♪ carol: welcome to "bloomberg businessweek." i'm carol massar. jason: i'm jason kelley. we are at bloomberg's headquarters in new york. carole: this week, a special takeover issue. a binge-worthy issue filled with true stories of robbery, bribery, and fraud. jason: including theft in mexico with tragic consequences and how one man raked in millions on biodiesel tax credit with multiple wives. carol: we begin with "bloomberg

businessweek" editor joel weber. this is an issue to take to the lake. joel: the goal is to steal your summer. cover to cover heist stories. they are a type of business story, right? only it is a business story with a major twist because it is ultimately about crime and the business of crime. jason: and every story has a twist including the story -- i love this one -- about model trains in england. our reporter turned into a private investigator. joel: austin brought us this story and it was sensational. you want to read a heist story to the end because you don't know how it ends and that is where austin excelled. we are talking about model trains. not little model trains, but model trains people ride. their is some humor to that but the story has some real tragedy to it because it devastated the community this story is about.

carol: people devoted their lives to building these. joel: little pieces of coal, little shovels. carol: from little trains to big gold coins. joel: canada made these gold coins that were worth about $1 million, the size of a car tire. a collector lent one to a museum in germany. it was there, it was on a collectible shelf with a lot of different coins and one night, it went missing. the story is a graphic novel that unfolds about not only the robbery but the aftermath. jason: joel weber, thank you. carol: to learn how a million dollar coin disappears in just 16 minutes -- jason: we turn to reporter benedikt kammel. he is in berlin. is one of five big coins minted by the royal canadian mint and they are as big as a tire and they weigh 100

kilos, about 220 pounds. solid gold and impressive, imposing. they end up with investors, one ended up with an investor in germany in dusseldorf and he loaned it to a museum where it sat for a couple of years. jason: it is a couple hundred pounds and yet behind the scenes leading up to this, there is an "ocean's 11" type plot to steal this thing. walk us through how they did it. >> one night, three guys show up on a platform nearby, the train platform and walk across the platform onto the tracks that pass by the museum on an old overpass and they climb up there through a window, go in, break the glass, take the coin and they are out in 16 minutes. seems very simple but if you dig deeper, there are -- was serious planning that went into it. they tried it twice before and didn't seem to work out.

the didn't make it into the museum so the third time, they made it in and found there was one window in the entire museum that didn't have an alarm. that was in a window that had been fickle over the years and it always set off a false alarm so they knew about this one window on the second floor. they knew when the guard was doing his rounds, so they struck at precisely the right moment and in the right place. jason: there are a couple of interesting things. one, the police slow walk getting there because they think someone stole a coin, so they don't show up for a while and then they clearly come to the conclusion that this was an inside job. that leads them down one path but as you say, they never found it. they think it was broken up and sold? benedikt: that's right. i went to one of the court hearings. they did, in the end, arrest four people they think are connected with this.

i went to the court hearing to hear what the guards had to say and police. one of the guards was telling how when they discovered the coin had gone missing, they called the police and said come here quickly. there is a coin missing. the police probably thought what is the big deal? you guys have hundreds of coins and someone slipped it in their pocket. they didn't realize this was the big coin that had gone missing. nobody thought this was possible. it was humanly impossible to take the coin out of so when the eventually showed up, they started asking some questions like how was it that these three people went down the platform, how would they know when the guard did his rounds? how would they know this particular window was the only window you could get into? all of these kinds of things, then they quickly started thinking maybe it was the guard who was on duty that night and they dropped that, but they poked around inside the museum and came to another guard who was friends with someone already suspected and that is how the

noose closed around these four guys who are on trial. carol: next, a sobering story. a gas heist gone terribly wrong in mexico. jason: fuel fraud. how one man allegedly stole half $1 billion from the u.s. government. carol: this is "bloomberg businessweek." ♪

carol: welcome back to "bloomberg businessweek." i'm carol massar. jason: i'm jason kelley. join us for "bloomberg businessweek" everyday on the radio from 2:00 to 5:00 wall street time. carol: find us on businessweek.com and the mobile app. in our special heist issue, a gas heist gone wrong. jason: fuel theft in mexico is an economic burden, one that you have done little to slow down. carol: it is also a huge hazard. >> it is important to remember mexico is a country where fuel theft has become a common issue here. see increasing numbers of pipeline taps on the network of pipelines, a state-owned oil company. often, these taps resulting explosions that can kill people. we have seen up to 42 pipelines

