By Emilie Ruscoe

Law360 (April 24, 2020, 10:44 PM EDT) -- Federal prosecutors say they have commenced a criminal case by invoking the Defense Production Act, the first of its kind, to charge a Long Island businessman with a misdemeanor, alleging hoarding and price gouging amid the COVID-19 pandemic.

The U.S. Attorney's Office for the Eastern District of New York announced Friday that it has filed the single count criminal case against 45-year-old Brentwood resident Amardeep Singh, alleging he stocked up in excess on scarce materials including N95 respirators and personal protective equipment, marked the products up and sold them in the weeks since March 18, when the president signed an executive order authorizing use of the Defense Production Act as the nation struggles to respond to the global pandemic.

The government described Singh as the proprietor of a network of businesses that usually sells "sneakers, clothing and other apparel" and operates out of a warehouse in Brentwood and bricks-and-mortar shop in Plainview.

Prosecutors claimed that 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 said Friday that Singh's records indicate that he sold these items at rates higher than he bought them, with markups ranging from 59%, for an N95 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 a dollar 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.

New Jersey U.S. Attorney Craig Carpenito, who also serves as head of the U.S. Department of Justice's nationwide COVID-19 Hoarding and Price Gouging Task Force, said in a statement Friday, "The Department of Justice and its partners will intervene whenever profiteers and scammers break the law by capitalizing on the public's fear to enrich themselves."

"The criminal complaint describes a defendant who allegedly saw the devastating COVID-19 pandemic as an opportunity to make illegal profits on needed personal protective equipment," Carpenito said.

Singh's attorney Bradley Gerstman called into question the legality of the DOJ's move, characterizing the allegations as "unconscionable and unsustainable in a court of law."

Gerstman added that he believed the statute was too general to "ever be upheld by a court of appeals, or any appellate court."

"I've never heard of this in my whole life, and I don't think anyone else has, either," Gerstman told Law360.

While other actions have targeted individuals accused of hoarding and price gouging under different federal provisions, a spokesman for the U.S. attorney's office confirmed the matter to be the first case invoking the Defense Production Act of 1950 in the current public health crisis.

Singh will appear before a judge next week via an as-yet-unscheduled teleconference, the spokesman said.

The case is assigned to U.S. Magistrate Judge Steven I. Locke.

The government is represented by Anthony Bagnuola of the U.S. Attorney's Office for the Eastern District of New York.

Singh and his companies are represented by Bradley Gerstman of Gerstman Schwartz Law.

The case is USA v. Singh, case number 2:20-mj-00326, in the U.S. District Court for the Eastern District of New York.

--Editing by Jay Jackson Jr.

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