re: How is this crime committed?

He would have to tap the line behind his neighbor's meter otherwise he would be taking off the main which would be harder to detect.

I saw a recent news item where a town is putting in digital water meters that can show the water company usage in real time. It can look for odd usage amounts that are usually a sign of leaks or theft and alert the customer right away instead of them being shocked by a monthly bill that shows 10X normal usage.