Baby-formula theft feeds black market

High-priced substitue often stolen or bought with WIC aid and resold

March 30, 2001|By KNIGHT RIDDER/TRIBUNE

CHICAGO - In the baby food aisle at the Dominick's supermarket in Elmhurst, Ill., small signs offer an apology: "Due to high theft, all powder formula is located in the pharmacy. When the pharmacy is closed, please ask at the service desk."

At superstores and grocery markets across the nation, shoplifters have been zeroing in on powdered baby formula, sometimes clearing shelves of dozens of cans at a time.

The thefts are the latest sign of a surprising black market in the innocent yet expensive white powder that comes packed in cans. The substitute for mother's milk is a favorite target for fraud, with government aid recipients trading it for cash.

Much of the stolen goods later appears on the shelves of small corner stores, where formula that legally costs as much as $13.50 a pound sells for a few bucks less.

The high price of formula and the ravenous market for it have attracted and enriched people from junkies and unethical grocers to young mothers on government assistance, police say. The illicit market also threatens the safety and nutrition of infants.

Some retailers have responded by removing powdered formula from open shelves. "It's one of the highest-ranked theft items in all the chains - it's a nationwide problem, particularly because it's a big-ticket item," said Wynona Redmond, a Dominick's spokeswoman.

State and federal authorities have discovered the link between shoplifting and the black market through investigations of fraud in the federal nutritional program for women, infants and children, or WIC. Most recipients use WIC coupons to buy food for themselves and their children. But others barter or sell the formula and other items they buy through WIC, or simply sell the coupons to storekeepers for cash.

Officials said it would be nearly impossible to quantify the amount of formula stolen from legitimate retailers in the nation, and several major retailers declined to put a value on their formula losses. Still, law enforcement officials say such theft is a significant concern.

"There's a big problem not just in the Chicago area but in New York, Detroit - all the major metropolitan areas," said Daniel Nikolic, an assistant Illinois attorney general who has prosecuted black-market formula retailers. "People have a big problem with infant formula just leaving their shelves."

The demand for formula seems inexhaustible. Most of the 4 million babies born annually in the United States are fed formula sometime during their first year, according to the Atlanta-based International Formula Council, a trade group that represents formula manufacturers.

And though many women and children meet the income requirements to receive WIC benefits, others who are slightly better off struggle to afford the powder. Some may turn to smaller neighborhood stores in search of a discount, and they may find one through black marketeers.

Across the country, federal investigators have been tracking a web of grocery stores and wholesalers who buy WIC-purchased formula for resale and sell stolen baby formula. A Cleveland grocer, his wife and an associate were indicted last year for committing more than $2 million in WIC fraud over six years.

Although most stolen formula is fed to babies, the fine white powder also is used to cut heroin and other injectable drugs, police and drug enforcement officials said.

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