Investigators' Reports

Counterfeit Baby Formula Lands Fugitive in Jail

By Linda Bren

After more than six years of living on the run from FDA investigators, Mohamad S. Mostafa may have thought he had escaped prosecution for selling counterfeit baby formula. But he was wrong. Agents from the FDA, with the help of the Royal Canadian Mounted Police, finally got their man.

Mostafa ran his grocery business--M&M Wholesale--out of an office in Stanton, Calif., with warehouses in nearby Santa Ana and Tustin. He made a few dollars selling some legitimate products, investigators say, but his cash cow was counterfeit infant formula.

Mostafa's illegal operation began when he hired an associate, Ivy Ong, to find a source of inexpensive bulk powdered infant formula. Ong complied, and in December 1994, Mostafa arranged to buy 500,000 pounds of the formula, marked "for export only," from a legitimate company. The formula could not be sold legally in the United States because it did not contain the correct levels of some nutrients required by federal law.

Selling the formula in the United States for about three times what he paid for it, Mostafa stood to net illegal profits in excess of $4 million, according to Jud Bohrer, special agent in charge of the Los Angeles field office of the FDA's Office of Criminal Investigations (OCI).

Mostafa did not export the formula. Instead, he hired laborers to pack the powder in cans similar in size and appearance to those used to package Similac--a higher quality infant formula made by Abbott Laboratories' Ross Products Division in Columbus, Ohio. Posing as a company representative of Ross Products, Mostafa ordered 50,000 labels bearing the registered trade name Similac from a printing company in Beltsville, Md. Mostafa's employees glued the labels onto the one-pound cans of illicit formula, according to investigators.

In January 1995, Mostafa sold more than 3,500 cases of the counterfeit formula to wholesale grocers in California. The formula eventually lined the shelves of retail stores throughout the state.

FDA agents were alerted to the scam in February 1995 after numerous parents who were familiar with the real Similac product complained to Ross Laboratories and to the FDA. The powdered product looked different and the enclosed measuring scoop was a different color than the one packed with the genuine Similac. No serious illnesses were reported, but some babies got upset stomachs and vomited after consuming the fake product, investigators say.

"Mostafa was in this country illegally, all the while engaging in this lucrative criminal activity that jeopardized the health and safety of thousands of infants," says Bohrer.

OCI agents in Los Angeles traced the fake formula to a grocery wholesaler in Palm Springs, Calif., who identified Mostafa as the seller. In February 1995, the agents located Mostafa's warehouses and secretly watched employees dismantling and loading canning and labeling equipment into a rented truck. Later, agents seized 38,000 pounds of counterfeit powdered formula, cans, and Similac labels from the truck, a warehouse, and a gold BMW belonging to a friend of Mostafa's. More than 6,000 cans of the counterfeit formula were also seized from California retail and wholesale outlets.

After hearing about the FDA seizure, Mostafa fled the country, according to testimony provided by Ong, who was charged as a co-conspirator. Ong was arrested in February 1995, and in August he pleaded guilty to three counts of misbranding a food. He was sentenced to four months of electronic home detention and one year of supervised release.

The Royal Canadian Mounted Police were on heightened alert following the terrorist attacks of Sept. 11, 2001, when they checked out the applications of several Middle Eastern men who had applied for asylum in Canada. Mostafa was one of the men. Mounties arrested Mostafa in Fort McMurray, Alberta, after they discovered that he had multiple identification cards and that a fugitive warrant had been issued for him in the United States. In October 2001, U.S. Marshals brought Mostafa back to California and jailed him in Santa Ana County until trial.

On Aug. 8, 2002, Mostafa was convicted of conspiracy, misbranding food shipped in interstate commerce, and two counts of trafficking in counterfeit goods. On Dec. 16, 2002, he was sentenced in U.S. District Court to 44 months in prison and three years supervised release.