Coronavirus fraud: Foreign government wired $317M for millions of N95 masks that didn’t exist


In this file photo, face masks are stacked before getting technical information printed on them at a new factory in Mexico City, Thursday, May 21, 2020.

Fernando Llano | AP

Federal authorities busted up a massive coronavirus scheme to sell a foreign government 50 million N95 face masks that didn’t actually exist, prosecutors revealed Thursday.

Authorities said that the unidentified government actually wired $317 million to a bank to pay for the fictional masks —but the purchase was stopped at the last moment by the U.S. Secret Service before it could be completed.

At least one person, Georgia resident Paul Penn, has been charged in the alleged fraud, according to the U.S. Attorney’s Office for the Southern District of Georgia.

Penn is accused of criminal attempt and conspiracy by a charging document known as an information. The charge carries a maximum possible sentence of 20 years in prison.

Criminal informations are typically filed when a defendant in a federal case is cooperating with authorities and has agreed to plead guilty. The information refers to two other unidentified people who allegedly participated in the scheme.

Prosecutors said that Penn, together with the others, tried to swindle the foreign government by offering to sell it 50 million 3M Model 1860 Respirator Masks, “which he and his associates did not actually possess,” said U.S. Attorney Bobby Christine.

Christine’s office said that Penn, through his company Spectrum Global Holdings, agreed to act as a middleman in exchange for a small cut of the $317 million sales price. There is a company with that name registered in Norcross, Georgia, which is located 20 miles north of Atlanta.

“The negotiated sales price for these masks was more than 500 percent higher than the previous normal market value for N-95 masks,” Christine’s office said in a statement.

“Penn falsely represented that the N-95 Masks were owned by a group in which he was associated,” the office said.

Christine said that, “Using a worldwide pandemic as an opportunity to take advantage of those searching for badly needed personal protective equipment is reprehensible.”

“Our office, together with our colleagues at the COVID-19 Hoarding and Price Gouging Task Force and our law enforcement partners, will aggressively seek out any fraudsters who exploit this crisis as a way to make a quick buck,” the prosecutor said.

Penn could not be reached for comment. A spokesman for Christine’s office said he did not have information about Penn’s age, home address or defense lawyer.

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