tapped a day in mexico which is really bad. in this case, january 18, not that long ago when you had people tap one of these pipelines and as a result, gasoline was pouring out of the pipeline, premium gasoline. people from around the area of the state of hidalgo in central mexico, people started gathering. this is a poor area and people saw the opportunity to get free gasoline. the numbers kept increasing and increasing until you saw around 600 people in total there. this also occurred in the middle of a crackdown by the government on this problem. while there were soldiers standing guard over the

pipeline, because the crowd had levels,to such enormous they thought they couldn't intervene because it could become a riot. unfortunately, that many bodies, people bathed in the gasoline, eventually what authorities say was static electricity caused a spark and that spark resulted in the entire area igniting. people were essentially burned alive. it took a very long time for firefighters and ambulances to get to the scene and sadly, it resulted in 137 people losing their lives. jason: talk to us about pemex's role in all of this because there is a corruption element here that is part of the crackdown you have been alluding to in the sense that a lot of what was going on was, dated by orwas promulgated by pemex

enabled to some extent? amy: it is a state-owned company that had a monopoly until recently over the entire sector. there are 128,000 employees at pemex and that is not even all the people contracted by the company. many of them got involved with people selling fuel on the black market as early as the 1990's. there is a report earlier in the year where government officials said probably about 80% of fuel theft was conducted with the help of pemex employees. so this is a problem of endemic corruption within the company. it has been very hard to address because it is so pervasive and because the company is so enormous. carol: they are so important to the mexican economy as a whole, obviously, but you do wonder

about -- how you said -- enabling these people because there were guards those guards were instructed to notify the company but keep watch. they didn't get involved. to wonder what is the company's responsibility here? i'm curious what you are hearing out of mexico and out of pemex about the responsibility in all of this? amy: the company and the economy are tied together. pemex represents about 20% of the federal annual budget, so it is an important contributor to the economy and this practice of fuel theft results in about $3 billion in losses every year for pemex. it is substantial. carol: from fuel theft to fuel fraud, jason kingston rake in half $1 billion in biodiesel tax credits and has multiple wives. jason: our reporter tells us about the polygamist skimming the u.s. with an unlikely helper. >> it centered around a mormon sect known as "the order" and

two brothers, jacob and isaiah kingston. they ran a biofuels company that the internal revenue service said engaged in a massive fraud over several years. their partner in this according to the government is lev dermen, an armenian immigrant who has been accused of several crimes over the years and then acquitted. with the government said is that over the period of several years, they defrauded the irs out of $511 million in biofuel tax credits and they then laundered $134 million of that to turkey and lived a very lavish lifestyle. there is a lot of witness intimidation alleged in this case and some quite colorful characters as witnesses along the way. carol: tell us about "the order," because i don't know

that everyone is familiar. david: it is a polygamist sect and people have several wives and many children and it is hierarchical, which has a prophet who determines where people work, who they will marry, essentially how they live their lives. they own more than 100 businesses in the west and generate hundreds of millions of dollars in revenue, and that money is supposed to be shared only with "the order." in this case, the government claims these brothers, jacob and isaiah kingston, kept a lot of that money for themselves and lived a very lavish lifestyle, as did lev dermen. he drove a $1.7 million bugatti.

the kingston brothers drove fancy cars and jacob kingston lived in quite a mansion. all against the general if those of "the order." jason: how did these guys get together in the first place? david: that has not been fully spelled out in the case but they met in february of 2011 at a biofuels conference in las vegas. the kingston's created biofuels which could then be mixed with diesel and there is a federal law that is about a decade old that encourages the use of biofuels. all the big refineries and oil

companies are required to use these biofuels which is what the kingston's produced. the government says they didn't actually produce what they said they did and they engaged in a very elaborate kind of daisychain of moving materials around the u.s. and in the caribbean to make it appear they were selling products they said they were producing, that they were not actually producing. so lev dermen -- carol: not producing the getting tax credits? david: not producing what they said they were producing and still getting the tax credits and that is the heart of the fraud alleged. carol: the kingston's said this isn't what happened? david: they said they produced everything they said they did and deserved these credits. lev dermen -- they've all pleaded not guilty. jacob kingston's mother and wife are also under indictment. they are going to trial in late july in utah and -- carol: one of his wives. david: that's right. lev dermen has asked the judge to be tried separately saying he

