Almost $800 Million In Mask Scams Alleged In The U.S. Alone
by Alexandra SternlichtTOPLINE
In the U.S. alone, officials have charged individuals promising to sell millions of masks without ever delivering, as companies, governments and health officials desperately try to end the national PPE shortage—and scammers see an opportunity to capitalize.
KEY FACTS
Law enforcement in the United States has uncovered fraudulent mask schemes totalling $799 million in the last few months by alleged scammers around the country.
Officials arrested a New Jersey used car dealer posing as an authorized 3M dealer on Tuesday who allegedly ran a $45 million scheme to sell more than 7 million masks at 400% markup, according to the criminal complaint obtained by the New York Times.
On April 10, a Georgia man was charged with fraud in an attempt to sell 125 million face masks and other forms of PPE, securing orders that would have equaled $750 million; he also promised 3M masks.
Two California-based men were arrested in late April, with prosecutors alleging that the duo was involved in a $4 million conspiracy to sell PPE they did not possess, according to BuzzFeed News.
The SEC has reported a 35% increase in fraud complaints amid the coronavirus pandemic, due to the scale of the crisis and unemployment of whistleblowers who would otherwise be afraid of employer retribution.
Less than 20% of mask buyers and sellers are legitimate, estimates Alexis Wong, a Hong-Kong based mask exporter interviewed by the Washington Post who provided the publication with phony bank statements with up to $3 billion in balances from scammers she’s encountered in the PPE business.
Surprising Fact
New York officials tapped Real Housewife-cum-business mogul-philanthropist Bethenny Frankel, according to the New York Times NYT , to obtain 15 million masks first for $82.5 million, then 10 million masks $66.5 million from entrepreneurs who never actually delivered a single mask.
Key Background
Current and former government officials say that the PPE shortage could’ve been avoided and is the fault of the federal government, according to the Washington Post. They also allege that the federal government is falling far short of obtaining the 3.5 billion masks that officials have long estimated the country would need in a pandemic of this nature. On the contrary, President Trump has said that the country has “tremendous supply to almost all places.”
“Words are inadequate to describe the inaction,” said Rep. Lloyd Doggett, D-Texas, to the Washington Post on the matter: “So much of this was preventable. It did not have to happen this way.”
Tangent
Gold standard PPE manufacturer 3M has filed 10 lawsuits in the last several weeks against people purporting to sell their masks without an actual legitimate business connection to the company, according to the New York Times. 3M has also set up a hotline for anyone in the U.S. or Canada to call in and report scammers and counterfeiters pretending to sell their equipment.
Further Reading
SEC Cracks Down On Coronavirus Scams Thanks To An Army Of Whistleblowers (Forbes)
‘No offense, but is this a joke?’ Inside the underground market for face masks. (Washington Post)
Bethenny Frankel’s Dark Journey to Find Medical Masks (New York Times)
A California Pair Have Been Arrested And Charged With Fraud Over A Multimillion-Dollar Face Mask And Respirator Deal (BuzzFeed News)