Feds bust stolen baby formula scheme
Milwaukee man in multi-million dollar conspiracy

Feb. 12, 2007 -- A Milwaukee man whose trafficking in stolen baby formula allegedly brought him millions of dollars now faces criminal charges and the forfeiture of his house, according to federal court records.

Abdulhakim Azzam, operator of the Penny Saver Food Market, 510 W. Vine St., bought stolen baby formula from fences in North Carolina and Georgia, shipped it to Wisconsin mostly through a West Allis trucking firm, and sold it at deeply discounted prices to wholesalers, according to an affidavit filed by FBI Special Agent Susan Blish.

Azzam faces charges of conspiring to ship and receive stolen goods. The government also is seeking to force Azzam to forfeit his house at 5431 S 23rd St., which he bought without a loan.

"Although Azzam does appear to receive some legitimate income from his ownership and employment at Penny Saver Food Market in Milwaukee, he does not receive the amount of money needed to make large asset purchases, such as a residence in Milwaukee for $208,000," Blish said.

Trafficking in baby formula is a recognized problem.

"The FBI has numerous ongoing national investigations which have identified retail theft groups, fences, wholesalers, and distributors operating nationwide who are involved in the theft and fencing of invant formula," Blish said. Azzam was targeted for investigation in 2002.

A cooperating defendant described to investigators how stolen formula networks work, according to the affidavit.

"Groups of women go to a store in a city and steal three to six cans of infant formula at a time, putting them in their purses or other items of clothing. They end up generally with 60 to 70 cans at the end of the day. Each case contains six cans."

The cooperating defendant paid the women $25 per case, less than half the wholesale price of formula, according to information in the affidavit. The cooperating defendant, in turn, "may have shipped up to 2,500 cases a week to Penny Saver, and that the price per case ranged from $35 to $55." That still is far less than the legitimate wholesale price.

The complaint alleges that Azzam and his nephew participated in the scheme.

"The financial investigation demonstrates that Azzam has received millions of dollars" for his illicit efforts, Blish said. Besides baby formula, Azzam also dealt in stolen over-the-counter drugs, according to the affidavit.

It is not unusual for baby formula to be sold on the secondary market, Blish said. In those instances, a purchaser buys directly from the manufacturer, then resells overstock to someone who may resell the product again. That was not what Azzam was doing.

"Simply put, legitimate product in not shipped in grocery bags with individual cans bearing retail store markings," Blish said.

Azzam, who has said he is an instructor at the Milwaukee Area Technical College and has received checks from MATC, had $84,920 in cash in his car when he was pulled over on a traffic stop in 2002, the affidavit said.

"Azzam personally withdrew over $14.6 million in cash from the Penny Saver (bank) account in 2000 through 2003 to keep the stolen infant formula scheme functioning by reinvesting in additional product," the affidavit said.

To read the criminal complaint, click here.

To read the forfeiture complaint, click here.

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