On April 2, 2021, the acting U.S. Attorney for the District of New Jersey released an update of her office’s efforts to prevent fraud related to the COVID-19 pandemic, noting prosecutions involving the Paycheck Protection Program, the Economic Injury Disaster Loan program, and the Unemployment Insurance programs, as well as prosecutions involving price-gouging and hoarding of critical personal protective equipment. The announcement comes on the heels of a similar one by Attorney General Merrick Garland last month, who marked the one year anniversary of the passage of the CARES Act by announcing that, in the past year, the Department of Justice has charged nearly 500 individuals with COVID-related fraud. These announcements serve as important reminders that, even as the vaccine roll out continues and life regains a sense of normalcy, federal prosecutors continue to actively monitor price gouging compliance.

In New Jersey, acting U.S. Attorney Rachael A. Honig stated that in the past year her office has charged 18 defendants, including four companies, with fraud, price gouging, and other crimes related to the COVID-19 pandemic. Of the corporate defendants, two were Chinese manufacturers charged with exporting misbranded and defective masks falsely purporting to be respirators. The first company, Crawford Technology Group (HK), was charged with misbranding over 140,000 masks purporting to be KN95 respirators. The charge in the complaint carried a maximum fine of $200,000. Relatedly, King Year Packaging and Printing was charged earlier this year with three counts of violating the Federal Food, Drug and Cosmetic Act for importing nearly half a million defective masks that falsely purported to be N95 respirators.

Two import companies from Ocean County, New Jersey, CSG Imports and KG Imports, entered deferred prosecution agreements for alleged violation of the Defense Production Act. The prosecutions arose following the seizure of over 11 million items of PPE, mainly respirator and disposable face masks, from three warehouses in Lakewood, New Jersey. Notably, CSG Imports had never imported PPE, or indeed any health-care products of any kind, prior to the pandemic, and KG imports was formed after the pandemic began specifically to import PPE. Under the terms of the agreements, the companies were required to sell the 11 million items at cost and disgorge nearly $400,000 in profits stemming from transactions with two customers who purchased PPE from CSG at excessive costs.

Attorney General Merrick Garland has said the DOJ would continue to vigorously monitor fraud related to the pandemic, an effort started last March by then-Attorney General William Barr. Still, questions remain about the ability of the government to prevent fraud. This was the sentiment expressed by the House Select Subcommittee on the Coronavirus, which stated in a majority staff memo released last month that the Trump administration’s lax oversight of CARES Act funds led to billions of dollars in potential fraud. While questions over the scope of DOJ enforcement may remain, it is clear that pricing enforcement remains at the front of the Department’s mind and enforcement priorities.

*      *      *

Visit Proskauer on Price Gouging for antitrust insights on COVID-19.

*      *      *

Proskauer’s cross-disciplinary, cross-jurisdictional Coronavirus Response Team is focused on supporting and addressing client concerns. Visit our Coronavirus Resource Center for guidance on risk management measures, practical steps businesses can take and resources to help manage ongoing operations.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Christopher E. Ondeck Christopher E. Ondeck

Chris Ondeck is co-chair of the Firm’s Antitrust Group and co-head of the Washington DC office. He represents clients in complex antitrust and consumer protection litigation, defends mergers and acquisitions before the U.S. antitrust agencies, represents companies involved in government investigations, and counsels…

Chris Ondeck is co-chair of the Firm’s Antitrust Group and co-head of the Washington DC office. He represents clients in complex antitrust and consumer protection litigation, defends mergers and acquisitions before the U.S. antitrust agencies, represents companies involved in government investigations, and counsels on antitrust compliance. Chris is also the founder and leader of the firm’s Price Gouging Practice, and is one of the key thought leaders in this space.

Chris handles antitrust matters for clients in a number of industries, including food and agriculture, financial services, media, telecom, technology, e-commerce, consumer products, natural resources, oil and gas, chemicals, and pharmaceuticals.  He also serves as outside counsel to a large number of industry groups, including trade associations and cooperatives.

Chris has been recognized as a leading antitrust practitioner by Chambers, noting that clients describe him as “our primary thought partner – he’s very good at explaining the complex issues and making them easy to understand” and praising “his strong advocacy skills”; by The National Law Review as a “Go To Thought Leader 2020”; by Acritas as a “Star” in multiple years; by Benchmark Litigation as a National Litigation Star 2021; and by The Legal 500 United States for Antitrust: Civil Litigation/Class Actions.

Photo of John R. Ingrassia John R. Ingrassia

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating…

John is a partner at the Firm, advising on the full range of foreign investment and antitrust matters across industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services consumer goods and health care. He is the first call clients make in matters relating to competition and antitrust, CFIUS or foreign investment issues.

For more than 25 years, John has counselled businesses facing the most challenging antitrust issues and helped them stay out of the crosshairs — whether its distribution, pricing, channel management, mergers, acquisitions, joint ventures, or price gouging compliance.

John’s practice focuses on the analysis and resolution of CFIUS and antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger CFIUS and HSR notification requirements. He advises clients on issues related to CFIUS national security reviews, and on CFIUS submissions when non-U.S. buyers seek to acquire U.S. businesses that have national security sensitivities.  He also regularly advises clients on international antitrust issues arising in proposed acquisitions and joint ventures, including reportability under the EC Merger Regulation and numerous other foreign merger control regimes.

His knowledge, reputation and extensive experience with the legal, practical, and technical requirements of merger clearance make him a recognized authority on Hart-Scott-Rodino antitrust merger review. John is regularly invited to participate in Federal Trade Commission and bar association meetings and takes on the issues of the day.