Baker Marquart Client Resource Center: COVID-19 Client Advisories

The litany of COVID-19-related criminal and regulatory violations range from the obvious to the most sophisticated. They include price-gouging, false marketing of purported cures or COVID-19 tests, phishing calls or texts from persons promising to provide economic assistance in exchange for personal information, and fraudulent statements on applications for CARES Act-related relief.

And, as predicted in our client alert (Government Enforcement in the Shadow of COVID-19), law enforcement and regulators have begun to crack down. They have initiated a number of investigations and prosecutions aimed at both punishing those they believe have crossed the line and deterring other like-minded individuals who might be tempted to do so.

Notably, these enforcement actions were brought quickly. Indeed, given the public circumstances, there is a huge amount of public pressure on investigators, prosecutors, and regulatory agencies to file charges. For example, as of this week, the Federal Trade Commission has fielded about 16,800 complaints of fraud related to COVID-19, with a total reported loss of nearly $13 million.1 The public pressure and support for action only underscores the need for those companies and individuals under investigation to seek qualified outside counsel at the earliest possible juncture.

We have seen these types of “rush-to-judgment” filings previously during national emergencies, such as those occasioned by Hurricane Katrina. We can help prepare and guide you through them, whether you or your company are the target of, or cooperating with, law enforcement or a regulator.

What follows are some examples of notable federal and state actions, which give a flavor of what you can expect to see at both the federal and state level in the coming weeks and months:

  • 3/14/20 – The Tennessee Attorney General’s Office issued a cease and desist order to residents Matt and Noah Colvin, which prohibits them from buying and selling medical goods and products while an investigation into their alleged price gouging is underway. 2
    The Colvin brothers had alleged purchased nearly 18,000 bottles of hand sanitizer and were allegedly selling them online for prices up to $70 a piece. 3
  • 3/31/20 – The Washington State Attorney General’s Office issued cease and desist letters to five Washington-based retailers who sold their wares through the Amazon marketplace. Amazon reported the sellers to the Washington State AG’s Office for allegedly raising prices on COVID-19 related products such as hand sanitizer, disinfecting wipes, and N95 masks by as much as 600 percent between January and February. Although Washington State does not have a specific law prohibiting price gouging, the AG’s Office stated it would investigate the sellers for unfair and deceptive practices under the State’s Consumer Protection Act.4
  • 4/3/20 – Federal prosecutors in Washington, D.C., charged Craven Casper with wire fraud for allegedly registering the website coronavirusprotectionmasks.org and then falsely offering to sell items such as hand sanitizer, N95 masks, and other personal protective equipment. The website also allegedly permitted customers to donate to a fake “Global Coronavirus Relief Fund,” which Craven allegedly falsely claimed would be used to send supplies to hospitals in areas most affected by COVID-19. 5
  • 4/8/20 – The DOJ Environmental and Natural Resources Division and a local U.S. Attorney’s Office charged Rong Sun, aka Vicky Sun, a Georgia resident, with illegally importing and selling an unregistered pesticide on eBay called “Toamit Virus Shut Out,” which Sun allegedly claimed would help protect individuals from viruses.6 The product being sold by Sun is considered a pesticide under the Federal Insecticide, Fungicide, and Rodenticide Act (“FIFRA”) because the term “pest” include viruses. FIFRA provides for civil and criminal penalties for, among others thing, distributing, selling, or delivering any unregistered pesticide.
  • 4/10/20 – The DOJ Consumer Protection Branch and a local U.S. Attorney’s Office charged a Georgia resident, Christopher Parris, with wire fraud for allegedly attempting to secure orders from the Department of Veterans Affairs for millions of 3M face masks and other personal protective equipment in exchange for large, up-front payments.7 In highlighting the prosecution to the press, Attorney General William Barr reiterated that the DOJ “will vigorously pursue fraudsters who exploit the COVID-19 pandemic to make money.”8 In a near-identical case, a company located in the Middle East attempted to get a man located in the Western District of Pennsylvania to fraudulently broker millions of 3M face masks to Kaiser Permanente in exchange for a 40% up-front payment.9

Should you wish to discuss this further, please contact Melissa Meister, Ashley Martabano, or any of the attorneys at Baker Marquart LLP.

1 Los Angeles Times, “Fake cures, scams, phony medications and price gouging: Predators pounce during coronavirus,” available at https://www.latimes.com/california/story/2020-04-14/coronavirus-home-test-treatment-scams (April 13, 2020).

2 TN Attorney General’s Office, “AG Slatery Investigates Reports of Price Gouging; Issues Stop and Desist,” available at https://www.tn.gov/attorneygeneral/news/2020/3/15/pr20-10.html (March 14, 2020).

3 News Channel 5, Nashville, “State officials investigating several complaints of price gouging violations,” available at www.newschannel5.com/news/state-officials-are-investigating-several-complaints-of-price-gouging-violations (March 16, 2020).

4 WA Attorney General’s Office, “AG Ferguson Sends Cease and Desist Letters to Price-Gouging Washington-Based Online Businesses,” available at https://www.atg.wa.gov/news/news-releases/ag-ferguson-sends-cease-and-desist-letters-price-gouging-washington-based-online (March 31, 2020).

5 dcist, “D.C. Man Arrested in Coronavirus-Related Scam,” available at https://dcist.com/story/20/04/06/d-c-man-arrested-in-coronavirus-related-scam/ (April 6, 2020).

6 DOJ Office of Public Affairs, “Georgia Resident Arrest for Selling Illegal Products Claiming to Protect Against Viruses”, available at https://www.justice.gov/opa/pr/georgia-resident-arrested-selling-illegal-products-claiming-protect-against-viruses (April 9, 2020).

7 DOJ Office of Public Affairs, “Georgia Man Arrested for Attempting to Defraud the Department of Veterans Affairs in a Multimillion-Dollar COVID-19 Scam”, available at https://www.justice.gov/opa/pr/georgia-man-arrested-attempting-defraud-department-veterans-affairs-multimillion-dollar-covid (April 10, 2020).

8 Id.

9 WPXI, “FBI in Pittsburgh helps stop multimillion dollar scheme targeting a health care system,” available at https://www.wpxi.com/news/top-stories/fbi-pittsburgh-helps-stop-multi-million-dollar-scheme-targeting-healthcare-system/LM2XJPOVOFD3ZHZJ2UBVQ25PRE/ (April 6, 2020).

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