U.S. Attorney’s Office Charges New York Resident With COVID-19-Related Price Gouging
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  • U.S. Attorney’s Office Charges New York Resident With COVID-19-Related Price Gouging
    On April 24, 2020, the U.S. Attorney’s Office for the Eastern District of New York charged Long Island resident Amardeep Singh with hoarding and price gouging of medical supplies in violation of the Defense Production Act of 1950 (“DPA”).  The complaint alleges that Mr. Singh and his business entities acquired excessive amounts of personal protective equipment (“PPE”) and other medical supplies designated as “scarce” under an executive order issued by the President.  Mr. Singh then allegedly sold these products at prices well in excess of the prevailing market price, including a 1,328% markup on disposable face masks.  Complaint, United States v. Singh, No. 20-MJ-236 (SIL) (E.D.N.Y. Apr. 24, 2020).  According to the U.S. Attorney’s Office, the charges are the first criminal charges filed under the DPA during the present crisis.  The case is currently before Magistrate Judge Steven I. Locke.
    The DPA makes it unlawful for any person to “accumulate” materials deemed scarce by the President “(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.”  50 U.S.C. § 4512.  Individuals who “willfully” perform prohibited acts under the law may be subject to a fine of not more than $10,000 or a prison sentence of not more than a year.  50 U.S.C. § 4513.
    According to the criminal complaint, President Trump deemed health and medical supplies such as ventilators and respirator face masks “scarce” under the DPA on March 18, 2020.  Around that same time, Mr. Singh began marketing a line of “COVID-19 Essentials” at his retail locations.  Mr. Singh, who had previously only been a seller of sneakers, clothes and other apparel, is alleged to have been marketing prohibited medical supplies at a markup of between 59% and 1,328%.  When postal inspectors searched Singh’s commercial premises, they found at least 100,000 face masks, 10,000 surgical gowns, nearly 2,500 full body isolation suits, and more than 500,000 pairs of disposable gloves.
    Prior to the issuance of the federal complaint, New York state regulators notified Mr. Singh of two other violations.  On March 18, 2020, an entity controlled by Mr. Singh was cited by the Nassau County Department of Consumer Affairs for unconscionable trade practices arising from his sale of N-95 respirator face masks and other goods in violation of New York’s consumer protection laws.  On April 1, 2020, after Mr. Singh continued selling these goods at a large markup, the Office of the New York State Attorney General sent him a cease-and-desist letter, alleging potential violations of New York’s anti-price gouging statute.  The letter warned Singh that his sale of consumer goods, including hand sanitizer and other disinfecting products, was occurring at “unconscionably excessive prices during a period of market disruption caused by the outbreak.”
    While the Department of Justice has recently used other federal statutes to combat price gouging, the charges against Singh represent the first use of the DPA’s criminal provisions in the present crisis.  See, e.g., Complaint, United States v. Doe, No. A-20-CV-306 (W.D. Tex. Mar. 21, 2020) (filed under 13 U.S.C. § 1345).  Since the complaint against Mr. Singh was filed, the U.S. Attorney’s Office has filed another complaint against two other individuals for DPA violations.  These cases are part of an effort by the Trump Administration to crack down on COVID-19 fraud, hoarding, and price gouging, which will likely continue throughout the public health crisis.