A California lawyer has been charged with violating the Defense Production Act by conspiring to inflate the price of one million masks needed because of the coronavirus crisis, according to an indictment unsealed Tuesday.
Kent Bulloch, 56, and Arizona-based businessman William Young, Sr., are accused of trying to take advantage of the pandemic by reselling the masks at double or triple the purchase price.
“It’s hard to believe anyone could take advantage of a situation like this, but this case clearly proves that theory wrong,” FBI Assistant Director-in-Charge Sweeney, said in a statement.
Prosecutors say Mr. Bullock told a potential investor that he had access to 12 million masks, including 1 million KN95 masks and 11 million surgical masks.
The potential investor was an undercover federal agent, according to a criminal complaint filed in Brooklyn.
When the agent expressed alarm about the appearance of price gouging, Mr. Bulloch volunteered to falsify invoices and draft a letter saying he purchased the masks close to the resale price.
Ultimately, Mr. Bulloch created an escrow agreement saying the resale profits would not exceed 10 percent, according to court documents.
Mr. Bulloch allegedly told the agent that the agreement was necessary because he wanted to hide that he was “making a killing here,” which would be “a red flag” for the authorities.
“I don’t look good in orange. I got nice pinkish skin. I don’t need, I don’t need orange to clash with it,” Mr. Bulloch allegedly said, referring to the color of prison uniforms.
Authorities say the alleged scheme was pretty straightforward.
“While the need for an influx of medical equipment and supplies continued to mount as a result of the COVID-19 crisis, Young and Bulloch allegedly claimed they could acquire approximately one million highly sought after KN95 masks,” Mr. Sweeney said.
“As detailed in the complaint, the next phase of their plan was pretty straightforward – find investors who would sell these masks for far more than their purchase price, in turn earning the defendants a 50 percent mark-up on the sale,” he continued.
The defendants are the second and third individuals to be publicly charged under the Defense Production Act, a 1950 law that prohibits the hoarding of essential goods during a crisis.
On Friday, the Justice Department filed a criminal complaint against Amardeep Singh, accusing him of price gouging customers on personal protection equipment at his retail store in Plainview, New York. He is the first person charged with violating the Defense Production Act since the coronavirus pandemic hit.
President Trump last month signed an executive order invoking the Defense Production Act to force certain industries to manufacture scarce personal production equipment. It also made it illegal to hoard such equipment or sell it for excessive prices.
