Sun, 12 Jul 2020

Used Car Salesman Arrested in $45 Million COVID-19 Fraud Case

Voice of America
27 May 2020, 06:05 GMT+10

WASHINGTON - A used car salesman from the state of New Jersey has been arrested and accused of trying to sell New York City millions of desperately needed face masks at grossly inflated prices at the height of the coronavirus pandemic in March, the U.S. Justice Department announced Tuesday.

Ronald Romano, who runs a used car dealership about 80 kilometers south of New York City in Manalapan, New Jersey, allegedly conspired with several business associates and friends to get New York City to pay $45 million for 7 million 3M brand N95 respirators that they did not possess or were not authorized to sell.

Romano is charged with one count of conspiring to commit wire fraud, one count of committing wire fraud and one count of violating the Defense Protection Act. Each of the first two counts carries a maximum of 30 years in prison. The third count carries a maximum of one year.

One of Romano's three alleged co-conspirators is identified in court documents as a former minister of foreign investment for a European nation who purported to have expertise in international transactions and attempted to broker sales of the respirators for Romano.

A spokesman for the U.S. Attorney's Office for the Southern District of New York did not respond to a question about the co-conspirators' status.

Largest case of its kind

The attempted price gouging and fraud case is one of the largest of its kind brought by federal prosecutors since the Department of Health and Human Services designated face masks and other medical supplies "scarce material" in March and Attorney General William Barr warned against profiteering from the crisis.

"At a time when the pandemic was ravaging New York City, this defendant greedily preyed on the city's desperate need for protective equipment to stop the spread of the virus," Margaret Garnett, New York City's Department of Investigations commissioner, said in a statement.

According to court documents, Romano and his co-conspirators allegedly began the "get rich quick" scheme as early as February when the coronavirus began a rapid spread around the country, making New York City the epicenter of the pandemic the following month.

With New York health care workers and first responders in desperate need of respirators, the fraudsters contacted potential suppliers around the world - a Mexican company and a Peruvian exporter among them - to secure large quantities of masks for resale at inflated prices.

In March, as he was hoping to close a deal with New York City, Romano texted a friend and co-conspirator, "I'm working on a few deals that if I get any of them you might be buying a Ferrari."

Then, three brokers acting on behalf of Romano approached New York City officials with a fictitious 3M distribution authorization letter and an offer to sell 7 million N95 respirators. Their offer: a 400% markup.

The deal fell through only after procurement specialists for New York City contacted 3M to confirm the price offer and was told that Romano was not an authorized distributor.

"Instead of reaping millions of dollars, the scheme received a dose of old-fashioned, New York City skepticism from procurement specialists," Garnett said.

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