is not involved in all of this fraudulent activity with kingstons and that has to be determined. the kingstons have also asked the judge to bar any reference to "the order" or to polygamy because they think it is prejudicial. carol: coming up in the heist issue, how to rob a train. jason: and the little engine that vanished. this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." i'm jason kelley. carol: i'm carol massar. you can listen to us on radio on sirius xm channel 119, and on am 1130 in new york, 106.1 in boston, 99.1 fm in washington, d.c. jason: am 960 in the bay area. and london on dab digital and through the bloomberg business app. copper mines in chile, always presenting a target for thieves. we are talking about an area as big as nebraska. it is mostly uninhabited and because copper is crucial to everything from electronics to plumbing, it is easy to find a buyer. carol: big companies have added security but one thing remains, the trains.

>> copper theft is a major issue in chile. it is the world's largest producer of that metal and the amount of copper produced is a great target for robbers, for thieves in that part of the world. it turns out that mines in northern chile are in the middle of the desert so quite isolated and makes for an easy target that people want to rob them. >> for a while, thieves robbing the mines themselves, putting it either in their backpacks or more professional bands would put it in the back of their pickup trucks or bigger trucks. copper miners and companies started to get more serious about security, they hired people that could look after the mines 24/7. the thieves thought of robbing

the trains and transporting the copper through unsurveilled desert. jason: they found that while wire is easily transported, slabs led to interesting ingenuity. laura: absolutely. the traditional way has always been the smalltime thief could go into the mines and steal the wires which are easier to hide and fit in the truck of your car, but that can be sold for around 100 u.s. dollars, but if you get a hold of one slab or more than one slab, they can be sold at around $500 each on the black market, which means that the thieves have an incentive to get organized and get a few

people together and figure out a way to rob that. carol: a couple of tips at you have, but i love one of the possible solutions to get these big slabs off. you tie some rope to a giant rock on the ground and then hop on the train? laura: that's right. we started talking to the local police and at the time we started covering that, there was still not a special police force to cover that but there is a police force that investigates the copper thefts on trains. they told us the robbers prefer moonlit nights because they don't have to use the lights. they can approach them and jump on them and steal copper.

the thieves who approach the trains on their pickup trucks, they match the speed of the train, jump on top of the train which can be quite dangerous, and either throw the slabs directly on the desert ground or tie a rope around the slabs and tie an anchor to that rope so the anchor drags all the slabs on top of the desert floor. what happens is there is someone on top of the train. there is someone on a pickup truck picking up the slabs that fall on the desert. jason: laura, one of the big issues here is you've got to be able to move it after you steal it. that seems to be getting harder and harder, thankfully, for those of us who are law-abiding citizens. tell us about the crackdown. laura: whenever there is a theft in one of the trains, the first

in the train drivers do is call the police and say there has been a robbery on my train. please come and help. they might stop the train. they might keep driving to the nearest port but the police set out lots of roadblocks to make sure they can catch these thieves carrying the copper on their pickup trucks. some thieves have been caught after robbing the trains, but then the police think the smartest thieves are disappearing into the desert. finding secret spots to hide the slabs for a while. so when the police pressure cools off and the police stop looking, they unbury that loot and drive to the nearest scrapyard and try to figure out how to get the copper out of the country. carol: coming up, we continue with train robberies, but this one on a smaller scale. jason: about 1/12 size. it is part of this week's

special heist issue. this is "bloomberg businessweek." ♪

carol: welcome to the hacker hotel. watch that wi-fi, it may be tapping your credit card. jason: plus, more train robbers. carol: it is all part of a special bloomberg businessweek "heist" issue. we talked to the men who put it all together. >> this is our summer reading issue. the idea is to give people a different experience. the new cycle slows down while everyone is going to the beach or whatever. so these are our sort of "true crime" series. this one, all the stories involved a thing getting stolen. this one is a little more expensive, includes heists, scams, fraud, other forms of skulduggery. carol: what story really stuck with you? >> i guess the story that stuck with me most was this story about the model train robbery. carol: yeah! >> it is kind of ridiculous because the stakes are quite low. it is about the theft of some of very small trains. and i don't want to ruin the whole story, but austin basically turns detective and tries to solve this mystery.

