $3,500," he remembers. "That didn't hit me right. Nobody will give you something for nothing."
But although the Home Depot agents were certain they had the right guys, Odell was having trouble getting law enforcement interested. The FBI's white-collar-crime unit basically told him to call when he had a suspect ready to interview. The San Leandro Police Department initially resisted getting involved because there was no evidence that the trio had conducted any crimes in its city. Plus, San Leandro has a relatively small police force -- its fraud department employs only two detectives -- and the officers were well aware of the cascade of paperwork the case would require. "To tell the truth," Pickard says, "when Brian Odell came into the front counter we were praying they would do this in Hayward."
So imagine this: Odell and O'Brien are camped inside the manager's office at Trailer Haven, watching the action unfold from behind its tinted windows. They have no badges and no guns. And they have just watched their number-one suspect export $300,000 worth of what they believe to be their company's money out of the country.
But then Davenport and Hay did exactly what would bring them under local police jurisdiction: They headed for the San Leandro Home Depot. The two security officers tailed them to the store where, for reasons no one has yet figured out, Hay and Davenport conducted a totally legitimate transaction, returning three of the cheaper faucets for what they originally paid for them. Davenport even bought some lumber. But by this point, the Home Depot investigators felt they had collected enough evidence to justify an arrest. It was finally time to make a move.
The problem was, who would do the arresting? As it turned out, Pickard and her partner, Sgt. Greg Lemmon, were out collaring somebody else at that moment. The only other option was a citizen's arrest. "I'm on the phone with Pickard, basically saying, 'What do I do at this point?'" Odell remembers. "Just as they were getting into the car, she said, 'Take 'em.'"
Odell and two other investigators made their move. Although they didn't have guns, they did have handcuffs, so they announced who they were and informed Davenport and Hay that they were under arrest. "They were a little startled about it, but it was very calm, peaceful," Odell remembers.
According to a subsequent police report, as the Home Depot crew arrested the two men in the parking lot, Hay tried to shed some of the bar codes he was carrying with him. Otherwise, Odell says, the two seemed surprised to be confronted, especially since they hadn't done anything illegal that day. "I don't think that at that point Hay and Davenport knew what we actually knew," Odell muses. "We didn't tell them. We didn't say 'We've been following you all over the country, we know what's going on.' We didn't really say a heck of a lot." Two hours of awkward silence must have ensued, because Davenport invoked his Miranda rights and it took Pickard and Lemmon a couple of hours to show up and take custody of the men.
Leaving Odell behind to fill out paperwork, the San Leandro police officers headed back to Trailer Haven, where Pickard spotted Broderick, the third member of the group, getting into a van. Its engine was running, and it was packed floor to ceiling with the trio's belongings. The group owned three small pet dogs, all of which were in cages on the front seat. To Pickard, the whole thing looked like an escape in process, and she put an immediate stop to it. "I thought, because of the circumstances surrounding the whole deal that they probably had a plan in place like, 'If we're not back in two hours, pack up and leave,'" she says.
Perhaps because they didn't realize the extent of the investigation in process, Hay and Davenport gave the cops permission to search their vehicles. "I took everything out of the van," Pickard says. "If it was a piece of paper, I took it. I figured as soon as they figured out we got them, they're going to take back their consent." Her search gave the police their first insight into exactly how lucrative the scam had been and how well-organized the group was. "We found three separate CDs for $100,000," Pickard says. "The FBI found more later. They had five Wells Fargo accounts, three Bank of America accounts, three CDs with Affinity Bank, a Bank of Ireland account, a Royal Bank of Canada account."
The police also found sheaves of preprinted bar codes, a small handheld scanner, a laptop computer, and hundreds of Home Depot receipts dating back to October, 2001. They found a briefcase containing credit cards and drivers' licenses for several states in each person's name, as well as under aliases for both Davenport and Broderick. Once the police analyzed the computer's hard drive, they found that the group had been using the Internet to download documents for multiple Irish passports. Davenport and Broderick apparently often used aliases; Hay always used his own name.
"The bells start ringing; I'm thinking this is a big deal," Pickard says. "I couldn't figure out why these people were living in a trailer. They had over a million dollars in assets that we could find, and they were sending money back to Ireland, where they don't live. The only thing I could figure is they were sending money back for a bigger cause. ... In my cop mind I'm thinking I need to get a hold of someone: Interpol, or Scotland Yard, or Homeland Defense."
