On April 2, 2021, the acting U.S. Attorney for the District of New Jersey released an update of her office’s efforts to prevent fraud related to the COVID-19 pandemic, noting prosecutions involving the Paycheck Protection Program, the Economic Injury Disaster Loan program, and the Unemployment Insurance programs, as well as prosecutions involving price-gouging and hoarding of critical personal protective equipment. The announcement comes on the heels of a similar one by Attorney General Merrick Garland last month, who marked the one year anniversary of the passage of the CARES Act by announcing that, in the past year, the Department of Justice has charged nearly 500 individuals with COVID-related fraud. These announcements serve as important reminders that, even as the vaccine roll out continues and life regains a sense of normalcy, federal prosecutors continue to actively monitor price gouging compliance.

In New Jersey, acting U.S. Attorney Rachael A. Honig stated that in the past year her office has charged 18 defendants, including four companies, with fraud, price gouging, and other crimes related to the COVID-19 pandemic. Of the corporate defendants, two were Chinese manufacturers charged with exporting misbranded and defective masks falsely purporting to be respirators. The first company, Crawford Technology Group (HK), was charged with misbranding over 140,000 masks purporting to be KN95 respirators. The charge in the complaint carried a maximum fine of $200,000. Relatedly, King Year Packaging and Printing was charged earlier this year with three counts of violating the Federal Food, Drug and Cosmetic Act for importing nearly half a million defective masks that falsely purported to be N95 respirators.

Two import companies from Ocean County, New Jersey, CSG Imports and KG Imports, entered deferred prosecution agreements for alleged violation of the Defense Production Act. The prosecutions arose following the seizure of over 11 million items of PPE, mainly respirator and disposable face masks, from three warehouses in Lakewood, New Jersey. Notably, CSG Imports had never imported PPE, or indeed any health-care products of any kind, prior to the pandemic, and KG imports was formed after the pandemic began specifically to import PPE. Under the terms of the agreements, the companies were required to sell the 11 million items at cost and disgorge nearly $400,000 in profits stemming from transactions with two customers who purchased PPE from CSG at excessive costs.

Attorney General Merrick Garland has said the DOJ would continue to vigorously monitor fraud related to the pandemic, an effort started last March by then-Attorney General William Barr. Still, questions remain about the ability of the government to prevent fraud. This was the sentiment expressed by the House Select Subcommittee on the Coronavirus, which stated in a majority staff memo released last month that the Trump administration’s lax oversight of CARES Act funds led to billions of dollars in potential fraud. While questions over the scope of DOJ enforcement may remain, it is clear that pricing enforcement remains at the front of the Department’s mind and enforcement priorities.

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Photo of Christopher E. Ondeck Christopher E. Ondeck

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters…

Chris Ondeck is co-chair of the Firm’s nationwide Antitrust Group. He represents clients in civil and criminal antitrust litigation, defending mergers and acquisitions before the U.S. antitrust agencies, defending companies involved in government investigations, and providing antitrust counseling.

Chris has handled antitrust matters for clients in a number of industries, including advertising, aerospace, alcoholic beverages, appliances, building materials, consumer products, defense, franchise, medical devices, metals, mining, natural resources, oil and gas, packaging, pharmaceuticals, software and telecommunications. He also has developed substantial experience advising clients regarding the application of the antitrust laws to the pharmaceutical industry, the agriculture industry, trade associations and the energy industry.

Photo of John R. Ingrassia John R. Ingrassia

When competition or antitrust questions arise, John Ingrassia is sought out for his knowledge, reputation and credentials.

John is a recognized authority on Hart-Scott-Rodino antitrust merger review, and for more than 20 years has counselled businesses facing the most challenging antitrust issues and…

When competition or antitrust questions arise, John Ingrassia is sought out for his knowledge, reputation and credentials.

John is a recognized authority on Hart-Scott-Rodino antitrust merger review, and for more than 20 years has counselled businesses facing the most challenging antitrust issues and helped them stay out of the crosshairs — whether its distribution, pricing, channel management, mergers, acquisitions or joint ventures.

John is a senior counsel at the Firm, advising on the full range of antitrust matters in diverse industries, including chemicals, pharmaceutical, medical devices, telecommunications, financial services and health care, among others.  His practice focuses on the analysis and resolution of antitrust issues related to mergers, acquisitions, and joint ventures, and the analysis and assessment of pre-merger notification requirements. John has extensive experience with the legal, practical, and technical requirements of merger clearance and is regularly invited to participate in Federal Trade Commission and bar association meetings regarding Hart-Scott-Rodino practice issues.