and in the process, reveals an stuff about his own family -- some stuff about his own family and the nature of hobbies. there's also a wonderful main character who is the secretary of this model railroad club who becomes a very effective detective. carol: not trains, but she becomes a good detective. jason: for more on the little engine that vanished -- carol: we got to our reporter austin. >> i realize there was this weird trend of an incredible number of heists and vandalism's of model train exhibits, stores, and clubs like the one we talk about. particularly in the u.k., there was a string of them which led us to england. carol: tell us about this club. >> it is just the cutest place filled with the loveliest people.

i was delighted to go there, i had no idea what to expect. and these folks, it is a model train club but really is an engineering society. a lot of them are engineers, they grew up that way of building these things with their hands are went to college or the military for it. so this is a club, but the whole idea is to educate kids and get them interested rather than just the model trains themselves. jason: and so there was a robbery. and you describe in great detail how they think it was pulled off. pretty brazen. >> incredibly, but also professional. and i don't want to give any spoilers away, but in the midnight witching hour of valentine's day, you had a van pull up to the small roundabout that used to be a retired airfield, used in the battle of

britain. it is now home of this train club. the thieves snuck through the back, clip through multiple fences, used angle grinders to get within these containers, click in to find these locomotives which way 100-300 pounds. than they had to wield a back over the fence, use a hoist to get them over another fence. they did this three or five times. jason: when we talk about model trains, we are not talking like the little ones. >> you guys might be used to hornby or lego trains, thomas the tank, these are larger. they are called loco's, the terminology is another thing i love about this, these things are pretty big. adults can ride on them. they are pretty large, 1/12 the size of an amtrak train, let's say.

it begins like an agatha christie novel. there is a leisure center, a ymca maybe, and he was just near that club with his wife and their cocker spaniel. they were walking along near this gated, fenced off train club. in the distance, he saw a few of the doors were just off their hinges. he got initially another member was just doing some maintenance work, but as he got closer, clearly something was awry. his wife admittedly called the cops and he knew to call the one

person who was the protagonist in the story, tricia. she immediately zooms over and that is when they begin their personal investigation. carol: you became an investigator of sorts. we have like a masterpiece theatre going on here. >> i do masquerade as an investigative journalist. [laughter] when i arrived, i went into this thinking that i would be the one who will have to this all on my own. it was very condescending, a lot of presumptions. it turns out the woman had done an exceptional job, she had done my homework, she should be the journalist. the amount of paperwork, photographs, evidence. just providing that give me a huge head start. but yes, i contacted a private detective, i went house to house, i went to local bars and spoke to councilman. there was a big lead we could talk about that almost broke the case open. you know, maybe the thieves out there were on -- out there, we are on to them. jason: more on the train robbery

of next. carol: all part of this week's special issue. jason: this is "bloomberg businessweek." ♪

jason: welcome back to "bloomberg businessweek." carol: join us every day on the radio from 2 p.m. to 5 p.m. wall street time. you can also catch up by listening to our podcast. jason: and you can find us online and through our mobile app. carol: staying with the model train robbery -- jason: we take you to the small town in england with thieves stole a valuable collection of those scaled-down locomotives -- where thieves stole a valuable collection of those scaled-down locomotives. >> in kent, england, since a group of train enthusiasts where since 1953, obvious meet to work on the many locomotives. -- hobbyists meet to work on the

mini-locomotives. even though the trains are small, the work that goes into them is massive. >> some people have been on the move longer than that, 20, 25 years. you've got to maintain them, and that takes quite a lot of doing as well. >> the club is open to the public on sundays about hosting birthday parties, charity runs, and other events for children. >> it is a great hobby to have. a lot of the youngsters that come up. do appreciate what we do. i've got grandchildren of my own, and i know how much they enjoyed it. over the years, i have had 3, 4 engines. sorry, do you want me to talk about the robbery or not? >> on february 14, 2019, the unthinkable happened.

