Is black-market baby formula financing terror?

Of course, just because the money goes to the Middle East doesn't mean it's going to terrorists, some groups point out.

"To say that - 'Oh, there's a chance that these funds went to fund terrorism because there are terrorist groups active in this country' - is irresponsible," says Rabia Ahmed of the Council on American-Islamic Relations in Washington. "We've seen many cases like this, where a prominent Muslim leader has been charged with horrible things, but it ends up being some kind of immigration technicality."

First identified in the early 1980s, organized retail theft is a key feature of baby-formula theft. Teams of professional shoplifters may travel 200 to 300 miles over a week or more, Miller says. Typically each has a shoplifting list of specific brands of infant formula, medications, shaving products, and batteries given them by their fences.

Shoplifting teams may involve five or six women or young men. Typically they disperse into a store in pairs or separately, posting lookouts to watch for store security. Then a separate team loads carts of formula and goes straight to the exit where a vehicle is waiting, investigators say.

Formula is a favorite of theft rings mostly because of the steady demand, high cost, and large profit margins. Its price is also supported by the US Department of Agriculture's $4.9 billion Women, Infants and Children (WIC) program.

To battle this trend, Texas authorities mandated that retailers participating in WIC must purchase their infant formula from approved WIC wholesalers or the manufacturers themselves. US Rep. John Carter (R) of Texas sponsored legislation included in the WIC Reauthorization Act of 2004 that aims to eliminate the market for stolen infant formula with a similar mandate. But those measures have not been implemented in most states.

As of May, the USDA has mandated that stores nationwide use a licensed wholesaler, say Oklahoma officials, where a recent burst of formula shoplifting has drawn attention even though Oklahoma is one of the few states that require stores to buy from a licensed wholesaler.

A key problem is that many local law enforcement officers view baby- formula theft as petty shoplifting - and shoplifting laws tend to be soft, experts say. Few shoplifters go to jail.

But there are signs that that attitude is changing. The Retail Industry Leaders Association in March testified before Congress, asking for tougher laws to crack down on organized shoplifting. Major retailers like Wal-Mart, Kroger, Walgreens, and others reported to be losing millions on shoplifted baby-formula have internal teams focused on the problem.

Although the FBI has also deployed teams nationwide to crack down on organized retail theft, some investigators say the problem is growing - and moving onto the Internet. On Monday, the online auction house eBay carried more than 1,000 offers of Enfamil baby formula. "This problem is getting worse, no question," Miller says. "It is in every state in the union, and neither law enforcement nor the retailers have their arms around it."

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