Officers while they watched a team of seven south american thieves clean out an old navy store. Shirts at 22. 50, and they got the whole rack. When police moved in to make the arrest, they found enough merchandise to fill a room. All taken in less than an hour without anyone inside the store noticing a thing. [ticking] we have never seen a problem of this size and magnitude in world history. Now hang on. In world history. Theres more counterfeiting going on in china now than weve ever seen anywhere. Name an american brand. Any brand. Any kind of product. Just name it, and well tell you something about it. Its probably being counterfeited in china as we speak. This is the most profitable criminal venture, as far as i know, on earth. Counterfeiting. Counterfeiting and your partners dont kill you. Welcome to 60 minutes on cnbc. Im steve kroft. In this edition, we look at the multibillion dollar business of international crime. First, we report on the theft of an eyepopping fortune stolen from the iraq treasury. Then we take a look at shoplifting gangs from south america. And finally we go undercover in china to expose rampant product counterfeiting. We begin in iraq with the theft thats been called one of the largest of its time, the mother of all heists. And it happened right under the noses of u. S. Advisers. As iraqi investigators told us in october of 2006, more than half a billion dollars had disappeared from the Defense Ministry money that was supposed to equip the Iraqi Military. Investigators believe the very people that the United States had entrusted with the funds had stolen them. But it seemed neither the u. S. Nor its allies had much of an appetite for pursuing the matter. People have died. Moneys have gone missing. Culprits are running around the world, hiding and scurrying around. I have to ask myself why has this happened . It is not every day that you get billion dollar scandals of this kind. When ali allawi, a harvard educated International Banker took over as iraqs minister of finance in 2005, he was confronted with a gaping hole in the treasury. 1. 2 billion had been withdrawn by the new ministry of defense to supply the iraqi army with desperately needed equipment to fight the growing insurgency. Millions had been misspent on old and antiquated equipment, and allawi says most of the. Money simply disappeared. How much do you thinkeared. Was stolen . I think the figure is probably between 750 million, 800 million thats a lot of money. It is a huge amount of money by any standard, byeven by your standards. Its one of the biggest thefts in history, i think. Gone. Gone, yes, up in smoke. The story begins in june 2004, when president ial envoy paul bremer turned over authority to the interim iraqi government, which would run the country until elections could be held. [gunfire] the insurgency was already gaining momentum. And with the, then newly constituted iraqi army riding into battle in unarmored pickup trucks, and scrounging for guns and ammunition, the iraqi Defense Ministry went on a billion dollar buying spree with almost no oversight. The contracts were paid in advance with no guarantees, and most of them involved a single company. There were awarded without any bidding to a company that was established a few months prior with a total capital of 2,000. So you had nearly a billion dollars worth of contracts awarded to a company that was just a Paper Company whose directors had nothing to do with the ministry of defense or the government of iraq. The name of that company was alain al jaria, which in arabic means the everflowing spring. Its address, here in amman, jordan was a post office box. Its telephone number, a mobile phone. The principal was a mysterious iraqi by the name of naer jumaili. And a half a billion dollars in Iraqi Defense funds would eventually find their way into his private account at the housing bank of jordan. The person who knows the most about the case is judge radhi al radhi, who in 2004 was iraqs commissioner of public integrity. It was his job to prosecute official corruption in iraq, and it may have been the most dangerous job in the country. Twice tortured and imprisoned under saddam hussein, he received Death Threats from both the insurgents and from corrupt officials. Seven of his people had been killed. Do you have body guards . [speaking arabic ] yes. How many . [speaking arabic ] 30. Lots of people would like to see you dead. [speaking arabic ] i dont care. Thats their problem. You dont care . I do not care. Judge radhi was more than happy to walk us through the case. Aside from the hundreds of millions of dollars that were stolen, radhi says much of the equipment actually delivered to the Iraqi Military was useless junk. Soviet era helicopters, some of which were considered unfit to fly; bulletproof vests that fell apart after a few weeks; and a shipment of ammunition so old, one of the people inspecting it feared it might blow up. [speaking arabic ] instead of aircraft, we received mobile hospitals. What would an army without aircraft do with mobile hospitals . Instead of getting planes and tanks and vehicles and weapons that we needed, we got materials there really was not a big need for. [ticking] coming up, confronting the accused. The allegations are that 1. 