Office of Criminal Investigation 2002
Counterfeit Similac Infant Formula
Numerous Consumer Complaints Lead to Discovery of Counterfeit Infant Formula
In February 1995, OCI initiated an investigation into the counterfeiting of Similac brand infant formula after FDA's San Francisco District Office and Ross Products received numerous consumer complaints. Ross Products Division is the maker of Similac brand infant formula. Ross was able to examine product being returned by some of the complainants and immediately determined the Similac in question was actually counterfeit. All of the counterfeit Similac was isolated to Safeway stores in the San Francisco California Bay area. An investigation by OCI revealed the counterfeit Similac had been purchased by Safeway through a secondary grocery wholesaler in Palm Springs, California, who had purchased the counterfeit Similac from Mohamad Mostafa Wholesale in Orange County, California.
The OCI investigation revealed that Mohamad Mostafa, the owner and operator of Mohamad Mostafa Wholesale, was an infant formula diverter who hired Ivy Ong to help him procure items that Mostafa would need to produce the counterfeit product. Through Ong, Mostafa was able to obtain cans, scoops, can sealers, and an ink jet printer that was used for printing lot numbers on the bottom of the cans.
In addition, Ong was able to find a source to supply a generic powdered infant formula for Mostafa. Mostafa entered into a one million dollar contract with this source for 500,000 pounds of generic powdered infant formula. Mostafa told Ong that the infant formula was going to be exported to the Middle East.
Mostafa even had several hundred labels printed in Arabic as part of his cover story and scheme and while he had 50,000 counterfeit Similac labels printed by a printer in Maryland. Mostafa was able to get an initial shipment of 8,000 pounds of the powdered infant formula delivered to a warehouse in Santa Ana, California. There he had day laborers package it into cans for distribution. Had this initial contract been fulfilled, Mostafa would have realized illegal proceeds and profits in excess of $4.3 million dollars. OCI was able halt this counterfeiting operation as an additional 38,000 pounds of the formula was being readied for delivery to Mostafa.
Following the execution of numerous search warrants served by the OCI, Ong was arrested in February 1995. In August 1995, Ong was convicted of 3 counts of Title 21 U.S.C. § 331(k) Misbranding a Food after Shipment in Interstate Commerce. In August 2000, Ong was sentenced in federal court to four months home detention followed by one year supervised release.
An arrest warrant was issued for Mostafa who fled the United States and remained a fugitive for six years. Investigation and information regarding Mostafa's whereabouts surfaced in Australia, Jordan, South Korea and Malaysia. Finally in June 2000, a Grand Jury in Santa Ana, California, returned an indictment charging Mohamad Mostafa with 1 count of Title 18 U.S.C. § 371 Conspiracy; 1 count of Title 21 U.S.C. § 331 (k) Misbranding Food while Held for Sale after Shipment in Interstate Commerce; and 2 counts of Title 18 U.S.C. § 2320 Trafficking in Counterfeit Goods.
Mostafa remained in fugitive status until October 2001, when he was arrested following the events of September 11, 2001. The Royal Canadian Mounted Police took Mostafa into custody at Fort McMurray, Alberta, Canada, on Canadian immigration violations. Mostafa waived extradition and was brought to the United States in March 2002.
In August 2002, after a three day bench trial, a U.S. District Court Judge, Central District of California, Santa Ana, California, found Mohamad Mostafa guilty of all four counts related to the June 2000 indictment. On December 16, 2002, Mostafa was sentenced to 3 years and 8 months incarceration followed by 3 years probation.
Misbranded and Adulterated Crabmeat
OCI/Alabama Depart. Of Health Discover Defendant Processing Crabs in Back Yard
OCI initiated an investigation which involved the misbranding and adulteration of crabmeat that was being processed in the backyard of Cuc Nguyen's home in Boothville, Louisiana. During the course of this investigation, OCI learned that Chi Huynh, who was operating Rose's Seafood, New Orleans, Louisiana, was transporting misbranded and adulterated crabmeat from Boothville, Louisiana, to Bayou La Batre, Alabama.
