2 NJ firms to sell PPE at cost to resolve price-gouging charges: feds

The FBI seized the items in raids in April

Two New Jersey firms have agreed to sell at cost approximately 11 million items of coronavirus personal protective equipment in a deal with federal prosecutors to resolve price-gouging charges.

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The FBI raided warehouses in Lakewood, N.J., in April and seized the items, which belonged to CSG Imports LLC and KG Imports LLC who the feds say seized on the COVID-19 pandemic as an opportunity to make a fast buck.

“The defendants in this case sought to profit illegally from a pandemic just as it was starting to sweep across the country,” Newark U.S. Attorney Craig Carpenito said. “Today’s agreements will ensure that needed personal protective equipment gets into the hands of the people who need it, and at a fair price.

WHAT IS PPE?

The FBI seized PPE in an April raid at a warehouse at this address in Lakewood, N.J. (Google Maps)

The agreement also requires the two LLCs to disgorge $400,000 in profits earned selling PPE to two customers who purchased PPE from CSG Imports at excessive prices and to compensate those customers for their losses as part of deferred prosecution agreements, prosecutors said.

CSG and KG purchased the PPE overseas and sold it to hospitals, health care providers, health care suppliers, and end users in New Jersey and elsewhere, they said.

Prior to the COVID-19 pandemic, CSG Imports had never imported PPE or health care equipment or products of any kind, the news release said. KG Imports was formed after the pandemic began, specifically to import PPE into the U.S.

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The items seized by the FBI consisted mostly of N95 respirator face masks and three-ply disposable face masks, which continue to be a coveted commodity for workers on the front lines of the pandemic.

Prosecutors said the N95 masks CSG Imports imported cost the LLC about $3.47 apiece. The markups for each mask were then 78 cents to $2.53.

Lawyers for CSG and KG did not immediately return calls for comment.

At the time of the raids, the FBI declined to say what brought them to the warehouses, the Asbury Park Press reported Saturday.

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However, at a coronavirus briefing April 23, Gov. Phil Murphy said of the investigation, “As a general matter, if someone is trying to hoard or price gouge in this hour of need, they deserve that special place in hell.”