By Sahar Adatia and Jimmy Singh


Last week, NSW Police arrested the leader of a shoplifting syndicate alleged to have stolen more than $250,000 worth of baby formula from supermarket shelves around Australia and then vending them at a significantly higher price on the black market.

Lie Ke, 48, the accused kingpin of the intricate theft ring, allegedly stole 4000 tins of baby formula.

At around 10pm on Wednesday night, Ke was caught “red-handed” at a cark park in Carlingford in Sydney’s north-west, where she attempted to offload 20 of those tins to a buyer, according to a NSW Police spokeswoman.

Ke, and a 53-year-old man also believed to be involved, were then taken to Ryde Police Station where they were questioned.

Following their arrest, investigators implemented search warrants in two of Ke’s Carlingford homes where they discovered more stolen goods, including large amounts of vitamins and electric toothbrushes – all believed to be in high demand in China.

It is understood that police had kept their eye on Ke for several months. Following this, detectives from the State Crime Command’s Robbery and Serious Crime Squad were tipped off about the elaborate theft by retailers.

Police believe Ke had at least 12 working alongside her to source the items.

Detective Superintendent Danny Doherty spoke to Channel 9 and commented on the strange nature of the case involving such a large amount of stolen baby formula.

“It’s one of those unusual cases,” he said.

“We hear about the thefts as isolated incidents but this time we’ve focused on the syndicate as a receiving group.”

The demand for Australian baby formula in China

In Australia, the cost for a tin of baby formula retails roughly between $20 and $35. However, in China, the cost is significantly higher with the price hiked-up to at least more than double.

The increasing popularity of the Australian product in China and overseas stems from parents being cautious of their local brands following health scares in recent years, which caused desperation of Chinese parents to locate safe products. Their belief is that Australian baby formula is the best.

China is currently facing health issues with an ageing population, increasing obesity, and environment problems, says Professor John Knight from the George Institute for Global Health.

The health scares in recent years that China are facing include counterfeit products and fake brand products that are being sold in the Country creating significant health concerns.

One of Australia’s top 3 biggest markets for pharmaceutical products including baby formula and vitamins is China. A Sydney University report reveals that Australia exported over $300 million worth of these products to China in 2013-2014.

As demand for the Australian baby formula continues to grow, many Chinese families in fact hire personal shoppers living locally to purchase tins and ship them overseas.

These buyers, known as “Daigou”, charge up to as much as a hefty $200 per tin to desperate buyers.

China has attempted to stop the unregulated importing of these products to save the local businesses by imposing import taxes. Unfortunately, the import levy hasn’t been very effective because people avoid the levy by sending the products by post.

With the product’s popularity only growing, supermarket giants Coles and Woolworths have imposed a two tin maximum buy limit in numerous stores as an attempt to avoid baby formula being bought in bulk for export.

Other supermarkets have been seen to keep their formula products behind the counter to prevent theft.

A high number of Chinese international students have taken advantage of the high demand of Australian baby formula products by selling them through online stores such as WeChat- raking in up to $3,000 in a good week. It’s become a lucrative alternative to a part-time job for Chinese international students in Australia.

The baby formula black market has affected Australian homes and supermarkets such as Coles and Woolworths.

What Turns This Into a Black Market?

While purchasing and selling these products is not illegal. What turns it into an illegal activity is if these products are stolen, or where they are legally purchased, but sold through unregistered businesses and/or without paying taxes. Either of those circumstances cause it to be categorised as a black market.

How Easy Is It to Do This?

To set up an online shop is extremely simple and quick.

WeChat is a Chinese messaging, social media and mobile payment app that can be downloaded within seconds.

The WeChat app is similar to Facebook. It has a news feed where you can post images, video’s and status updates. Ads can also be posted for products you wish to sell.

It’s easy to create and open a WeChat account which, once created, will then allow you to connect directly to your bank account so that you can send and receive money online by simply clicking a button on the app- this avoids the trouble of separately going onto your banking app.

Charges Against the Accused Mastermind

Ke is accused of acting as the mastermind of a broader criminal group operating throughout Sydney, Newcastle and the Central Coast.