the club would never be the same. >> we just sat down to eat breakfast when i received a phone call from one of our members who is a dog walker and uses this pathway. he just said i'm sorry to tell you, but we have been burgled. as we came through the gates, the door to the clubhouse was off its hinges and laying on the ground. both of these containers were open with a debris inside with a had gone through everything, broken into locks where the trains were. >> in total, four trains were stolen, two belonging to

individual members and to owned by the club itself -- two owned by the club itself. the value was estimated at 25,000 pounds. >> letting people know what has happened, calling them up was the worst thing i have ever had to do. it was horrible. there were tears. they may be grown men, but there were tears, on my side and there's. -- theirs. >> when i walked in and realized that mine had disappeared, i must admit, at that time i felt like packing up, to be honest. i had that engine over 20 years, to maintain it and keep it running. it was devastating, really, absolutely devastating. my grandson especially, because he loved it, and it really upset him.

>> the second member whose trade was stolen decided to leave the club. he was too heartbroken to continue. others, like tricia, focus their energy on investigating the crime. >> we now know that the thieves had a van of some sort parked at the end of this pathway. they walked down this pathway, cut the farmers fence, climbed over, which brought them to the back of our containers. on entering, they angle grinder -- angle grinded through all of these hinges. this last container here is where our two club engines were stored. >> the police were unable to uncover any additional clues. but that night, tricia received a phone call from a model

railway shop in hempstead, a town 90 minutes from kent by car. a man was offering to sell some model trains. but when asked about paperwork, a requirement for all engines, the man drove off. >> it was a matter of seconds, he said, when his helper in his shop came out and said you'll never guess, i've had four locos stolen. from there we have had no leads. , i am hoping that people will lead them somewhere, because they cannot use them or get rid of them without the paperwork. and to the members, it would be lovely if they were found in a ditch somewhere or a field, anywhere, even if they were damaged. we have the facilities to repair them. the members were quiet for a few weeks.

gradually, we were lifted by the community around us who decided to do a giving page for us and raise money. >> donations to the club totaled over 5000 pounds, mostly from small contributions by friends, humanity members, other clubs, and complete strangers. >> the frowns and tears gradually turned to smiles again. >> we had a such support from the community. a lot of us could not believe it. we just saw it as a love of our own, a hobby that keeps us busy. but when we saw support from the public, it wasn't just a brilliant. >> we have bounced back very well, actually. i went out and one of our club members had another logo -- loco

for cell -- for sale. i felt sorry for him, really, because what he has given me is better than what he has got. >> the culprits are still at large, but the club is as strong as ever. chugging right along with a newly completed expansion of their track. >> we love what we do. and that is the truth. and if you enjoy what you are doing, there is nothing better than that. i think that says it all, really. jason: next up, we take you undercover to uncover the security flaws in hotels. carol: plus, what is the number one restaurant in the world? we will tell you. jason: this is "bloomberg businessweek."

jason: welcome back to "bloomberg businessweek." carol: you can also listen to us on the radio on sirius xm channel 119, and on a.m. 1130 in new york, 106.1 in boston, 99.1 f.m. in washington, d.c. jason: a.m. 960 in the bay area, london on dab digital, and through the bloomberg business app. carol: staying with this week's special heist issue, malware and mini-bars. jason: we go undercover to uncover security vulnerabilities in hotels. >> i walked into hotels with security experts and watch them as they went about identifying and beginning to exploit the

vulnerabilities that they saw. it started from the moment we walked into the hotel. one of the guys i was with walked along the front desk while another hacker was checking in. he noticed that at the end of the front desk are a bunch of computers used to take reservations, swipe credit cards, process payments. and all the way over there were machines that where nobody was sitting. theoretically, he could have reached over-the-counter and slept a little usb drive into the end of the machine and all of a sudden been logging every keystroke the machine made. carol: apparently, that is just one opening in the environment that people can access. and that is what these guys were looking for. >> it is all over the place.