2 billion left iraq yes. To buy military equipment. Yes. And only about 400 million worth of equipment came back into the country. And that 800 million somehow disappeared. It isnt true. [ticking] and later well look at the billion dollar industry of shoplifting. If this is happening all over the country, why do so few people know about it . When you talk about shoplifting, not a lot of people think about organized crime. Most people think, when you say shoplifting, its the opportunistic shoplifter. Thats ahead when 60 minutes on cnbc returns. Moderate to severe Crohns Disease is tough, but ive managed. I got to be pretty good at managing my symptoms, except that managing my symptoms was all i was doing. When i finally told my doctor, he said my crohns was not under control. He said humira is for adults like me who have tried other medications but still experience the symptoms of moderate to severe Crohns Disease. And that in clinical studies, the majority of patients on humira saw significant symptom relief. And many achieved remission. [ female announcer ] humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal infections and cancers, including lymphoma, have happened; as have blood, liver, and nervous system problems, serious allergic reactions, and new or worsening Heart Failure. Before treatment, get tested for tb. Tell your doctor if youve been to areas where certain fungal infections are common, and if youve had tb, hepatitis b, are prone to infections, or have flulike symptoms or sores. Dont start humira if you have an infection. If youre still just managing your symptoms, ask your gastroenterologist about humira. With humira, remission is possible. Ask you water dripping andt dont juspipes clanging ncisco. Visit tripadvisor san francisco. soothing sound of a shower with millions of reviews, tripadvisor makes any destination better. He cadillac summer collection is here. During the cadillac summers best event, lease this all new 2014 cts for around 459 a month or purchase with 0 apr and make this the summer of style. [ticking] in october 2005, iraqs Anticorruption Commission obtained arrest warrants for some of the top officials in the iraq Defense Ministry. Accused of massive fraud, almost all of them fled the country. One of them was ziad cattan, an official in charge of military procurement. But when we caught up with cattan in paris, he didnt seem terribly concerned about the charges against him. There is an arrest warrant out for you. Yes, i hear about that. If you went back to baghdad youd be arrested. Uh, no. Nobody will arrest me. They will kill me. [speaking arabic ] the son of a retired iraqi general, cattan had been living in poland until a few days before the u. S. Invasion, running a pizza parlor in germany, and importing and exporting used cars. But his cando attitude and ability to speak english impressed the americans, including ambassador bremer, who praised cattan in his memoir. After a few months working with the coalition on neighborhood councils, cattan was given a position in the new ministry of defense. So you were recruited for this job. Yes. By the cpa. Yes. By ambassador bremer and his aids. The staffs, yeah. Did you have any experience in military procurement . No. To make up for this obvious deficiency, cattan was sent off to the National Defense university in washington d. C. For a few weeks of training and eventually placed in charge of buying 1. 2 billion worth of equipment for the Iraqi Military. The allegations are that 1. 2 billion left iraq yes. To buy military equipment. Yes. And only about 400 million worth of equipment came back into the country. And that 800 million somehow disappeared. It isnt true. Cattan told us that the charges are politically motivated, and that he can account for every single dinar. All equipment with this 1 billion, 200 million, it is nowaday in iraq. It was delivered to iraq. I have documentation. I give it to you in your hand. This is a big misunderstanding, i mean, were talking about 800 million. Yes, it is here. I can show you. This is btr80, from vanguardian. This is ambulances, 2005 production, also in iraq nowaday. This is mobile kitchen. Also in iraq nowaday. Well, this isnt equipment. This is just pictures of equipment. Yeah, but you can prove it if you wanted to. Nobody want to prove it. Thats the problem. We took all of cattans documentation, had it translated into english, and gave it to janes, one of the worlds leading authorities on military hardware. At the time, john kenkel was the senior director of consulting, advising countries on military purchases. If you had 1. 2 billion and you were going to equip the iraqi army, would you have bought what they bought . Well, thats the big question, cause nobody really knows what they bought. Kenkel told us the documents were so vague that he couldnt tell what had been ordered, or whether it had been delivered. I think the biggest thing was that you couldnt identify what the equipment was that was actually being delivered. To say that you were being delivered a gun, doesnt necessarily mean anything in terms of what youre getting. Can you think of another government in the world that would have spent 1. 2 billion this way on military equipment . Nobody that you would consider on the upandup. [speaking arabic ] but the thing that really suggests this wasnt on the upandup, are these audio recordings, which we obtained from a former associate of ziad cattan and the mysterious middleman, naer jumaili. We have some audio recordings that wed like you to listen to. Is that your voice . Yes. [on recording] so i just talk with him the recordings were made by the associate as he drove cattan around amman in 2004. According to two independent translations, theyre talking about payoffs to iraqi officials. This is cattan talking about a top political advisor to the defense minister, a man who was also identified on the recordings as a representative of the president and the Prime Minister of the interim government. He want to know how much money is gonna be placed in his account. He want say 45 million. Yes, but not dollar. I dont say dollar. And what was it . 