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Financial Crimes
08/19/2008

7 charged in interstate transportation of stolen property conspiracy

MIAMI - Seven individuals have been indicted in a multi-million dollar conspiracy involving the interstate transportation of stolen property following a joint investigation by U.S. Immigration and Customs Enforcement (ICE), United States Attorney for the Southern District of Florida, Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS), and the Broward County Sheriff's Office (BCS).  The defendants are charged with buying and selling millions of dollars worth of stolen over-the-counter medications and health and beauty aids.

A federal grand jury sitting in Fort Lauderdale returned a nine-count indictment charging the defendants with conspiracy to transport stolen property, interstate transportation of stolen property, possession and receipt of stolen property and conspiracy to commit money laundering.

Law enforcement agencies in the tri-county area of Broward, Palm Beach, and Miami-Dade counties have been investigating the multi-billion dollar industry of organized retail theft.  In retail theft organizations, the term "boosters" is used to describe individuals who are professional shoplifters of retail merchandise. A booster shoplifts with the intent to resell the stolen goods. The term "fence" is used to describe an individual or group of individuals who purchase mixed quantities and brands of stolen products from the boosters. There can be multiple levels of fences: lower level fences obtain smaller amounts of stolen products from boosters, and higher level fences obtain larger amounts of stolen products usually from lower level fences. In this case, the defendants were buying and selling over-the-counter medications and health and beauty aids that had been stolen from retail stores including Walgreens, Target, CVS and Rite-Aid.

Agents were able to follow the stolen products from the boosters to first line fences who then sold them to higher level fences. The higher level fences then sold stolen over-the-counter medications and health and beauty aids to Pharmacare, which operated a warehouse that cleaned and packaged the merchandise and removed store markings and anti-theft devices that were on the merchandise.

Those charged include employees of Pharmacare, a wholesaler who often purchased bulk quantities of mixed and damaged stolen products from fences, and people who sold stolen products to Pharmacare.  They include Nasir Khan, aka David Khan, controller and operator of Pharmacare; Duane Schneider, owner of Pharmacare; Asif Khan, aka Jordan Khan, David Khan's brother and a warehouse manager at Pharmacare; Michael Spencer, David Khan's former brother-in-law; Edward Joseph Smith, owner/operator of EDS Wholesale; and James Edward Foy and Michael Todd Dagnen of Gastonia and Kings Mountain, North Carolina, respectively.

According to the indictment all seven defendants conspired to transport, receive and sell stolen property. Allegedly, they bought and sold approximately $7.9 million of stolen over the counter medications and health and beauty aids. If convicted on count one, the defendants face a statutory maximum sentence of five years in prison followed by three years of supervised release and a $250,000 fine.

Counts two, three, four, five and six charged all defendants with transporting in interstate commerce, the over-the-counter medications and health and beauty aids which had been stolen. If convicted on counts two through six the defendants face a statutory maximum of 10 years imprisonment, three years of supervised release and a $250,000 fine.

Counts seven and eight charged the defendants with possession and receipt of stolen merchandise. If convicted on these counts, the defendants will face a statutory maximum of 10 years imprisonment, three years of supervised release and a $250,000 fine.

Count nine charged defendants David Khan, Duane Schneider, Jordan Khan and Michael Spencer with a money laundering conspiracy. If convicted they face a statutory maximum of 20 years imprisonment, three years of supervised release and a $500,000 fine. In addition, the United States seeks forfeiture of $7,900,000.

R. Alexander Acosta, United States Attorney for the Southern District of Florida commended the investigative efforts of ICE, FBI, IRS and Broward Sheriff's Office. In addition, Mr. Acosta commended the efforts and support of Walgreens and Target, Anti-Retail Theft Divisions. This case is being handled by Assistant United States Attorney Laurence Bardfeld, and Trial Attorney Peter Frandsen from the Department of Justice, Fraud Section.

The case has been assigned to United States District Judge Donald Middlebrooks.