Coupon Fraud Operation Uncovered By Sheriff's Office

CONROE, TX — The Montgomery County Sheriff’s Office recovered over $40,000 worth of merchandise and arrested three people in connection with a coupon fraud operation, authorities announced at a news conference Tuesday.

Captain Tim Holifield of The Woodlands Township Division said authorities uncovered an online operation that printed fraudulent manufacturer’s coupons in an investigation that began in November. Holifield said the Sheriff’s Office received the first report of fraud from Walgreens and that Walmart, Target, H-E-B and Kroger also were affected by the operation over a two-year period.

One person involved purchased approximately $200,000 worth of merchandise with the fraudulent coupons over two years, according to authorities.

Richard Halverson, organized retail crime manager for Kroger’s Houston division, said that issues arose when the manufacturer’s coupons would go through a clearinghouse and the company wouldn’t receive money back.

“Once it becomes obvious that there are certain customers that have couponing activity that rises above the norm, it’s something we want to take a look at internally,” Halverson said. “Once we started taking a look at that, we started to notice distinct patterns. The more we looked, the more we realized they were using counterfeit coupons.”

Authorities said a clearinghouse has documented more than $9.7 million in losses and estimates the investigation could reveal another $10 million in losses tied to the counterfeit coupons.

The Montgomery County Sheriff’s Office investigation led to the identification of 87 people across 23 states who were involved in the operation, and the case has now been referred to the Federal Bureau of Investigation and the U.S. Attorneys. Including the three people arrested in the case so far, authorities have identified 23 people from Montgomery and Harris counties involved in the operation. People involved could face charges of organized retail theft at the state level and theft at the federal level, Holifield said.

“They were using the exact same printers that the retail stores are using, so that’s how they were able to continue this,” Holifield said. “This has been a two-year process where … we were able to identify the person, locate some items and recover a printing house. They had a number of computers lined up and printers, and they were just going through the ink and tape to mass produce these coupons.”

Holifield said one of the search warrants was executed at Traders Village in Houston.

Among the items recovered by the Montgomery County Sheriff’s Office were dog food, toys, toiletries, cleaning supplies and diapers. Approximately 4,000 items were recovered from four locations throughout Montgomery, Harris and Liberty counties and awarded to Montgomery County through the court system, according to Holifield.

The items will be donated to several Montgomery County charities: Compassion United, Montgomery County Animal Shelter, Montgomery County Sheriff Citizen’s Academy Alumni Association, Home of Hope, Family Promise and the Montgomery County Women’s Center.

Holifield said the recovered items would help domestic violence victims, homeless people, children in need, trafficked children and homeless pets among other people in need.