Baby Formula Fraud Leads To Prison Time For South FL Residents: DOJ

MIAMI, FL — Three South Florida residents were sentenced to 18 years in federal prison for orchestrating an elaborate fraud scheme that cheated United States manufacturers of infant formula, eye-care products and other FDA-regulated items out of more than $100 million, according to a Department of Justice news release.

Between 2013 and 2018, Johnny Grobman, Raoul Doekhie and Sherida Nabi secured deep price discounts for infant formula and other items by lying to the manufacturers of these products.

Doekhie, 53, and Nabi, 57, who are married, told the companies that they were purchasing the products to ship overseas to Suriname, often claiming they held government procurement contracts there.

The couple didn’t have any government contracts in connection with Suriname, though, and never intended to export the products, the DOJ said. Instead, Grobman, 48, and others sold the products in the U.S. for millions of dollars, which the three defendants later split among themselves.

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The defendants hid their activity from the manufacturers in three ways. In one way, they sent “dummy” shipments abroad, the DOJ said. These shipments didn’t contain the products purchased from the manufacturers, but they did generate documentation to prove that an export occurred.

The second method was to “U-turn” the products, the agency said. The products were shipped abroad, generating export documentation. As soon as they arrived overseas, they were shipped back to the U.S. Their third method was to create fraudulent export shipping documentation showing that the products were exported when they actually never left the country.

Following a 13-day trial, on Feb. 6, 2020, a federal jury found Grobman, Doekhie and Nabi guilty of conspiring to commit wire fraud, wire fraud, money laundering, conspiring to obtain pre-retail medical products worth $5,000 or more by fraud or deception, theft of pre-retail medical products, and smuggling goods from the United States.

On April 25, 2022, the court entered forfeiture money judgments for the amounts of the criminal proceeds traceable to the offenses of conviction, the DOJ said. These amounts are $87,187,374.83 against Grobman and $115,699,273.61 jointly against the Defendants Doekhie and Nabi.

Their prison sentences were announced Thursday by U.S. District Judge Roy K. Altman in Miami.

“(Their sentencing) should serve as a reminder that those who fraudulently divert consumer products for profit will be held accountable for their actions,” said Special Agent in Charge Justin C. Fielder, FDA Office of Criminal Investigations Miami Field Office. “We will continue to investigate and bring to justice those who engage in fraudulent schemes involving FDA-regulated products.”

This case is the second large-scale prosecution by the South Florida U.S. Attorney’s Office and FDA-OCI targeting fraud schemes related to the so-called “gray market,” which involves the diversion and re-sale of certain goods that were not intended for distribution in the U.S., the DOJ said.