The little case that nobody wanted to take had suddenly gotten a lot bigger.
John Hay, writing from the Camp Parks federal facility in Dublin where he awaits sentencing, seems bemused by the furor law enforcement's discovery of the money caused, and the sort of wild conclusions people were drawing from it. "When we were arrested on June 12, 2002, this was a relatively minor case," he writes. "When they found bank accounts totaling almost $1 million they thought at first we were involved with the IRA, even though I am Scottish."
Hay dismisses the conjecture about the Irish Republican Army as totally baseless, as do court-appointed attorneys for Davenport and Broderick. (Davenport did not respond to a written request for an interview, and Broderick's attorney would not allow his client to be interviewed.) Although the FBI declined to comment on its own investigation into the case, and the press spokesman for the US Attorney's Office confined his remarks to vague generalities, it seems clear that neither agency found proof that the trio was using their cash to bankroll any political factions.
But what were the con artists doing with all that money? They certainly weren't spending it on their lifestyle. They lived a spartan and highly mobile existence, crossing the nation in a small caravan consisting of a silver and green Ford Econoline van, a black Subaru station wagon, and a trailer. True, the vehicles were shiny and new, and the trailer was a snappy recent model equipped with comforts such as a TV and VCR, and a slide-out side panel that expanded the size of the interior. But the accommodations were cramped and less than luxurious. The three of them lived together in the trailer, and Hay even slept on the floor. "The van was really weighted down," Granada says. "I don't know what they had in there, but it seems like it had a lot of stuff in it. I'm surprised it even pulled the trailer, it was that full." And they certainly didn't wear any fancy clothes. The worn faces and hairstyles they present in their police mug shots are redolent of lives lived on the open road, not at the day spa.
Nor did they seem to be buying themselves a life of leisure. Granada remembers that their trailer was always bustling with activity. "They were always busy, in and out," he says. "One would stay and two would go, two would stay and one would go." Broderick earned a reputation for hogging the Internet connection in the Trailer Park's front office. "She was kind of a pest," Granada laughs. On the surface, the three didn't stand out from any of the European vacationers who often rent spots in Trailer Haven's overnight section as they pass through the East Bay on summer camping trips.
Except for one thing: These travelers were always on vacation. The three have been linked to the Irish Travelers, a nomadic ethnic minority population analogous, but unrelated to, the Rom, or Gypsy, people. Throughout the world, Irish Travelers have gained notoriety for blowing into town, pulling off home improvement-based scams, and then leaving before anyone is the wiser.
There are Welsh, Scottish, and English Travelers as well, and they share a somewhat blurry history of where they came from and why they took to the road. In Ireland, various legends trace their roots back to the dispossessed of all sorts -- pre-Celtic wandering minstrels and poets; Druid priests fleeing the spread of Catholicism; farmers displaced by Oliver Cromwell's campaigns in the seventeenth century; people with nowhere left to go when the Irish potato famine hit. Historically, many Irish Travelers supported themselves as musicians and through metalworking, although the resulting "Tinker" nickname is now considered something of a racial slur. In the United Kingdom, the fate of the Travelers is an active social issue. They have their own lobbying groups pushing for better government-funded social programs, the establishment of permanent housing, investigations into ethnic discrimination, and camping sites for those who wish to take time off from the road. In general, Irish Travelers are strict Roman Catholics, and many speak a secret language loosely based on Gaelic and known as Shelta, Gammon, or Cant.
No one seems to have a very accurate count of how many Travelers currently live in the United States -- estimates range between 7,000 and 30,000 -- although it's generally believed that Travelers first began emigrating to the United States in the 1840s during the potato famine. In the United States, the Traveler population seems to be concentrated in South Carolina, Texas, and Arizona, and of those who still travel -- now often driving top-of-the-line SUVs and trailers -- many make their living doing home repair and contracting work. But despite these tidbits, the lives of Irish Travelers remain mysterious to outsiders. "They are very closed societies and they marry within their own, they stay to their own," says Kevin Mullen, librarian for San Francisco's Irish Cultural Center. "A lot of people say that they are light-fingered and duplicitous, and others say they're not." Like most itinerants in a settled world, the Travelers aroused the suspicion of townspeople throughout their history and have been the subject of hyperbolic legends. "In historical times they used to say that they'd steal babies or children," Mullen says.
