New Jersey Man Charged in Mask Price-Gouging Scheme

(CN) — Federal prosecutors in New York Tuesday announced the arrest of a New Jersey used car salesman accused of participating in a $45 million scheme to resell respirator masks to the city of New York at wildly inflated prices.

A complaint in U.S. District Court for the Southern District of New York, unsealed Tuesday, alleges that Ronald Romano of Manalapan, N.J., hoarded masks for months in an attempt to sell them to city officials at a 400% markup, with prices as high as $6.65 per mask.

Romano is charged with two counts of wire fraud and one count of conspiracy to violate the Defense Production Act in connection with the New York scheme and one in which he allegedly upsold masks at a still higher markup to the Florida Division of Emergency Management.

The complaint follows a civil suit against Romano’s company Performance Supply LLC brought by 3M. Romano, 3M claims, had posed as an authorized distributor of 3M products in an attempt to fool New York officials into buying masks from him.

According to the criminal complaint, Romano began hoarding masks in February, when he and a co-conspirator identified by the New York Times as New Jersey businessman Nicholas Campanella began negotiations with a Mexican manufacturer to purchase masks and other personal protective equipment.

Romano and Campenella first attempted to sell their masks through a third co-conspirator, which the New York Times identified as former Macedonian minister for foreign investment Gligor Tashkovich. The co-conspirator balked at the prices Romano listed, which ranged from $4.01 to $4.11 per mask, the complaint said. “Look, I really have a problem with the pricing,” he wrote in an email to Romano. “It’s one thing to charge … 25-30% more than the usual price —but here you are charging around 260%.”

Despite these concerns, the complaint said, that the conspirator attempted to sell masks for Romano, and even provided input on a fake authorization letter that Romano used to pass himself as a 3M representative. Romano would continue to raise prices as he acquired more masks and the Covid-19 pandemic grew.

Romano and his co-conspirators used their fictitious credentials to market masks under the 3M brand without 3M’s consent, the complaint claims, while still seeking actual 3M masks to sell and allegedly claiming to the company that New York had already made a purchase order from them despite the fact that Romano had yet to submit quotes for the masks.

When the quotes came, the complaint said, Performance Supply offered to sell two varieties of the 3M respirators it did not have to New York for prices of $6.33 and $6.65 per mask, totalling over $45,000,000. Romano’s promises that the masks were manufactured in the United States, the complaint said, appealed to city officials, and the city contacted one conspirator, purportedly Campenella, for a reference. He told them he had worked with the newly-created Performance Supply “for numerous orders in the past for surgical masks and medical supplies.”

Romano also listed the Florida transaction as a reference for his NYC sale, the complaint claims, despite the fact that he was unable to deliver any of the three million face masks he sold the state’s Department of Emergency Management at $1.82 per mask — a more reasonable price point until compared to the manufacturing price of approximately $0.28 per mask.

At this point, prosecutors said, the plan’s seams started coming apart. Romano and his fellow conspirators found that they needed documentation from 3M authorizing the mask distribution. One conspirator, believed to be Tashkovich, cut off his dealings with Romano, as did two married packaging company owners who had been working to sell the masks on Romano’s behalf. Romano started expressing concerns that one of his would-be suppliers, a Peruvian exporter, was a “scammer.” 

Federal officials praised Romano’s arrest Tuesday. “Ronald Romano’s short-lived second career as a purveyor of vital protective gear is over,” U.S. Attorney Geffrey Berman said in a statement.

Margaret Garnett, Commissioner of the New York City Department of Investigation, lionized the city workers who called 3M about the high asking price for “their” masks. 

“Instead of reaping millions of dollars, the scheme received a dose of old-fashioned, New York City skepticism from procurement specialists at the City’s Department of Citywide Administrative Services,” she said in a statement.

“The defendant’s ruse unraveled, and these City workers proved that heroes have an array of titles.”