Feds Bring More Charges In Anti-Price Gouging Campaign

By Stewart Bishop
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Law360, New York (April 28, 2020, 10:38 PM EDT) -- New York federal prosecutors on Tuesday continued their dragnet against individuals allegedly engaged in price gouging and hoarding personal protective equipment, bringing charges under the Defense Production Act against a California attorney and an Arizona businessman for seeking to profiteer off of a deal for 1 million protective masks.

Attorney Kent Bulloch, 56, and William Young Sr., 64, were charged with conspiracy to violate the Defense Production Act by seeking to resell 1 million KN95 masks in New York City at a 50% markup.

The charges came on the same day as another businessman, Long Island resident Amardeep Singh, 45, made his initial court appearance in a case accusing him of stocking up in excess on scarce materials including N95 respirators and other PPE, and selling the materials at a steep markup in the weeks since President Donald Trump signed an executive order authorizing use of the Defense Production Act as the nation struggles to respond to the global pandemic.

Singh was ordered released on a $50,000 unsecured bond in a brief teleconference proceeding before U.S. Magistrate Judge Arlene Lindsay, and his travel was restricted to the continental U.S. Singh was the first individual to be criminally charged under the DPA since Trump invoked the act in March.

Bulloch and Young are due to make their initial court appearances via teleconference on Wednesday.

The cases are part of an effort by U.S. Attorney General William Barr to crack down on COVID-19 fraud, hoarding or price-gouging. A nationwide task force has been convened to investigate potential fraud connected to the coronavirus outbreak, and lawyers say government attorneys have been deputized to participate from all U.S. attorneys' offices and U.S. Department of Justice headquarters in Washington, D.C.

In the latest case to come out of the Eastern District of New York, prosecutors say Bulloch and Young solicited investors to sell KN95 masks for double or triple the regular price. Bulloch is accused of cooking up an escrow agreement for one purported investor — who was actually an undercover federal agent — that falsely stated that resale profits would not exceed 10%.

Two purported California suppliers connected to the scheme, Donald Allen, 62, and Manuel Revolorio, 37, on Monday were hit with wire fraud conspiracy charges, as well.

"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," U.S. Attorney Richard Donoghue of the Eastern District of New York said in a statement.

In the Singh case, prosecutors say Singh allegedly received numerous shipments of products among those deemed in short supply by the U.S. Secretary of Health and Human Services, and claimed that an April 14 search of Singh's store and warehouse yielded 100,000 face masks, 10,000 surgical gowns, nearly 2,500 full-body isolation suits and more than 500,000 pairs of disposable gloves.

Officials say Singh's records indicate that he sold these items at rates higher than he bought them, with markups ranging from 59%, for a KN95 mask purchased for $2.50 and sold for $3.99, to 1,328% for three-ply disposable face masks that Singh purchased for 7 cents apiece and sold for $1 each.

Singh's customers included "uniquely vulnerable populations" who purchased the supplies wholesale, the government said, such as the Association to Benefit Children, the New York Foundation for Senior Citizens Inc. and Rewarding Environments for Adult Living Inc.

An attorney for Singh last week called the case "unconscionable and unsustainable in a court of law."

Bulloch did not immediately respond to a request for comment on Tuesday. Young could not be reached.

The government is represented in the Singh case by Anthony Bagnuola of the U.S. Attorney's Office for the Eastern District of New York. The government in the Bulloch and Young case is represented by Nathan Reilly and Hiral Mehta of the same office.

Singh is represented by David Schwartz of Gerstman Schwartz LLP.

Counsel information for Bulloch and Young was not immediately available on Tuesday.

The Singh case is U.S. v. Singh, case number 2:20-mj-00326, the other case is U.S. v. Bulloch et al., case number 20-mj-327, both in the U.S. District Court for the Eastern District of New York.

--Additional reporting by Emilie Ruscoe. Editing by Amy Rowe.

For a reprint of this article, please contact reprints@law360.com.

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