Even in modern times, their association with trickery and crime has not abated. Just ask the California Contractors State License Board. The board frequently puts out warnings about Traveler-related home repair scams, many of which are perpetrated against trailer park residents and the elderly. Stuart Rind, an investigator for the board, says that the number of Traveler cases his agency investigates annually is on the rise as law enforcement grows more familiar with the prototypical Traveler scams. Every year, he says, "There are probably in the neighborhood of 25 to 50 cases that we can clearly say are Traveler-related, but we may have reports for double that amount where for one reason or another we can't make that designation."
In one of the most common cons, a group of Travelers will approach a resident, claim that they've noticed a defect in his or her roof, and offer to repair it. For emphasis, sometimes they'll sneak a squirt-bottle or sponge inside the home and, when the owner isn't looking, create a wet mark on the ceiling or floor to convince him that he has a hitherto-unnoticed leak. Then they'll offer to spray the roof with a sealant. But a resident who agrees to let them do the repairs doesn't get very much in return. "Sometimes we can prove they've done no work, just walked around on the roof for a half hour," Rind says. "Or sometimes they've sprayed latex paint."
Realizing that one has been fooled can be difficult, especially if the homeowner is elderly and unlikely to scale the roof to check up on the work himself -- Rind says some people have unwittingly been swindled by the same con five or six times.
In a related scam, Travelers have been known to approach mobile home residents and offer to coat their homes with a sunlight-reflecting substance that will keep the trailer cooler, although in reality this may or may not work. Even when employing legitimate materials, such as using asphalt to pave driveways, the board says that Travelers sometimes do work that is so shoddy the homeowner has to pay someone else to redo it. Because the Travelers are usually long gone by the time anyone's noticed the damage, it's hard to track them down for a refund. And a new Traveler scam that Rind says is emerging in the South Bay is even more sinister: They show up offering to trim your trees, get you out in the backyard, and then have their cohorts burglarize your house while you're not looking.
While the home improvement scams are mostly performed by men, female Travelers have frequently been associated with shoplifting crimes. For example, Rind says, a common trick is to buy one set of clothes or cartful of items, steal a second identical one, and then return the legitimately purchased items for cash.
The bar-code-switching scheme perpetrated by Davenport, Hay, and Broderick appears to be a unique hybrid of the home repair and shoplifting cons. Perhaps its slight variance from a typical Traveler scam is part of the reason they were able to get away with it for so long.
Even though they were wily enough to con a major corporation out of hundreds of thousands of dollars, the three never seem to have applied their energies to enjoying their ill-gotten gains. The specifics of their pre-Home Depot lives are hard to gather, but the details gleaned by their lawyers show that they were used to moving from place to place. Davenport grew up without parents and spent much of his adult life working as a civil engineer all over the world, according to his attorney, Daniel Horowitz. Although Davenport didn't have an extensive education, he reportedly did well for himself by taking on unpopular postings in Africa and the Middle East.
Broderick, meanwhile, was raised by foster parents. According to her attorney, James Giller, her foster father was in the military and moved the family back and forth between England and Ireland. As an adult, she worked as a hairdresser, accompanying Davenport around the globe. She also made money by crafting beaded jewelry, which she sold at fairs.
Davenport and Broderick's initial connection to Hay is unknown. He apparently knew them before he was deported from the United States in 2000, then met up with them again once he was allowed to re-enter the country. "Hay is somebody they took in to try to befriend because he's a nice man and he seemed lonely and they wanted to be friends with him," Horowitz says. "He's a very charming, smart man."
So if they didn't aspire to penthouse living, why collect all that cash? A possible explanation is that the three, all in their late fifties or early sixties and none in excellent health, planned to return to Ireland and retire on it. Davenport, for example, has a lung condition called sarcoidosis that requires him to take prednisone, a catabolic steroid often taken by lung cancer patients. Since his imprisonment, he has undertaken a series of hunger strikes because he feels he isn't being given proper medical care at the Santa Rita Jail. "He thinks it's an abysmal dungeon of a place," Horowitz says. "The last we knew he was really, really unhealthy. ... His wife is terrified he's going to die." According to Hay, throughout his yearlong incarceration Davenport has spent several weeks in Oakland's Highland Hospital and has been on life support multiple times.
Hay had a different set of health problems, Pickard says. "Mr. Hay had at one point probably weighed 650 pounds, and he basically told us he owes his life to Linda for helping him lose weight," she says. "He's a shadow of himself, maybe 300 pounds. She would only let him eat certain things. He was in bad physical straits until she kind of took him under her wing and made him lose weight."
