Trader guilty in welfare scam - East Valley Tribune: News

Trader guilty in welfare scam

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Posted: Wednesday, April 27, 2005 6:19 am | Updated: 7:24 am, Fri Oct 7, 2011.

A Mesa businessman was convicted in federal court Tuesday of masterminding a scheme to steal baby formula, resell it to a government welfare program and then send millions of dollars in profits to the Middle East.

Samih Fadl Jamal, owner of Tempe-based Jamal Trading Co., faces up to 20 years in prison in the $11 million conspiracy that was first uncovered by counterterrorism agents in 2003, according to the U.S. Attorney’s Office.

Twenty-seven people — including nine from the East Valley — have been indicted in the scheme, and 17 have pleaded guilty. A number of those people, including Jamal’s two brothers, have already been deported back to the Middle East.

Jamal was convicted on 20 federal charges, including one count of interstate transportation of stolen property, 11 counts of structuring financial transactions, one count of money laundering and two counts of interstate receipt of stolen property. Three other men were also convicted in the conspiracy.

Of the $11 million earned in the scheme, several million were funneled through Middle Eastern banks, said U.S. Attorney for Arizona Paul Charlton.

Authorities would not say if Jamal or the funds were linked to terrorist activity.

"We have tracked some of that money going back to the Middle East, but we’ve been unable to track all of it," Charlton said.

Jamal, who was born in Lebanon, would recruit young, Middle Eastern men — many of them illegal immigrants.

From 1997 to 2003, they would steal the formula, then pass it on to businesses such as the Jamal Trading Co. Those businesses would repackage and broker it to other businesses, which would sell it around the country, a search warrant affidavit states.

Many of the businesses were authorized to participate in the federal Women, Infants and Children program, which provides food and services to low-income women and their children.

"The brazenness of his activities is what led to its initial success and what may have led to it’s eventual downfall," Charlton said.

The FBI, Tempe police and Phoenix police began investigating Jamal in 2001 after receiving a tip from an informant.

Authorities subpoenaed bank and business records, tapped Jamal’s telephone, set up video surveillance of the business and used undercover agents to sell truckloads of the formula, according to the affidavit.

The prosecutor said Jamal was convicted in federal court in Kentucky in a similar baby formula scheme from 1993-98.

Jamal will be sentenced Sept. 12.

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