Court rules company extorts money from accused shoplifters

A State Superior Court judge has ruled that a "corrective education" scheme for accused shoplifters is considered "extortion."

San Francisco City Attorney Dennis Herrera filed the lawsuit against Corrective Education Company, which partners with retailers like Walmart, Bloomingdale's, Burlington Coat Factory, Abercrombie & Fitch, Ralph's grocery chain and Kroger's.

Suspected shoplifters at those retailers don't get handcuffed by police, instead, Herrera says they answer to a private business called CEC or Corrective Education Company.

"They basically would intimidate and get someone they suspected of being a shoplifter and say uh, unless you sign this form and and pay us money, we're gonna report you to the police," said Herrera.

The problem with that, Herrera says... it's illegal.

"The law is clear. This is a textbook case of extortion and false imprisonment," said Herrera who filed the lawsuit back in November of 2015.

This week, California's State Superior court agreed.

"What really spoke to me was that this company for private gain was establishing alternative, a parallel system of justice," said Herrera.

CEC claims to partner with law enforcement and credits itself with "removing 10,000 people from the criminal justice system."

The company sent an email to KTVU saying it was "shocked" and "dismayed" by Tuesday's ruling. "We are disheartened for our partners... and for those Californians who face a lifelong scarlet letter because of one bad choice," read the statement.

"If this company *really* wants to partner with law enforcement," said Herrera. "They can do so but extortion and false imprisonment is not the way."

CEC was founded in 2010 and currently operates in more than 25 states.

Herrera thinks many of the CEC's "offenders" were not guilty of a crime.

"I have no doubt that there were many unsuspecting individuals who were intimidated, who were fearful and just signed up for this bogus program," stated Herrera.

Herrera says there are at least 13,000 accused shoplifters who participated in CEC's program. After being led into an isolated room, each person was threatened with arrest and criminal prosecution unless they signed a confession, agreed to pay up to $500 and watched a six-hour long video.

That could potentially translate into somewhere between $5.2 million and $6.5 million in restitution fees, not to mention $32.5 million in penalties.