But while their motives may be obscure, what is clear is that the three charmed practically everyone they met, including lawyers and the police. "They're really the salt of the earth," Horowitz says. "They don't have a single incident of ever hurting an individual. You'll find nobody who's ever crossed their path who didn't come out richer. When they stayed with people, they'd leave them money."
When asked for examples of this kindness, people tend to bring up their highly doted-upon dogs. Davenport, Hay, and Broderick had three of them, which they reportedly treated like children. One was so elderly and blind that they would push it around in a baby carriage. Granada says he also sometimes spotted Davenport shuttling the dogs about the trailer park in a basket on the back of his bicycle. "They sure do love those dogs," Horowitz sighs. One of the obstacles to negotiating their eventual plea agreement was that Davenport wanted to release some money to the people who took care of his dogs because he appreciated their kindness, Horowitz says. "Literally, him and Linda spent more time in jail because they wanted to pay back these people."
People were also charmed by the group's close emotional bonds with one another. "They're very devoted to each other," Pickard says. "If you travel across the country in a trailer, a married couple and a three-hundred-pound man sleeping on the floor, you have to get along." Horowitz says that although Davenport was originally booked into Camp Parks, once he learned that he would not be allowed to send daily letters to his wife he asked to be transferred to the less accommodating Santa Rita Jail. The two of them are said to be equally fond of Hay, who also complains that they are not allowed to correspond with each other, despite having no other close friends in this country.
If the gift of the con artist is the ability to get strangers to sympathize with you, this group had it in spades. Even the investigating detectives found it hard to speak ill of them. There's a rather sweet postscript in Pickard's police report in which she notes that after arresting Davenport, San Leandro officers made an extra trip back to the trailer park to pick up his medication. "They were very kind, gentle people," Pickard remembers, and admits to being impressed by the scope of what they were able to pull off. "They found something that worked and they worked it. ... Their thoughts were along the lines of 'We're not hurting anybody -- we found a flaw in the system and we're exploiting it.' It's true that in their minds they weren't doing anything wrong."
Not surprisingly, the federal government saw things differently. The prosecution against Davenport, Hay, and Broderick was transferred from state to federal court after the United States Attorney's Office argued that it should have jurisdiction because the case was essentially wire fraud, and not burglary and forgery. The government's reasoning: At the end of each sales day, individual Home Depot stores transmit their sales information via a T-1 line back to the retailer's headquarters in Atlanta, Georgia. Authorization for returns also cross over the same line. Since the bar-code switch meant that false information about sales and returns moved over the T-1 line, the US Attorney's office claimed that this constituted deliberate use of interstate wires for fraudulent purposes.
It's a claim refuted by Hay, who calls the charge "completely bogus." He writes, "Any offences we committed were over and we had left the store before this transaction was transmitted to their head office at 9:00 each night -- and to be guilty of wire fraud the wire has to be an integral part of any scheme."
Both Giller and Horowitz believe the argument for federal jurisdiction was weak at best, since their clients never knowingly used the wires. But in the end, they decided it wasn't worth challenging in the face of the overwhelming evidence against the three. "We focused on negotiating, because whether or not we were right on that we still had to face the music in state court," Horowitz says.
On the other hand, the extent of the scam turned out to be larger than anyone had imagined. As Home Depot's investigators combed back through their computer records, looking for purchase combinations, identification numbers, and dollar amounts that matched the group's usual pattern, they turned up evidence that Davenport and Hay had visited stores in at least 24 states. The damages were also growing. The original estimate of Home Depot's loss was slightly under $400,000, but according to Odell, the retailer now expects to collect $600,000 in restitution. In fact, he surmises that its loss might be even higher. Although Home Depot's current computer system can only track the group's refunds back to 2001, Davenport's 1999 arrest at a Home Depot store, which apparently was never deeply investigated, may indicate that he was doing the bar-code switch several years earlier. Odell estimates that if Davenport was performing the refund scam at the same velocity back then as when the group was arrested last year, the overall loss might approach $1 million. But finding out just how much money the three drained from Home Depot is trickier than it seems, since after the introduction of the gift cards, the transactions often involved no real money at the retailer's end. "In some cases they would actually use one of the cards to make another purchase, so it all became cashless," Odell says. "They were just turning cards."
It's a loss Horowitz believes the retailer could have avoided if it had a better merchandise tracking system. After all, Home Depot was cashing out refunds for hundreds more high-end faucets and light sets than it had ever sold. "It doesn't make sense and the computer's not picking it up," he notes. "And it should, because you're taking back into inventory what you never sold. They obviously have no decent computer controls."