Based on this information, OCI along with the Alabama Department of Public Health interviewed Huynh. Huynh admitted to transporting approximately 2,000 pounds of misbranded and adulterated crabmeat from Boothville, Louisiana, to several crab processing plants in and around Mobile, Alabama. This crabmeat was produced in the backyard of Nguyen's home in Boothville, Louisiana.
Based on the information from Huynh, OCI investigators, together with the Louisiana Department of Fish and Wildlife, proceeded to Nguyen's home. Upon their arrival at Nguyen's home, the Department of Fish and Wildlife interviewed Nguyen who admitted to processing crabs in her backyard. Based on her admission, the Fish and Wildlife obtained consent to search that resulted in the seizure of approximately 500 pounds of processed crabmeat. The crabmeat was in plastic bags along with plastic cups labeled D&Q Crab Company, Biloxi, Mississippi.
During the course of this investigation, investigators determined that D&Q Crab Company was formerly a certified crab processing plant in Biloxi, Mississippi. However, the plant was closed months before Nguyen became involved in processing crabs.
On May 22, 2000, Huynh appeared in U.S. District Court, Southern District of Alabama, Mobile, Alabama, and was convicted of 1 count Information for violating 21 U.S.C. § Section 331(a). On November 22, 2001, Nguyen was charged with 2 counts of 21 U.S.C. § 331(a). Based on this filing, a summons was issued for Nguyen to appear for her initial appearance. On January 24, 2002, Cuc Nguyen appeared before the U.S. Magistrate, Eastern District of Louisiana, New Orleans, Louisiana, and was convicted of 21 U.S.C. § 331(a).
Meat Products From Korea Found In Vegetable Dumplings
FDA, USDA/OIG Investigation Result in Conviction for Interstate Distribution
The U.S. Department of Agriculture (USDA), Office of the Inspector General (OIG) advised OCI that a firm, the Rhee Brothers, Inc., a Korean product importer and distributor located in Columbia, Maryland, was importing vegetable dumplings, which actually contained meat. USDA tested the dumplings and confirmed the presence of meat. Meat products from Korea are prohibited from importation into the U.S. based on an ongoing embargo.
Information obtained from employee interviews suggested that Rhee Brothers intentionally shipped the meat dumplings using false labels to prevent detection by import officials. The U.S. Customs Service (USCS) determined that the meat dumplings were falsely invoiced when the product made entry into the U.S.
On June 17, 2002, Rhee Brothers, Inc., appeared before U.S. Magistrate Judge Paul Grim, District of Maryland, and was convicted of a one count misdemeanor Information charging the company with 21 U.S.C. §§ 331(a), 333(a)(1), and 343(a)(1), Unlawfully causing the interstate distribution of misbranded food.
Rhee Brothers, Inc., was sentenced the same day and fined $100,000.00. This was a joint investigation involving OCI, USDA OIG, USCS, and the FDA's Baltimore District Office, Dundalk Resident Post.
Dietary Supplements with Substitute Ingredients
This investigation concerns the allegation that Jack Watkins, President, Sharon Gross, Chief Financial Officer, and Lyndon Dellis, Operation Manager of CAP TAB conspired and knowingly substituted lower price ingredients in lieu of the ingredients listed on the label of their dietary supplements (encapsulated vegetable powders). This substitution caused the products to be misbranded (mislabeled), and adulterated (substitution of ingredients). Further investigation revealed that CAP TAB, Inc., and its officers, forged organic certifications and an insurance certificate. These forged documents were submitted to various customers. Gross and Dellis were previously sentenced in 2002.
On January 5, 1999, the Federal Grand Jury, Southern District of California, indicted CAP TAB Nutritional Formulating, and Manufacturing, Inc., Jack Watkins, Sharon Gross, and Lyndon Dellis for nineteen criminal violations.
On June 28, 2002, the Assistant U.S. Attorney Pierson filed a superceding information that charged Watkins and CAP TAB with three counts of 21 U.S.C. § 331(a) and 333(a)(1) Misbranding and 18 U.S.C. § 2 Aiding and Abetting.
