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COVID Frauds of the Week: Price Gouging, Unapproved Treatments, and a Dead CEO

Posted  August 7, 2020

COVID-19 fraudsters really delivered this week, wherein we saw price gouging on masks, peddling of unproven “treatments” for COVID-19, and fraudulently-obtained PPP money spent on real estate, luxury goods, and personal—sometimes very personal—entertainment.

Starting in Pennsylvania, the Attorney General announced this week that two medical supply companies—American Surgical Supply and Keystone Medical Equipment—entered into an Assurance of Voluntary Compliance with the Office, in which they agreed to cease overcharging for N95 masks, and provide restitution to purchasers who paid upwards of $26 and $28, respectively, for individual masks. Under Pennsylvania’s Price Gouging Act, a price increase of 20% or more during a declared state of emergency is considered gouging, and is illegal. The Office made contact with the two companies after receiving tips about the alleged price gouging. Customers who file a consumer complaint form and attach a receipt as proof of purchase are eligible for repayment.

Next up are California companies Golden Sunrise Neutraceutical, Inc. and Golden Sunrise Pharmaceuticals, Inc., who, along with their principals, Huu Tieu and Dr. Stephen Meis, were charged with deceptive advertising related to their $23,000 herbal treatment plan for COVID-19. Receiving a Warning Letter from the FTC in April did nothing to deter the companies from continuing to promote unproven and unapproved remedies for COVID-19. They didn’t follow the FTC’s initial request to stop marketing the “treatments,” so the FTC followed up by filing a Complaint in the Eastern District of California to enjoin them from further false product assertions. That seemed to do the trick, at least for now. Neutraceutical’s website has since been disabled, and the false statements were removed from Golden Sunrise’s website.

Finally, entrepreneurial genius Lee Price III, of Houston, TX, engaged in his own version of Weekend at Bernie’s, in which he propped up a dead CEO to get PPP funds from the SBA. Price applied for Paycheck Protection Program funds on behalf of two companies—Price Enterprises Holdings ($900,000) and 713 Construction ($700,000). In support of his application, he falsely claimed to have numerous employees and significant payroll expenses, and failed to mention the CEO he listed on the application died a month before the application was submitted. After Price received the loan funds, he treated himself to a Lamborghini Urus, a 2020 Ford F-350 pickup truck, a Rolex watch, some real estate transactions, and then further rewarded himself by spending thousands at various night clubs and strip clubs in the Houston area. The US Attorney’s Office cut short his spending spree, and Price is now charged with making false statements to a financial institution, wire fraud, bank fraud, and engaging in unlawful monetary transactions. (USAO SDTX)

If you have information about frauds related to COVID-19, or any other fraud on government programs, contact us.

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Tagged in: COVID-19, Government Programs Fraud, Pricing Fraud,