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COVID-19: FDA actively investigating sellers/re-sellers of N95 respirator masks and other PPE.
Andrew M. Kohlmetz • Apr 27, 2020
Sellers of PPE may be exposed to federal criminal liability
The nation-wide COVID-19 health crisis has brought seemingly endless stories about people hoarding, and selling or reselling personal protective equipment (“PPE”) at huge price mark-ups. This type of hoarding or profiteering is no longer subject to the risk of social media and moral shaming. It can be criminal, and the FDA’s Office of Criminal Investigations (“FDA-OCI”)is aggressively pursuing people and business engaged in the distribution, sale and resale of PPE.
On March 25, 2020, the federal Department of Health and Humans Services (“HHS”) by notice in the Code of Federal Regulations, designated a wide selection of PPE as “scarce materials or materials the supply of which would be threatened by accumulation in excess of reasonable demands of business, personal, or home consumption, or for the purpose of resale at prices in excess of prevailing market prices.” 85 Fed. Reg. 17592. This designation includes many types of equipment including face masks, respirators, gowns, gloves, disinfecting supplies etc. The designation brings people or entities in the business of purchasing, selling or otherwise distributing PPE under the provisions of the federal Defense Production Act. (“DPA”)
Under section 4512 of the DPA it is unlawful for anyone to “accumulate (1) in excess of the reasonable demands of business, personal, or home consumption, or (2) for the purpose of resale at prices in excess of prevailing market prices, materials which have been designated by the President as scarce materials or materials the supply of which would be threatened by such accumulation.” Violation of this section of the DPA is a class A misdemeanor and carries a potential sentence of up to one year in jail and a fine of $10,000. 50 U.S.C. §§ 4152, 4153.
The FDA-OCI and other federal civil and law enforcement agencies are actively looking for and investigating persons involved in the purchasing, selling or otherwise distributing PPE. In some cases it has been discovered that certain PPE was counterfeit, or rebranded and marketed for originally unauthorized – even patently false purposes such as a “COVID-19 cure” or “effective anti-viral protection.” The making of any such false or misleading claims or the sale of counterfeit and/or expired products could also give rise to far more serious federal wire and or mail fraud charges.
The Law Office of Andrew M. Kohlmetz LLC Blog
The nation-wide COVID-19 health crisis has brought seemingly endless stories about people hoarding, and selling or reselling personal protective equipment (“PPE”) at huge price mark-ups. This type of hoarding or profiteering is no longer subject to the risk of social media and moral shaming. It can be criminal, and the FDA’s Office of Criminal Investigations (“FDA-OCI”)is aggressively pursuing people and business engaged in the distribution, sale and resale of PPE. On March 25, 2020, the federal Department of Health and Humans Services (“HHS”) by notice in the Code of Federal Regulations, designated a wide selection of PPE as “scarce materials or materials the supply of which would be threatened by accumulation in excess of reasonable demands of business, personal, or home consumption, or for the purpose of resale at prices in excess of prevailing market prices.” 85 Fed. Reg. 17592 . This designation includes many types of equipment including face masks, respirators, gowns, gloves, disinfecting supplies etc. The designation brings people or entities in the business of purchasing, selling or otherwise distributing PPE under the provisions of the federal Defense Production Act. (“DPA”) Under section 4512 of the DPA it is unlawful for anyone to “accumulate (1) in excess of the reasonable demands of business, personal, or home consumption, or (2) for the purpose of resale at prices in excess of prevailing market prices, materials which have been designated by the President as scarce materials or materials the supply of which would be threatened by such accumulation.” Violation of this section of the DPA is a class A misdemeanor and carries a potential sentence of up to one year in jail and a fine of $10,000. 50 U.S.C. §§ 4152, 4153 . The FDA-OCI and other federal civil and law enforcement agencies are actively looking for and investigating persons involved in the purchasing, selling or otherwise distributing PPE. In some cases it has been discovered that certain PPE was counterfeit, or rebranded and marketed for originally unauthorized – even patently false purposes such as a “COVID-19 cure” or “effective anti-viral protection.” The making of any such false or misleading claims or the sale of counterfeit and/or expired products could also give rise to far more serious federal wire and or mail fraud charges. If you are engaged in the purchase, distribution or sale of PPE such as N95 respirators, face shields, surgical masks, or other COVID-19 related-PPE, contact Andrew M. Kohlmetz , a federal criminal defense attorney familiar with the DPA and the recent COVID-19-related regulations, to discuss how to limit any potential liability. By the time the FDA-OCI reaches out, it might be too late.
Major change in federal criminal firearms laws
Over the years I have been retained by a few criminal defense clients after they had bad experience with a prior lawyer. The reasons for switching defense attorneys in midstream vary: sometimes it is concern over the lawyer’s competence, or concern that their case is not getting the attention it deserves, or even that they just don’t see eye to eye with their lawyer. One of the most common, and disturbing reasons though is that the client feels that their prior attorney ripped them off. These complaints generally involve “flat-fee” retainer agreements in which a lawyer and a client agree upon a fixed sum of money for the entire defense representation no matter whether it goes to trial or ends in a plea deal. I see cases all the time where a lawyer accepts a major felony case for a ridiculously low flat-fee just to land the client. Then, when it becomes obvious the case will require a lot of work, the attorney hits the client up for more money. I have even seen cases where the attorney threatens to withdraw from the case if the client does not come up with the additional funds. I call these “pump and dumps:” The lawyer pumps the client for a quick cash infusion and if the client balks, the lawyer tries to dump the client or the retainer agreement. When this happens, the client rightfully becomes upset and the situation quickly becomes untenable. What should a client do? They have (or should have) a written and enforceable fee agreement with the attorney. Then again, who wants a lawyer defending them from serious criminal charges when they claim they are being paid for their work? Defending clients charged with serious or complex felony cases in state and federal courts takes a great amount of work on the part of the criminal defense attorney, the client, and the defense team. These cases are expensive. To get an idea of how expensive, ask the attorney what their normal hourly fee is. The ask them how many hours they would expect to work in a case such as yours. What if it is a plea? What if it is a trial? If the lawyer’s retainer agreement sounds too good to be true, it probably is. The best thing a person can do when selecting a criminal defense attorney is to deal very clearly with this issue up-front. Hourly fee agreements will avoid the problem altogether. The attorney is paid only for the work performed. When negotiating an hourly fee agreement with a criminal defense attorney, be sure to ask the attorney to give a good faith estimate of the number of hours she or he thinks the case will consume depending on various outcomes like a plea agreement or a trial. If you are negotiating a flat-flee agreement make sure that both parties understand that regardless of how many hours the attorney must spend on the case, the fee agreement spells out the total amount to be paid in attorney fees. To protect both parties, flat fee agreements can be modified to suit the needs of each case. For example: The amount of the fee could be staggered to depend on at what stage of the proceedings the case is resolved: Pre-Indictment, with a plea agreement, after a trial etc. Regardless of the attorney and the fee structure you choose. I always recommend the potential client talk to as many knowledgeable and experienced criminal defense attorneys as the situation allows before settling on their pick. This will give the prospective client some idea of comparable fee agreements and rates. It will also allow both parties to get to know each other a little bit before signing up to work so closely together over so serious a matter. Switching attorneys in the middle of the case is sometimes unavoidable, but it is a situation best-avoided if possible.