45 million what . I dont remember. Well, you were going to give him 45 million of something . Yes, but i dont remember what the matter was. Cattan told us that u. S. And Coalition Advisors at the ministry of defense approved everything that he did, and he now believes that the recordings have been doctored. The audio experts that we consulted could find no evidence of it. Judge radhi told us that he, too, has a copy of the recordings, and that one former ministry of defense employee confessed after hearing them. How could the american advisors have missed all of this . [speaking arabic ] i think this question should be directed to the americans. [speaking arabic ] we certainly tried to, but no one in the u. S. Government would talk to us on camera about the missing 800 million. Off camera, we were told that this was iraqi money spent by a sovereign iraqi government, and, therefore, the iraqis business. So where did all the money go to . Its impossible to tell. The money trail disappears inside a number of middle eastern banks. We can report that ziad cattan, who was convicted in absentia in iraq and sentenced to 60 years for squandering public funds, was building this villa for himself in poland. And naer jamaili is said to be snapping up real estate in amman and building himself a villa. A lot of these suspects are living outside of iraq in comfort and dont seem to be too concerned about the charges against them. [speaking arabic ] as you know, those people, they have a lot of money right now, so they use it to bribe anybody in the world. How much help have you gotten from countries like poland and jordan in either apprehending suspects or recovering money . [speaking arabic ] no help at all. We have not been given any serious, official support from either the United States or the u. K. Or any of the surrounding arab countries. Why has this received so little attention, do you think . The only explanation i can come up with, is that too many people in positions of power and authority in the new iraq have been, in one way or another, found with their hands inside the cookie jar. And if they are brought to trial, it will cast a very disparaging light on those people who had supported them and brought them to this position of power and authority. Nobody wants to get to the bottom of it. In practice, no. Since our report first aired, a lot of things have changed in iraq, the biggest being the withdrawal of American Military forces. Since ali allawi left his post in early 2006, he has returned to his teaching position at oxford university, and has also taught at harvard and princeton. Among other changes, judge radhi, the man with the most dangerous job in iraq, fled the country and sought asylum in the United States. As for the man he was investigating, ziad cattan, hes not returned to baghdad to appeal his conviction. And accused middleman, naer jamaili, is also still at large. [ticking] coming up, the science of bigtime shoplifting. This man holding up the clothes, is executing whats called a blocking maneuver. Just loading things up in a booster bag. Now heres a different angle. Just different view. Just loading. Is he gonna leave anything on the rack . Basically, its empty. This is how bold and brazen they are. Theyre good. Oh, no, theyre professional at what they do. [ticking] and later, we look at chinas massive counterfeit industry. What would retail for close to 3,000 in the United States was being offered to us for 275, because, as the owner of the shop readily admitted copy. Copy. Not fake. Copy. Boosting billions when 60 minutes on cnbc returns. [ticking] you fifteen percent or more on huh, fiftCar Insurance. Uld save yeah, Everybody Knows that. Well, did you know that playing cards with kenny rogers gets old pretty fast . You got to know when to holdem. Know when to fold em. Know when to walk away. Know when to run. You never count your money, when youre sitting at the ta. What . You get it . I get the gist, yeah. Geico. Fifteen minutes could save you fifteen percent more on Car Insurance. [ jackhammer pounding, horns honking ] [ siren wailing ] visit tripadvisor miami. [ bird chirping ] with millions of reviews, tripadvisor makes any destination better. [ticking] boosting is a term used for organized shoplifting. And if you think shoplifting in america is nickelanddime, think again. The truth is, as we first reported in february of 2004, its a billion dollar business, and back then, a huge chunk of that business was under the control of highly skilled, well organized professionals from south america. [camera shutter snaps] these surveillance photos were taken by Undercover Police officers while they watched a team of seven south american thieves clean out an old navy store. Shirts at 22. 50, and they got the whole rack. When police moved in to make the arrest, they found enough merchandise to fill a room, all taken in less than an hour without anyone inside the store noticing a thing. There may be as many as 1,000 of these teams operating every day. And about the only place theyre ever captured, is on the video tape in store security cameras. Craig matsamato used to be in charge of Loss Prevention for t. J. Maxx and reebok. He is now a Security Consultant for major retailers and is well acquainted with the south american groups. Youre finding them now throughout california, maryland, chicago, miami, new york. If this is happening all over the country, why do so few people know about it . When you talk about shoplifting, not a lot of people think about organized crime. Most people think when you say shoplifting, its the opportunistic shoplifter. Winona ryder. Winona ryder. There you go. Thats kind of how people look at shoplifting. Nobody really talks about the fact that, jeez, its really organized, its big business, and its high loss to retailers. Thats all part of the group, right matsamato says the south americans usually work in small groups, relying on distraction, advanced planning, and precision teamwork. One or two people occupy the sales staff while others go to work. It doesnt take them long. Watch these two. Theyre about to steal 3,000 worth of armani suits in just ten seconds using some specially designed equipment. Hes gonna roll it up. Now, heres a booster girl right here. This is a great example of how we talked about, how its elastic. Very quick. Notice how quick this can be done. Mmhmm. At eye level, the woman on the right looks like a customer, but she is actually a lookout, watching the sales floor while her partners load up on merchandise. This man holding up the clothes is executing whats called a blocking maneuver. Now, this is just a great angle. Theres a blocker. Hes looking. Theres another gentleman right on the side youll see just p