Wholesaler sued for fake condoms

Wholesaler sued for fake condoms

New Berlin grocery company also target of FBI inquiry into stolen baby formula</span>
By CARY SPIVAK

Already caught up in an FBI investigation of a scheme to sell stolen infant formula, a New Berlin grocery wholesaler is also in the middle of a complex lawsuit involving the sale and distribution of millions of counterfeit condoms.

Kaloti Enterprises has steadfastly denied dealing in stolen infant formula. But it admits buying and selling a shipment of counterfeit Trojan condoms as well as a load of fake Duracell batteries.

The company's defense: It didn't know the products were counterfeit.

"Kaloti Wholesale Inc. bought a load of condoms from a company in New York that it has dealt with for many different products over the last few years and had never had any problem," Ahmed Quereshi, attorney for Kaloti, said in an interview last week.

Only after Kaloti sold the condoms and batteries did it discover they were not authentic, Quereshi said.

"Condoms and batteries are not top 100 items," Quereshi said, explaining that the company focuses its business on the top 100 products sold in grocery stores - goods such as cereal and detergent. But, he explained, Isaac Kaloti, a part owner, "got a good price" for the condoms and batteries, "and the rest is history."

Geoffrey Potter, lawyer for Church & Dwight Co., Trojan's parent company, was unimpressed with Quereshi's defense.

"I do a lot of these cases, and it's very rare for somebody to say, ' . . . You caught me,' " Potter said.

String of incidents

Invoices filed with the U.S. District Court in Brooklyn, N.Y., show that in January 2007, Kaloti's supplier, Alex Trading Inc., paid a Canadian company $56,000 for 6,400 cases of Trojan condoms and $18,400 for 400 cases of Duracell batteries. The products were immediately sold to Kaloti for an undisclosed amount, and Kaloti then sold them to a third wholesaler, which did not pay for the goods because it discovered they were fraudulent.

Quereshi said that none of the nearly 250,000 condoms made it to market and that this was the only time the firm has been involved in the condom business. Kaloti has agreed to a court injunction not to deal condoms, he said.

The condom lawsuit - an action filed last year in New York against some 40 companies and individuals - was one in a string of embarrassing incidents to hit the wholesaler. The other defendants - none, with the exception of Alex Trading, related to Kaloti - are alleged to have bought and sold more than a million other counterfeit Trojans. Church & Dwight is seeking $10 million from every defendant.

Kaloti was launched 20 years ago with the purchase of one truck by brothers Rassem, Marvin and Isaac Kaloti.

Today, Kaloti Enterprises posts more than $100 million in sales.

Last February, the FBI raided Kaloti's warehouse and seized more than 80,000 cans of infant formula that were believed to have been stolen. Alex Trading, the New York company that sold the counterfeit condoms and batteries to Kaloti, was also the source of some of the infant formula that was seized, according to court records and Kaloti's attorneys.

Alex Trading also denies knowing the condoms and batteries were bogus.

Assistant U.S. Attorney Scott Campbell said in a hearing in Milwaukee last week that criminal charges were expected to be filed in the formula case, though he did not say who would be charged.

Kaloti's president, Rassem Kaloti, declined to be interviewed for this story, calling the situation "a goofy thing" and referring all questions to his lawyers.

The condom lawsuit was filed under seal, an action that allowed Church & Dwight to secretly obtain a court order to seize Kaloti's records on the condom transactions. Local police accompanied Church & Dwight's investigators last Feb. 14 when they made a surprise visit to Kaloti's office to confiscate the records.

Having police on the scene proved fortuitous for federal authorities in the formula case, because while at the Kaloti offices, a New Berlin police sergeant spotted evidence that bolstered the FBI's application for a search warrant in that case.

Potter, the Church & Dwight lawyer, said about four million counterfeit Trojans have been confiscated by law enforcement officials and by his client, a firm best known as the maker of Arm & Hammer baking soda. He said four people have been indicted in connection with the fake Trojans.

Quereshi stressed that with the exception of Alex Trading, Kaloti has not been involved with any of the other players named in the condom litigation.

Potter said he was confident that all the illicit condoms, which he said were likely made in China, have been seized.

While many brand-name products are counterfeited, Potter said, "I must tell you that counterfeiting condoms is pretty distasteful."

Church & Dwight said consumers who have questions or think they may have bought counterfeit condoms can contact its consumer affairs department at (800) 575-2925.



\\\\\ A Note From CondomDepot.com On This Serious Issue //////

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Many of the companies that sell these counterfeit condoms are convenience stores, Ebay Stores and Various Online Retailers.

CondomDepot.com is an authorized MASTER Distributor of Condoms and other Safe Sex Products. If you are concerned that a product you purchased elsewhere may be counterfeit, you may contact John Fidi Vice President of CondomDepot.com whose experience in this area can be of assistance.