White Collar Crime and Internal Investigations

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Department of Justice’s Responsive Measures to the COVID-19 Pandemic

White Collar Crime and Internal Investigations Alert Hector J. Diaz

On March 16, 2020, Attorney General William P. Barr issued a memorandum to all United States Attorneys directing them “to prioritize the detection, investigation, and prosecution of all criminal conduct related to the current pandemic.”

Appearing with the president a week later, Attorney General Barr said the enforcement would focus on those hoarding medical equipment, such as masks, on an “industrial scale” with the goal of influencing the market. “If you are sitting on a warehouse with masks—surgical masks—you will be hearing a knock on your door,” he said.

Vigorous enforcement actions against unlawful profiteering from the coronavirus crisis and those hoarding valuable “health and medical resources” to drive prices and profits are already underway. A southern California man was charged with wire fraud for his solicitation of investments in a company he claimed would be used to market pills that would prevent coronavirus infections and an injectable cure for those already suffering from COVID-19. The Department also filed its first civil enforcement action, shutting down a fraudulent website offering fake COVID-19 “vaccine kits."

Numerous U.S. Attorneys have designated specific fraud coordinators and prosecutors in their offices to handle COVID-19 fraud investigations. The U.S. Attorneys in Virginia, and numerous other districts, have issued warning bulletins, and the D.C. U.S. Attorney created a hotline for victims of suspected pandemic fraud.

Businesses and individuals should be vigilant and protect themselves against those that may exploit this crisis for their own pecuniary gain, even within their own supply chains. Here are several common schemes that are on the rise to keep in mind so you can recognize them, as well as tips to take defensive action when appropriate:

Supply Chains & Procurement Fraud

  • Supply Chain Schemes: Individuals creating fraudulent businesses, websites, social media accounts, and email addresses claiming to sell medical supplies currently in high demand, such as surgical masks. When consumers attempt to purchase supplies through these channels, the money is kept and the promised supplies are never provided.
  • Strike Forces Formed: The U.S. Department of Justice has renewed its focus on government contracting and procurement fraud. Fraud and antitrust crimes will be investigated in the context of government procurement, grants, and federally funded programs with renewed importance and resolve given the Attorney General’s mandate and directive.
  • Companies should investigate unknown suppliers and verify pricing before going to market.

Antitrust Crimes & Pricing Schemes

  • Price Gouging: Individuals and businesses selling essential goods at significantly higher prices than in a non-emergency setting.
  • Price Fixing: Two or more individuals agreeing to take actions that have the effect of raising, lowering, or stabilizing the price of any product or service without any legitimate justification.
  • Bid Rigging: Individuals agreeing with competing parties to secretly choose the winner of a bidding process while others submit uncompetitive bids.
  • Companies should verify state law requirements on pricing. For example, in Virginia it is illegal to increase the price of products by more than 20 percent a week prior to an emergency. Other states may have similar laws that companies should review beforehand.

For more information on the Department of Justice’s responsive measures to the COVID-19 pandemic, or any of the aforementioned offenses, please contact:

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