COVID-19 and the DPA: First Criminal Complaint Filed by the Justice Department in New York

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On Friday, April 24, 2020, the Justice Department announced the filing of a criminal complaint against a New York man, Amardeep “Bobby” Singh, for the hoarding and subsequent price gouging of personal protective equipment (PPE) under the Defense Production Act (DPA) – the first of its kind since the beginning of the COVID-19 outbreak in the United States. Singh faces up to one year in prison or a fine of up to $10,000 if convicted of violating the DPA. In addition to the Eastern District of New York and the United States Postal Inspection Service, this case is being handled with assistance from the Department of Justice’s nationwide COVID-19 Hoarding and Price Gouging Task Force.

According to the complaint, Singh operates a retail store selling apparel and shoes. However, beginning in mid-March, Singh began to accumulate merchandise he called “COVID-19 Essentials,” including but not limited to N-95 filtering face piece respirators, PPE face shields, PPE gloves, and clinical-grade sanitizing and disinfecting products. According to the charges, this merchandise was sold at inflated prices to the public. For example, according to the complaint, Singh purchased three-ply disposable face masks for a per-unit price of $0.07. He resold those same masks at a per-unit price of $1.00 – a markup of approximately 1,328%. Among the entities allegedly price gouged were particularly vulnerable organizations, such as the Association to Benefit Children, the New York Foundation for Senior Citizens and Rewarding Environments for Adult Living Inc. Overall, investigators seized a total of more than 100,000 face masks, 10,000 surgical gowns, nearly 2,500 full-body isolation suits and more than 500,000 pairs of disposable gloves.

Prior to the filing of the complaint, Singh had been warned by state and local officials that he was violating the law. According to the complaint, he was cited seven times by the Nassau County Department of Consumer Affairs between March 18 and March 31 for selling, and continuing to sell, masks. In addition, the Office of the New York State Attorney General sent a cease-and-desist letter to Singh on April 1 informing him that he may be violating New York’s price-gouging law.

It remains to be seen whether the filing of criminal complaints for hoarding and price gouging under the DPA will emerge as a trend as government officials continue to respond to the COVID-19 outbreak.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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