from the hotel websites to hotel wi-fi, which is a big one. if you are using hotel wi-fi, and you can configure your wi-fi setup. one of the more interesting things is that even five or 10 years ago when it was more common to pay for wi-fi, there was a higher degree of security around that. you were getting an individualized wi-fi access point. you are paying for it and it would give you some kind of credential linked to your name and credit card and all that. now, everybody wants everything immediate, free, and easy, and wi-fi has become no longer something we think should pay for -- we should pay for what should be part of what they provide us. so what you get instead is a completely public wi-fi, no log in. and in much better system would be based on your room there would be a password. that event that would be based on your you mail address or social media account. but so every single user has a

credential. one of the reasons this is important is they created a simple way with just their cell phone, they created a wi-fi access point with his phone that was named after the hotel. they said if you really want to be a jerk, usa name of the hotel and then free. or name of the hotel, fast. even more enticing. carol: you see when you get in, you will see multiple names. and what is the real? -- real one? >> immediately, six devices had jumped over. it was not people looking down, it was their devices automatically finding the network. we did this on the basis of we are not going to do anything illegal, obviously -- carol: these are good guys. jason: white hats. >> and the hotel is a client, we had permission to go in and mess

around. but we were not going to compromise a guest in any way. and there were some other things we were not going to do. if he had gone in any more serious way, he would have come in with a device called a wi-fi pineapple. it would do the same thing but automate the process of using this initial exploit of tricking phones and laptops into switching on to this evil wi-fi network to then start listening into all of the communications they are doing. he send an unencrypted password summer but the guy over here with the pineapple is going to know. and from there, the possibilities kind of continue. much of what these guys showed me, the idea is you are looking for and access point or a door and you see where that leads. and maybe you are able to snoop on the indications of my devices, whatever emails i am sending or whatever. maybe, something i do is going to give this guy more access.

jason: so we can't let folks go without a little bit of "pursuits." so we turn to the number one restaurant in the world. carol: first of all, it is a survey, right? >> yes, the number one restaurant is like the oscars. the excitement leading up to it, this is like the big day. they announced the number one restaurant and it was a surprise, it has never happened before. is a place in provence. carol: how could that never be? >> this is the first time france has won a top spot. which is kind of crazy, right? france is supposed to be one of the great food countries of this world. jason: so they change the rules

olympics this year and that led to a little bit -- the rules this year and that led to a little bit of disruption. >> this option is the right world -- word. this is the survey that put that restaurant in copenhagen on the map, and that change everything. -- changed everything. that is when he started to hear about foraging and scandinavian food. so now everything new is old again -- everything old is new again. so they put these all places off the list because these places that had one cannot win anymore. jason: they change the rules so that if you have one, you are now relegated to the best of the best. carol: well done, smart move. >> it is smart on a lot of levels. it is smart for them because they get to mix it up and address a diversity more -- address diversity more. it is still a white guy winning, but they can address a new cast of characters. but the chefs like it, because

if they are number one and there restaurants start slipping, that is embarrassing for them. so if they get to be in the hall of fame, that's good. carol: we can't go through all the names, but tell us about the winner. >> the winner is in provence. the chef is argentinian-born, and he has adopted local ingredients. and the best restaurant in america is number 23 in new york. it is a fancy mexican restaurant and it is great. jason: and its chef one some accolades of her own. >> exactly,ines, one best female chef in the world, so there are a lot of reasons to go. jason: and we have to mention noma because it made its way onto the list at number two. >> if you want some scandal, you have to talk about noma, which one -- which some say should not be on the list because it has won a number of times.

but they have a new location and a new format and is at number two. that's only to talk about. carol: thank you as always. "bloomberg businessweek" is available on newsstands now. jason: also online and through our mobile app. what is your must-read? carol: i like the story about jacob kingston out there in utah. he is polygamists, allegedly tapped into biofuel credits. so unraveling that story, that was a interesting read. jason: i loved austin's, he delivers with such enthusiasm. and if you go to the story online and in the magazine, you also learn it is a personal story for him. not just because he became a detective, but bonded with his dad a little bit. carol: a very sweet moment. jason: check out our daily

business week podcast on itunes, soundcloud, or bloomberg.com. carol: more bloomberg television starts now. ♪

♪ emily: this is the "best of bloomberg technology," where we bring you all of our top interviews from this week in tech. coming up, shots have been fired between the u.s. and china in the global trade war. the tech sector in the crossfire. who is poised to win and lose? plus, facebook is putting together an "almost supreme court." the company's new content oversight board will review controversial decisions about what goes up and what should must come down. cyber stri