Police allege that Ke returned significant profits from selling the pilfered baby formula at an inflated price on the black market, with Mr Doherty commenting that “the criminal network has on-sold this product and has made a fair profit out of it.”

Ke has since been charged with an extensive record of serious offences. These include knowingly directing the activities of a criminal group and knowingly participating in a criminal group to assist crime.

Ke is on strict conditional bail and will appear at Burwood Local Court on September 17. The 53-year-old man arrested with her was released with further inquiries imminent.

The law on Participating in a Criminal Group

In NSW, the offence of participating in a criminal group is reflected in section 93T of the Crimes Act 1900 (NSW).

A penalty of up to 5 years imprisonment can be imposed to anyone who:

  • Participates in a criminal group; and
  • Knew or at least ought to have known that it’s a criminal group; and
  • Knew or at least ought to have known that his/her participation in the group contributes to the criminal activity

There is a harsher penalty of up to 10 years imprisonment if:

  • You participate in a criminal group by directing any activity of the group, and
  • You knew that it’s a criminal group, and
  • Where you had at least realised the possibility that your participation contributes to the criminal activity at the time.

A criminal group is where there is a group of at least three people who have a goal to obtain a benefit by committing a ‘serious indictable offence’. It can include the goal of obtaining a benefit by doing something outside NSW, which would be considered a ‘serious indictable offence’ if it was done within NSW.

A serious indictable offence is any crime that carries a maximum penalty of imprisonment of at least 5 years or more.

The court can look into the evidence and make inferences as to whether you knew or at least ought to have known at the time (if there is a reasonable basis for it) that what you were participating in was a criminal group.

In the same way, the court can make an inference that you also knew or should have known that your participation in the criminal group contributed to the criminal activity.

Possible defences to this can include an argument of an honest and reasonable mistake of fact defence. You will be not guilty where you honestly didn’t know that your involvement was with a criminal group if your honest belief was based on a set of circumstances where it was reasonable for you to have held that belief.

Similarly, you will be not guilty for participating in a criminal group if you honestly didn’t know that your participation in the group contributes to the criminal activity if your belief was honestly held in a set of circumstances that it would be reasonable for you to have held that belief.

Stealing baby formula from supermarket shelves is a criminal offence referred to as larceny charges in NSW under section 117 of the Crimes Act 1900 (NSW). It’s considered a serious indictable offence because it carries a term of imprisonment of up to 5 years.

Legally purchasing baby formulas in Australia and selling them at a profit without paying taxes in Australia, especially through an unregistered business, is also a serious indictable offence and can result in tax evasion and fraud charges. Tax evasion and tax fraud charges can have penalties of imprisonment of up to 10 years.

Some common tax evasion charges include:

  • Obtain Property or Financial Advantage by Deception under section 192E of the Crimes Act (NSW) which carries a term of imprisonment of up to 10 years. There are referred to as Obtain Benefit By Deception NSW
  • Obtaining Financial Advantage with Deception and with Dishonesty under 134.2(1) Criminal Code- obtain a financial advantage by deception. This carries a term of imprisonment of up to 10 years.
  • Conspiracy to Defraud under section 135.4(3) of the Commonwealth Criminal Code Act where dishonestly cause a loss to the Commonwealth. This also carries a maximum penalty of up to 10 years imprisonment.

Convicted of these tax evasion and fraud offences will result in a criminal record against your name which can have devastating consequences on getting a job and travel plans in the current and future.

The ATO recovers millions of dollars from people and companies in Australia who have evaded tax each year. It has even set up a hotline for people to dob in those suspected of tax evasion in Australia.

As a general rule, honesty is the best policy.

In the long run, paying taxes by complying with the law works out much cheaper than not declaring tax and getting caught out -which is just a matter of time given the sophisticated technologies the ATO utilises in collaboration with other agencies in and outside Australia.

Published on 30/08/2018

AUTHOR Criminal Defence Lawyers Australia

Criminal Defence Lawyers Australia are Leading Criminal Defence Lawyers, Delivering Exceptional Results in all Australian Courts.

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