• Home
  • >
  • Blog
  • >
  • COVID-19 Hoarding and Price Gouging Task Force (DOJ & HHS)

October 28, 2020

COVID-19 Hoarding and Price Gouging Task Force (DOJ & HHS)

Written by: Heather Goe, BS, DBA

Editing provided by: Nayiri-Tara

More...





Sure you’ve heard this one before, but it rings so true that I think it deserves repeating… necessity is the mother of invention.


At the beginning of this Pandemic, we as a nation, as a workforce, and as responsible adults faced many obstacles.  Fear begets many in many different ways, viral ‘Panic buying’ YouTube videos featuring two shopping carts per person, each cart overwhelmed and consisting solely of toilet paper seemed to inspire much of the same.  Now, as we head toward the 2020 holiday season, mini decorative toilet-paper rolls sold as Christmas ornaments are all the rage.  It seems that, for some, this fear has turned sarcastic.


Perhaps that is one of the most admirable qualities we as a nation can ascertain- our innovative spirit.  On March 24, 2020 Attorney General, William Barr issued a Memorandum for all Heads of Department Components and Law Enforcement Agencies.  This Memorandum advised notice of a new Executive Order signed by the President, and it directed the creation of a new, special task force.  The goal of this task force was to address hoarding and price gouging practices associated with the COVID-19 Pandemic.


we will aggressively pursue bad actors who amass critical supplies either far beyond what they could use or for the purpose of profiteering. Scarce medical supplies need to be going to hospitals for immediate use in care, not to warehouses for later overcharging.”   - Attorney General, William Barr


Executive Order 13910, was designed to prevent hoarding of health and medical resources necessary to respond to the spread of COVID-19 within the United States. The president delegated his authority to the Secretary of Health and Human Services (HHS) to designate certain resources as ‘scarce materials’ and granted the ability to outline the conditions regarding the hoarding of such materials. The order cites Section 102 of the Defense Production Act (DPA) that once an item is labeled as scarce, it becomes a crime for someone to have it (1) in excess of their “reasonable needs” or (2) to sell it in “excess of prevailing market prices.”


“Scarce materials” or “threatened materials” as defined in this order, refers to “health or medical resources, or any of their essential components, needed to respond to the spread of COVID-19 and which are, or are likely to be, in short supply.”


The next day, March 25th, the HHS began to implement the President’s Executive Order and announced a detailed list of certain health and medical resources that would apply to the hoarding prevention measures. Items such as:

  • N-95 Filtering Facepiece Respirators
  • Other Filtering Facepiece Respirators (e.g., those designated as N99, N100, R95, R99, R100, or P95, P99, P100)
  • Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges
  • Powered Air Purifying Respirator (PAPR)
  • Portable Ventilators
  • Chloroquine phosphate or hydroxychloroquine HCl
  • Sterilization services for certain medical devices and certain sterilizers
  • Click here to see the original full list of items


The Executive ‘Hoarding Prevention’ order was initially established to be in effect for a total of 120 days.  However, updates were made on both July 7th  - HHS removed chloroquine phosphate and hydroxychloroquine HCL from the list of scarce or threatened materials , and on July 23rd -  The order was extended for another 120 days.


Since its inception, the COVID-19 Hoarding and Price Gouging Task Force has helped bring to light many serious areas of concern, some of which have concluded with DOJ enforcement actions.


An April 2nd, 2020 HHS press release announced the confiscation of more than half a million medical supplies.  The heading read, ‘DOJ and HHS Partner to Distribute More Than Half A Million Medical Supplies Confiscated From Price Gougers’.

Supplies including approximately 192,000 N95 respirator masks, 598,000 medical grade gloves and 130,00 surgical masks, procedure masks, N100 masks, surgical gowns, and disinfectant towels, and hand sanitizer, particulate filters, and disinfectant spray was discovered in a warehouse, by the FBI during an operation by the COVID-19 Hoarding and Price Gouging Task Force. 


The HHS announced that the department would pay the owner for the supplies at pre-COVID-19 fair market value.  The HHS distributed the supplies among healthcare workers in New York and New Jersey.  


On August 6, 2020 the DOJ announced that a “Georgia businessman” Milton Ayimadu had been arraigned on federal charges of hoarding and price gouging, citing the Defense Production Act (DPA) of 1950.  Under the act, any person charged of hoarding shall pay a $10,000 fine or be imprisoned.

From March 2020 to May 2020, this individual was alleged to have engaged in hoarding and price gouging of more than 200,000 face masks in violation of the DPA.  The DOJ’s report continues to explain the allegations indicating that more than 200,000 face masks were purchased by Mr. Ayimadu for roughly $2.50 each and then re-sold to American consumers through his website for approximately $5.00 each – an almost 100 percent markup!


States are also taking their own measure by releasing Executive Orders, in addition to existing penal codes against price gouging and hoarding. On March 4, 2020, Gavin Newsom, Governor of California, issued Executive Order N-44-20 prohibiting price gouging or selling items such as food, consumer goods, medical supplies, and other materials deemed scarce under the U.S. Secretary of Health and Human Services (HHS) more than 10% greater than the highest price charged on February 4, 2020.


Optimistically as more reports emerge, it will help to deter others from such activities.


REFERENCES

TAGS


follow us