Joseph A. Reaves, The Arizona Republic
Forget about cocaine and heroin.
Stolen baby formula is apparently the way to go.
At least until Wednesday, when a terrorism task force of federal and state agents fanned out across the East Valley and Southern California to arrest 15 people accused of trafficking more than $22 million of stolen infant formula.
The arrests came after a 20-month investigation into a money-laundering operation that funneled funds to three Middle Eastern countries.
Authorities, however, avoided linking any of those arrested with terrorist activities.
“We want to make sure that the individuals who are charged in this case defend themselves on the counts they are charged with and not on speculation or hypotheticals,” said U.S. Attorney Paul K. Charlton, who announced the crackdown.
The 15 people arrested were among 27 indicted by a federal grand jury on charges ranging from interstate transportation of stolen property to conspiracy to commit money laundering. Warrants were issued for the other 12, several of whom are believed to be out of the country.
All but two of those indicted were men from the Middle East, mostly Iraqi, Jordanian and Lebanese natives who arrived in the United States legally. Some became naturalized citizens. Others overstayed student or visitor visas.
Maricopa County Attorney Rick Romley, who said his investigators began looking into the infant formula ring in 2001, also announced a 90-count indictment on state charges against 21 of the federal defendants.
All are accused of running a stolen baby-formula ring that was strikingly similar to others operating across the country.
Just last month, a federal grand jury in Texas indicted 11 people on felony charges they stole infant formula, repackaged it and sold it to wholesalers at huge profits. Authorities said some of the money from that operation went to banks in Jordan and Egypt, but they, too, avoided any suggestion that the ring was tied to terrorism or terrorist activities.
Investigators with the Joint Terrorism Task Force in Phoenix said the Valley operation made more than an $11 million profit fencing $22 million worth of stolen baby formula since 1997.
The ring leader of the operation was identified as Samih Jamal, 34, of Mesa, owner of the Tempe-based Jamal Trading Co., and several other businesses.
“Jamal Trading Company is part of a national network of businesses owned and operated by foreign nationals and/or naturalized citizens of Middle Eastern descent who are engaged in the trafficking of stolen infant formula and other goods,” said J. Swain Granieri, a detective with the Phoenix Police Department Organized Crime Bureau and a member of the Joint Terrorism Task Force.
Baby formula is particularly attractive and profitable largely because of a program enacted by Congress to provide supplemental food for low-income women and children. The Women, Infants and Children Program, better known as WIC, creates a steady market for baby formula.
“If you are able to obtain baby formula through theft or fraud at greatly reduced prices, then you know you always have a steady customer, in this case the government,” Charlton said.
The Valley-based infant-formula operation worked much the same as others across the country, relying on a three-tier hierarchy.
At the lowest level, thieves were recruited, and sometimes trained, to steal baby formula from stores, including Wal-Mart, Kmart, Target and Albertson’s. Thefts could be as trivial as shoplifting a single can or as brazen as hijacking a semi-trailer.
The second tier involved companies doing what Jamal Trading is accused of doing - gathering the formula, repackaging it and passing it on to wholesalers who make huge profits selling it to businesses throughout the United States.
Documents released by the Valley task force indicate that Jamal and his operation had business ties in at least 15 states, including some as far away Illinois and North Carolina.
The strongest ties alleged in the indictment were with a smaller company in Garden Grove, Calif., 35 miles southeast of Los Angeles. That company, RJ Grocery Trading, is owned by Jamal’s brother, Ramy Jamal, and an uncle, Mamoun al-Jamal, who also were indicted.
Undercover agents said two men working for Jamal Trading Company delivered 960 cases of stolen baby formula to RJ Grocery Trading on May 16, 2002. According the indictments, Ramy Jamal paid his brother’s company $33,720 for the formula that day.
The largest single transaction the indictments allege occurred in 2002 when undercover agents loaded a Wal-Mart semi-trailer with 1,440 cases of infant formula and met members of Jamal’s operation near Quartzite, Ariz. The agents made video and audio tape recordings of themselves telling Jamal’s associates the formula was stolen and could be had at a good price, which turned out to be $72,793.
According to investigators, Jamal transferred at least $64,500 from his operation to banks in the United Arab Emirates, Lebanon and Jordan. But the total could be far higher.
“Samih Jamal obtained more than $8 million in cash from Jamal Trading Company Bank accounts which is currently unaccounted for,” said Granieri.
Jamal was indicted on eight felony counts ranging from conspiracy to commit interstate transport of stolen property to making false statements and conspiring to commit money laundering.
The false statement allegations stem from his failure to disclose a 1999 felony conviction involving stolen baby formula in Kentucky.
He faces up to 20 years in prison and a $500,000 fine on the money laundering charge and five to 10 years in prison and fines of $250,000 on the other counts.