As part of her sentencing, the California mother who admitted to operating an organized retail criminal ring that stole millions of dollars’ worth of cosmetics from Sephora and Ulta Beauty to resell on Amazon will now have to reimburse those stores.
After reaching a plea agreement with prosecutors last year, Michelle Mack, who started her five-year prison sentence on January 9 after being arrested outside of San Diego in December 2023, was forced to pay $3 million in restitution to Ulta, Sephora, and several other stores.
Mack, 54, sacrificed her 4,500-square-foot estate in Bonsall, California, which sold for $2.35 million in December, according to property records, as part of the agreement.
According to California Attorney General Rob Bonta’s office, Mack and her 60-year-old husband Kenneth Mack will repay the remaining amount over time, with any proceeds from the sale going toward restitution after bank debts have been paid.
Mack originally bought the house for $2.29 million in 2021, according to property records, however it’s unclear if she had a mortgage on it.
Additionally, it’s unclear how Mack’s victims will split the compensation. Although the criminal organization she acknowledged operating mostly preyed on Ulta stores, it also stole from Sephora and other stores.
The restitution is probably a drop in the bucket compared to the net income that stores like Ulta generate each year, but it would still be a little windfall. When asked how it will utilize the money or account for it in financial statements, Ulta declined to comment on the restitution. The business did express gratitude to law enforcement for their efforts and said it was honored to have collaborated with them on the inquiry.
In a statement, Dan Petrousek, senior vice president of loss prevention at Ulta Beauty, said, “This case shows that we can make a meaningful impact on organized retail crime and hold the criminals perpetuating this problem accountable through close partnerships between retailers, law enforcement, and prosecutors, as well as legislative support.”
A request for comment from Sephora was not answered.
Retailers that have been robbed often receive restitution, but the sums have only lately begun to approach the millions, according to David Johnston, vice president of asset security and retail operations at the National Retail Federation.
According to Johnston, the amount of theft has not been as significant or widespread as it has been throughout the last four years or so. When we begin to bring these organized retail criminal gangs before the legal system, this is what we would anticipate seeing. There is a significant loss, a complicated organization with many parties involved, followed by sentencing and reparation according to the offense.
He warned that it can take years for a defendant to fully repay the penalty and that restitution rarely fully compensates for a retailer’s lost revenue.
According to Johnston, restitution is a component of the legal system but does not ensure that the victim will get all or any money. It depends on the mechanism by which the restitution is really paid and distributed among several victims as well as the ability to acquire it from the offender.
According to a recent CNBC article, Bonta filed numerous criminal charges against Mack and her husband last year, claiming they operated what his office described as a vast retail crime organization that resulted in an estimated $8 million in stolen cosmetics. At least a dozen states were involved in the operation, according to CNBC.
Mack was not charged with her own product theft. According to the authorities, she instead hired a group of young women to steal the goods so she could resell them on her Amazon storefront for a little portion of their original retail cost.
The California Highway Patrol spearheaded the investigation, which attracted national attention and exposed the sophistication of some retail crime networks as well as the ways in which criminals can sell stolen goods on internet marketplaces.
Mack received a five-year, four-month term in state prison last summer, but it was postponed until this month. The judge decided to postpone Mack’s sentence so she could take care of their children while Kenneth was in jail since Mack’s husband, Kenneth, was also imprisoned in connection with the case.
Additional reporting by Courtney Reagan and Scott Zamost
More from CNBC:
-
Investors may be able to file taxes for free this season. Here s who qualifies
-
Microsoft loses status as OpenAI s exclusive cloud provider
-
Netflix to hike prices on standard and ad-supported streaming plans