Ex-Rock Hill business owner charged in $624,000 Walmart fraud

mgordon@charlotteobserver.comMay 20, 2013 

Robert Milton

An open door into a small-town storage unit last month raised a window into Robert Michael Milton’s private world.

Now the 49-year-old – who once lived in Rock Hill and Fort Mill – is in the Mecklenburg County Jail, accused of masterminding a three-year scheme that stole more than $600,000 from Walmart stores in three states, and put scores of investigators – including one from the Department of Homeland Security – on his trail.

On May 8, Milton, with a current address in Blacksburg, was arrested on federal charges of wire fraud, trafficking in counterfeit goods and conspiracy to traffic. He remained jailed Monday and faces up to 40 years in prison and $3 million in fines. An indictment could come as early as this week, at which time he could face additional charges.

An affidavit filed by Brian Boze, a Homeland Security investigator assigned to Charlotte, says the current cases against Milton stretch back to 2010.

The take so far – $624,000 – is expected to grow as Walmart, the world’s largest retailer, tabulates further losses, the affidavit says.

Milton’s alleged scheme was built around taking merchandise back for refunds, an everyday ritual of trust between a store and its customers. It took technical savvy, forgery skills and access to the worldwide shadow economy of counterfeit goods.

On April 6, separate local and federal investigations of Milton, a former Rock Hill computer business owner, began to merge. On that day, an employee of a storage company in the Cleveland County town of Grover came upon a unit with its door ajar. The worker took a look inside, then called the sheriff’s department.

Contacted by investigators, Milton acknowledged that the storage unit was his. A search warrant revealed that it held what appears to be the tools of his alleged operation: more than 1,000 counterfeit DVD sets, almost 1,000 more counterfeit copies of Microsoft software, more than 40 Ohio driver’s licenses, 31 South Carolina licenses, some receipt printers, and almost 2,000 pre-paid gift cards.

Investigators also found Walmart receipts and an atlas listing every Walmart store in the country. Many of the locations in the Carolinas and Georgia were accompanied by hand-written notes and marks.

Milton’s attorney, Peter Adolf, could not be reached for comment.

According to Boze’s affidavit, Milton told investigators in April that his wife would be “devastated” if she thought Milton “was falling into his old habits.”

A call to Milton’s home in Blacksburg, just across the state line, brought a stunned reaction from a woman who said she was Milton’s daughter.

“We’re kind of in shock right now,” she said. “I can’t believe my dad would do that.”

Hints of trouble

Milton, who previously lived in Charlotte, Rock Hill, Fort Mill and Belmont, was first confronted by Walmart on Dec. 29, 2010, when employees of a store in Monroe called police for what they thought was a fraudulent return of merchandise. No charges were filed, but a store investigator launched a probe into Milton’s activities with the retail chain.

Two years later, the same store investigator contacted Boze and asked him to look into “numerous fraudulent returns/refunds” at Walmarts across the Southeast.

Milton’s operation, according to the affidavit, had two parts.

First, he would use cash to purchase a number of American Express $100 gift cards, getting authentic store receipts in the process.

Secondly, the affidavit claims, he would use transaction codes from those receipts to forge new ones, replacing the gift-card product descriptions with those matching counterfeit merchandise he and his unnamed accomplices wanted to unload.

Other times, he rigged receipts so he could trade in cheap fishing poles and get refunds for much higher-priced models.

Two of his Walmart targets were on opposite ends of Tryon Street.

On Dec. 12, 2010, Milton bought seven $100 American Express gift cards at the store at 7735 N. Tryon St.

Two weeks later, the affidavit says, he walked into a Walmart at 8180 S. Tryon St. and returned 15 movie DVDs suspected of being counterfeit, using a doctored receipt from the earlier gift-card purchase. He walked out with a $672.40 refund, plus the gift cards.

The transactions added up.

Boze says the preliminary losses from Milton’s operation included $115,000 in fraudulently returned software, $95,000 in DVDs, and $46,000 in mispriced fishing rods. The estimated lost value of the items seized from Milton’s storage unit include some $325,000 in counterfeit Microsoft items.

Worldwide, counterfeit goods, most of them from China, now make up 2 percent of the world’s transactions or more than $250 billion a year, according to an report in April by the United Nations. Despite more and more crackdowns, counterfeit trade, from electronics and software to clothing, toys and drugs is expected to top $1.7 trillion by 2015.

In North Carolina, Secretary of State Elaine Marshall said Monday that her department recently added 20 local law enforcement officers to its counterfeit task force. Since January, more than $3.5 million in counterfeit goods have been seized.

“It’s absolutely a growing problem and a high priority in this state,” Marshall said. “No. 1, it’s a health and safety issue. Secondly, it steals from people up and down the line.”

Organized retail crime, which includes fraudulent refunds, is at an all-time high, according to a crime survey in 2012 by the National Retail Association.

More than 95 percent of the survey’s respondents reported being victimized in the past 12 months. Two-thirds said the level of criminal activity had increased over the year before.

Arrest in mid-April

Boze, who specializes in counterfeit goods, declined to comment about the case.

So did Mike Sturgis, the sheriff’s detective who led the investigation of Milton in Cleveland County. There, in mid-April, Milton was arrested and charged with 10 counts of counterfeit-related charges. All of those counts were dropped once Cleveland County became aware of the federal investigation.

The federal case will be handled by Thomas O’Malley of the U.S. Attorney’s Office in Charlotte. A spokeswoman for the office said no one would comment about the investigation.

Walmart also declined to discuss the case. Kayla Whaling, a spokeswoman with the chain’s corporate headquarters in Bentonville, Ark., said the company is “partnering with all appropriate agencies and working closely with law enforcement to provide them with information on their investigation.”

Observer researchers Marion Paynter and Maria David contributed.

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