Another flaw in the system was the Home Depot policy that let customers return items without receipts and discouraged store cashiers from challenging them even if transactions seemed a little hinky. After all, if the customer is always right, nobody wants to offend them by giving them the third degree. "Most businesses now are so much into customer service that they don't look into fraud," Pickard says. "You can't ask for ID in some stores anymore." And even if clerks feel that something is amiss, she says, they often just let things slide. "What is their investment in getting into a beef with people who are returning a product?" she shrugs. "They're making minimum wage."
Bar-code switching isn't a particularly sophisticated or innovative form of crime -- it's just that Davenport and Hay managed to elevate it to a whole new level of magnitude. "Most boosters will change the tag in the store and of course the wrong item will come up," Horowitz notes. "The great innovation here is they went to Kinko's and did it. They came in pre-loaded."
Home Depot loss-prevention officers are reluctant to discuss how they've tightened up their methods in light of the bust -- after all, Odell notes, they've had a rash of copycat attempts since the arrest made headlines last year. But the retailer says it has no plans to abandon its use of the bar-code system. However, its loss-prevention department makes it clear that the need for complex fraud investigations only come along once in a blue moon, and it's never wrestled with anything like this before. "Absolutely, it's been the highlight of my career," Jackson says.
After slightly more than a year in jail, Davenport, Hay, and Broderick pled guilty this July to conspiracy to commit wire fraud. Broderick is slated for sentencing on September 15, Hay and Davenport on October 20. The two men are eligible for a maximum sentence of five years in jail and a $250,000 fine. Broderick, who had a lesser role in the crime and no criminal history, is eligible for twelve to eighteen months and is expected to be given credit for the year she has already served. Giller expects Broderick will be given two to three years of supervised release, although it is likely that she will be deported shortly after her sentencing. Davenport and Hay will also likely be deported once their time is served. All three are responsible for paying restitution to the Home Depot. Now the question is, how much?
Hay believes the trio's sentencing has been overly harsh for the crimes committed. For example, he writes, the men were told that all three defendants needed to accept the same deal, so they took one less favorable to them to guarantee Broderick's earlier release. They also feel they've gotten tougher treatment because they are not US citizens. "The federal prosecutor held the INS over us, saying that if no deal was taken we could then be charged with illegal reentry, so we were left with no option but to take what was offered -- thirty months and deportation," Hay writes. "Had we been Americans, this sentence would have entitled us to enter programs in the federal system which would have entitled us to up to a year off -- certainly six months in a halfway house -- and some sort of work-release program, but we get nothing because we are classified as deportable aliens."
Additionally, Hay complains that the government's seizure of all their money has made it difficult for them to mount a vigorous defense. "We had lawyers, but the federal government froze the funds and we had to take federal public defenders," he writes. "Since June of 2002, we have been in this system unable to buy toiletry items such as soap, shampoo, or deodorant -- and even stamps and writing paper is a problem."
Lawyers for Davenport and Broderick argue that, by having their assets during the investigation, the group has already paid full restitution, if not more than it owes. According to Giller, of the $821,000 seized by the government, including the $300,000 cashier's check that was frozen en route to the Bank of Ireland, only $221,000 has been returned to Broderick. That's not counting the vehicles the trio owned, which the government also seized. The lawyers say that if the government turns the remainder over to the Home Depot, the corporation doesn't stand to lose a penny from the whole ordeal. "Home Depot is either going to be totally made whole or make a profit," Horowitz says.
Odell finds this assertion rather ridiculous. "There's no way that we made any money off this particular deal because we got restitution," the investigator says. "We can probably go back and determine that's a fraction of the actual damages."
But the three defendants and their lawyers say not all of the money in their bank accounts originally belonged to Home Depot. "They're claiming that a lot of that money was their own money and the government has gotten a windfall here," Giller says. After all, he points out, some of the money in those bank accounts was derived from legitimate means, including the salary from Davenport's career as an engineer and the proceeds from real-estate transactions the group had made in the United Kingdom. "Of the money found," Hay agrees, "we proved that over $500,000 of it had been in the same bank, untouched, for six or seven years, and that this money had nothing whatsoever to do with our case, but they still took it from us."
Which is why Hay and his fellow Travelers actually claim that, in the end, they're the ones getting ripped off.