On June 28, 2002, Watkins was convicted of one count of 21 U.S.C. § 331(a) and 333(a)(1), Introduction into Interstate Commerce of a Misbranded Food. On this same date, the corporation was convicted of three counts of 21 U.S.C. § 331(a) and 333(a)(1), Introduction into Interstate Commerce of a Misbranded Food.
Caviar Smuggling Scheme
Caviar Labeled as "Atlantic Lumpfish Roe" Seized
This investigation began after Victor Tsimbal, a Russian national, offered to sell sturgeon caviar with false labels stating that the contents were "Atlantic Lumpfish Roe" an unprotected species. A search warrant was executed at Tsimbal's business and more than $500,000 worth of caviar was seized along with the false labels. Tsimbal admitted that the lumpfish labels were part of an overall scheme to continue to use false documents to smuggle caviar into the United States after a number of couriers had been arrested.
Tsimbal admitted to using false documents to smuggle more Beluga caviar from Russia into the United States via Poland in 1999 than the entire Russian export quota for the year, according to a detailed factual statement filed in court.
Tsimbal orchestrated a conspiracy in which smugglers were paid approximately $500 for each trip and were provided airline tickets, pre packed luggage filled with black market caviar and apartment and hotel rooms in Europe and Miami, according to papers filed in court. Tsimbal used bank accounts in Europe to launder the proceeds of the wildlife smuggling scheme. Upon conviction, Tsimbal also admitted that he encouraged an employee to lie to the grand jury.
On November 7, 2002, Tsimbal was sentenced to 41 months incarceration and 2 years of supervised release as the result of his involvement in a far reaching wildlife smuggling conspiracy. In this conspiracy, Tsimbal paid couriers to bring suitcases filled with caviar into the United States after new international restrictions were announced in 1998 to protect sturgeon. Tsimbal, 42, at the time of the offenses, was the president and owner of Beluga Caviar, Inc., located in North Miami Beach, Florida.
Tsimbal was sentenced by U.S. District Court Judge Federico A. Moreno after being convicted of 18 U.S.C. § 371 B Conspiracy, 18 U.S.C. § 545 B Smuggling, and 18 U.S.C. § 1956 - Money Laundering. Tsimbal also forfeited $36,000 found in his possession upon his arrest at Miami International Airport. Caviar valuing approximately $860,000 was also seized and forfeited.
Foreign Crabmeat Promoted as Domestic
This investigation involved the misbranding and adulteration of crabmeat that was being processed by several crab processing plants in and around Mobile, Alabama. On March 9, 1998, a Consumer Safety Officer/Supervisor in the FDA's Nashville District Office, Nashville, Tennessee, reported that allegations had surfaced in the Mobile, Alabama area that Petros Greventis, SeaQuest Crab Co., was conspiring with Dan Viravong, Grand Bay Seafood, Inc., to mix imported crabmeat with domestic crabmeat. He stated the allegations further indicated that these companies were selling and/or distributing this crabmeat as domestic crabmeat, a product of the U.S.
During the course of this investigation, investigators determined that Dan Viravong, Grand Bay Seafood and Petros Grevenitis, SeaQuest Crab Co., were purchasing foreign crabmeat from a firm in Florida, and mixing the foreign crabmeat with a small amount of domestic and selling the entire amount as domestic fresh crabmeat.
On September 5, 2001, Viravong appeared before a U.S. Magistrate, Southern District of Alabama, Mobile, Alabama. During this appearance, Viravong was convicted of a two count Information for violating 21 U.S.C. §§ 331(a) and 331(c).
On November 20, 2001, Viravong appeared before the U.S. Magistrate, Southern District of Alabama, Mobile, Alabama, and was sentenced to 2 years supervised probation and ordered to pay a $15,000 fine.
On January 29, 2002, Grevenitis appeared before the U.S. Magistrate, Southern District of Alabama, Mobile, Alabama. During this appearance, Greventis was convicted of a one count Information for violating 21 U.S.C. § 331(k).
On April 15, 2002, Grevenitis was sentenced to 2 years probation and a $15,000 fine. Grevenitis, and/or any company or business owned by Grevenitis was ordered not to be involved with any processed crabmeat in any form during his probation term.