Two men have been arrested for allegedly attempting to sell 1 million KN95 face masks in New York City at double or triple the original price, violating the Defense Production Act, the Department of Justice said on April 28.
The U.S. Attorney’s Office said in a release Tuesday that the two individuals, 56-year-old Kent Bulloch and 64-year-old William Young, Sr., are being charged in a criminal complaint unsealed in a federal court in Brooklyn with conspiracy to violate the Defense Production Act.
“We have some people hoarding. We want to prevent price gouging and critical resources are going to be protected in every form,” Trump said at a press conference last month.
The White House said that the president is authorized under the Defense Production Act to prohibit the hoarding of needed resources.
Between March and April this year, the pair sought out investors to sell the protective masks for at least double the purchase price, court filings state. They then attempted to conceal the markup on the masks by falsely claiming in an escrow agreement that profits on the resale of the masks would not exceed 10 percent. A federal law enforcement agent posed as a purported investor, the release states.
“As alleged, the defendants conspired to turn a huge profit from the urgent need for surgical masks in New York during the pandemic,” stated U.S. Attorney Richard Donoghue said in a statement.
“When the attorney general said that those engaged in price gouging should expect a knock on the door, he meant it—and when we knock with one hand, we usually have a warrant in the other.”
Bulloch was arrested in California on Monday night and will appear in federal court via teleconference in San Francisco, while Young will appear via teleconference in Phoenix.
“This is precisely the type of price gouging for which Attorney General Barr created our nationwide task force,” said Craig Carpenito, head of the Department of Justice’s nationwide COVID-19 Hoarding and Price Gouging Task Force.
“The Department of Justice will not allow greedy profiteers to take advantage of the public during this health crisis.”
Last month, Attorney General William Barr emphasized that individuals who stockpile essential supplies will not be the target of the presidential action, but those who hoard items to sell with hiked up prices are, and may be subject to investigation.
“If you have a big supply of toilet paper in your house, this is not something you have to worry about, but if you are sitting on a warehouse with surgical masks, you’ll be hearing a knock on your door,” he said.
The Department of Health and Human Services (HHS) was granted the authority to determine which items are prohibited for sale in “unnecessary quantities” above the fair market value in light of the hoarding rules.
The measure aims to ensure that hospitals, first responders, and doctors have sufficient supplies of critical medical equipment, including personal protective equipment and sanitizing and disinfecting products.
“By limiting access to these critical resources, those who engage in hoarding and price gouging could put both our medical workers and the health of the American people at risk,” the White House said last month. “All Americans must come together to help one another during this time and help combat the outbreak.”