2 sentenced for roles in baby formula ring
One worked as recruiter for the black market here, while other was on receiving end in N.J.
With powdered baby formula retailing for $25 at supermarkets, some cash-strapped parents resort to buying it for discount prices at flea markets, Craigslist or the corner store.
Retailers say a black market pipeline has existed for years to supply those bargain shoppers with name-brand formula.
Two members of one such baby formula ring were sentenced Thursday in Houston federal court for their roles in a multimillion-dollar operation that ran from Houston to Bayonne, N.J., and stocked bodegas in New York City. One defendant worked at the beginning of the supply chain in Houston, recruiting a team of shoplifters, while the other was on the receiving end, running a New Jersey wholesale business that moved the hot formula to momand-pop stores.
Abel Garcia Tepozotlan, 53, a Mexican national who is undocumented, was sentenced to a year and a half in federal prison. After completing his term, U.S. District Judge Keith P. Ellison said, he should expect to be deported. He pleaded guilty to conspiracy to transport stolen merchandise.
Guilty plea
Ellison also sentenced Ahmad Manzoor, 73, a U.S. citizen who emigrated from Pakistan, to five years of federal probation and ordered him to pay $7,500 in restitution. He pleaded guilty to conspiracy to transport stolen merchandise through interstate commerce.
Assistant U.S. Attorney Joseph C. Magliolo Jr. told the judge both men had cooperated with police, helping them track down other participants in the ring. Magliolo said the operation likely involved millions of dollars of merchandise, but more restitution cannot be recovered because authorities can’t identify the stores from which the formula was stolen.
Tepozotlan, who also went by Eugenio Ortiz Contreras, admitted he organized a crew of shoplifters, known as “boosters,” to empty shelves of formula at a variety of Wal-Marts, H-E-Bs and other stores in the Houston area between 2012 and 2013.
Tepozotlan sold the cans — with a retail value of over $2 million — to a “fence,” or clandestine supplier, in Houston. Magliolo indicated that suppliers like that make about $600,000 a year. The supplier put the odd assortment of formula on pallets and shipped it to M&Z Candy, Manzoor’s wholesale business in New Jersey, and to other wholesalers, who comprised a second tier of fences and resold the cans.
A third defendant, Wassim Hassan Elsaleh, pleaded guilty to the conspiracy to ship stolen merchandise across the country. He admitted to being the fence in Houston. His sentencing is May 11.
While the baby food racket is not new, attorneys familiar with these operations said individual thefts rarely add up to organizedcrime prosecutions — for one simple reason. If security personnel catch a booster shoplifting a few cans of baby formula, they might cut the person a break, and they’re unlikely to conclude the culprit is linked to an interstate racket that makes millions of dollars.
In addition, formula has a high price point and is fairly easy to move, said Joe Williams, a consultant and former vice president for the Texas Retailers Association. Supermarkets lose about $2 million per month statewide in stolen formula alone, he said.
Illegal to resell
Reselling stolen formula, however, is not as easy as it used to be.
In 2003, a task force of retailers, manufacturers and law enforcement agencies crafted an Organized Retail Crime law making it illegal to resell products intended for young children at flea markets in Texas.
Boosters still steal formula here — it’s among the top stolen items, along with razors and beauty products — but the fences sell it out of state, Williams said. The vast majority of stolen formula is used to feed babies, though law enforcement officials have told retailers about 3 percent is used to cut such drugs as heroin, methamphetamine or cocaine.