Debra Black insists she is “not a thief.”
She says she rolled her electric wheelchair out of the Goodwill Industries store in Tustin after inadvertently neglecting to pay for a few items. The pack of purple napkins, headband and small purse came to $6.97.
But once a security guard stopped her that day in March 2013, things got heated. Black, 64, said she was frightened into signing a confession and agreeing to complete a six-hour “life skills” course and pay a Utah company $500.
When Black did not pay, she received multiple calls and letters from Corrective Education Co., including this final warning: “Contact us immediately to prevent the filing of a criminal complaint.”
Black unsuccessfully sued the firm, which refers to itself as CEC, along with Monument Security Inc., contending they were debt collectors that had violated laws governing that industry.
On Monday, the San Francisco city attorney weighed in, filing a new lawsuit that alleges CEC's practices violate the California business and professions code and amount to extortion and false imprisonment.
The suit seeks civil penalties as well as restitution for every Californian who has paid into the program. About 20,000 accused shoplifters are believed to have participated nationwide.
The company, founded in 2010 by two Harvard Business School graduates, calls itself “the leading provider of restorative justice education.” It purports to give low-level, first-time shoplifters a valuable opportunity to learn how to make better choices, while saving them a criminal record and sparing law enforcement resources.
Retailers that have contracted to use the program include Bloomingdale's, Wal-Mart, Burlington Coat Factory, DSW Inc. and Goodwill Industries of Orange County, according to documents and interviews. The companies pay nothing; CEC pays them for each participant who signs up.
In a statement, CEC Chief Executive Brian Ashton called the lawsuit “without merit” and “factually incorrect,” and said the company intends to fight it “vigorously.”
He said that responding to calls from retailers to pick up shoplifters “has been an especially difficult burden on law enforcement in California,” and that the program has “dramatically reduced” those calls. It has helped first-time offenders “make behavior changes so that they can become productive members of society while still being held accountable for their actions,” Ashton said.
Last year alone, retailers lost $44 billion to theft by shoplifters, employees and vendors, according to a national retail security survey. The CEC founders have said their “vision is to reinvent the way crimes are handled, starting with retail theft.”
But the civil lawsuit, filed in San Francisco County Superior Court, calls the tactics “coercive” and “deceptive” and says the program “has not been approved by any California court or prosecutor.”
The company makes “threats and false and misleading statements to people detained by private security guards in the back room of a store to induce them to sign unlawful and unconscionable contracts confessing to crimes,” the lawsuit contends.
The suspected shoplifters then agree to pay “CEC hundreds of dollars for an ‘educational' video program that operates without the knowledge or involvement of the criminal justice system, and that flouts many of the laws that regulate pretrial diversion programs,” the lawsuit says.
“Whenever we privatize our justice system, especially criminal justice, you run the risk of intimidation from people who are motivated by nothing but profit and I think this is a perfect example of that,” City Atty. Dennis Herrera said in an interview.
In a written overview of the program posted on the company's website, attorneys for CEC say there is “no California law that prohibits any precomplaint … diversion program created by a private entity to deal with a merchant's theft.”
The overview says the company has addressed potential “coercion issues” with “very specific protocols and staff training” that stress the voluntary aspect of participation.
In a list of “frequently asked questions,” the company notes that its approach does not amount to “a shakedown” because offenders “can seek legal counsel or opt out of the program … at any time.”
The lawsuit says that offenders who decide to opt out have already signed a confession that CEC has pledged to forward to law enforcement.
The lawsuit also names Sacramento County-based Monument Security, which did not respond to requests for comment.
In the Goodwill store case, Black, a former restaurant manager who retired after an accident left her paralyzed, said the security guard told her: “We're going to call the police and you're going to go to jail if you don't sign this.'”
“It was more than intimidation,” she said.
Black was never charged with a crime. It is unclear whether CEC forwarded her case to police. But legal experts said that particularly in California — where Proposition 47 has made petty theft a misdemeanor — it is unlikely that police and prosecutors would have pursued it.
That makes the threat of referral for prosecution problematic, said Stanford Law School professor Joan Petersilia, who with her students is surveying the increase in diversion programs — some of which partner with for-profit companies — that have resulted from shifts in California criminal justice policy.
Petersilia called CEC's tactics “just so obviously wrong” and said they do not fit the philosophy of restorative justice, which is based on empathy for the injured party and a solution that repairs the harm.
Most of the money under this model goes to CEC, not to the retailer or injured party, she said, adding that for those with money, it is not punitive enough, and for those without, it is unduly harsh.
“You're using the criminal justice system, but the criminal justice system really isn't engaged,” she said. “You can't blame the merchants because they've got no recourse and they want accountability, but this is not the way to get accountability.”
Most states have enacted civil recovery statutes that allow merchants to sue shoplifters for restitution, which “provides a revenue stream for loss prevention,” said Richard Hollinger, a criminology professor at the University of Florida who conducts the national retail loss survey.
“If you take it criminal,” Hollinger said, “you seldom get the merchandise back. Then you have to put your staff and team into a prosecutorial mode where they develop evidence for a local prosecutor [and] the most you can hope for is small fine.”
But Hollinger said the Corrective Education model, which secures a commitment on the scene from participants, could raise questions about whether those who opt to participate are doing so voluntarily.