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The Federal Bureau of Investigation has busted a number of scammers throughout the country for price gouging and health care fraud in separate novel coronavirus-related schemes, officials have announced.
The agency is cracking down on fraudsters taking advantage of people desperately seeking COVID-19 products, such as medical masks, jobs and money as the pandemic leaves millions unemployed or searching for ways to stay healthy. The criminals are also preying upon those in need of jobs, money or virus testing.
Over the course of weeks, the United States has become the nation with the highest number of COVID-19 cases worldwide, with at least 452,582 reported as of Thursday afternoon.
But even before almost every state was effectively locked down, criminals had begun creating methods to trick people into handing over their money or personal information.
The Department of Justice began sounding the alarm on these COVID-19 scams in the beginning of March. And by March 30, the FBI's Internet Crime Complaint Center had received more than 1,200 reports of COVID-19 scams, according to agency data.
The FBI made its first scam-related arrest on March 25 and agents have since made at least two more, according to the Justice Department.
Here’s what each of these scams looked like:
Investment opportunity for COVID-19 prevention medication, 'injectable cure'
No cure has been discovered for COVID-19, but that hasn’t stopped fraudsters, such as Keith Middlebrook, of California, from trying to trick people into believing otherwise, Justice Department officials announced on March 25.
Middlebrook, 53, boasts a collective following of more than 50,000 people through his Instagram accounts, where he describes himself as a businessman, “Real Iron Man,” a real estate mogul, a “genius” and an “entrepreneur icon.”
Middlebrook allegedly claimed to have discovered a “patent-pending cure” for the virus, as well as a COVID-19 prevention treatment.
He allegedly posted about the bogus prevention medication in a March 21 Instagram post, which was viewed by more than 1 million people in three days, court papers show. He also posted about it on Twitter.
“Yes I have created the pill that makes you IMMUNE to COVID-10!” he wrote in the since-deleted Instagram post, according to court papers. In the video, he shows a pill, which he called “Quantum Prevention CV Inc,” or QP20, and says, according to the court records, “that if he took the pill and walked into the Staples Center filled with COVID-19 positive individuals, he could not contract the virus.”
Middlebrook also claimed in the Instagram video to have just finished a phone call with Dr. Ronald Goldman, one of President Trump’s physicians, and he said he “is on his way to Mar-a-Lago to get the executive emergency order to override the FDA,” the document states.
An injectable cure, he allegedly said, was called “Quantum Cure CV 2020,” or QC20.
“The Medical, Virus and Disease communities are lazy and trying to use old tricks on a new dog,” Middlebrook allegedly wrote in the Instagram post. “I have the True, Tried and Tested Cure and now the Prevention. I had to wait for Lab Results to post this.”
Middlebrook began soliciting investments and promised he would issue shares of QP20 and QC20 upon receiving the investor funds, according to a DOJ press release pertaining to his arrest.
“I have Developed the Cure for the CoronaVirus COVID-19…*LA Patient tested Positive for CoronaVirus got up and walked out 51 hours after my Injection,” he told a cooperating witness, according to the affidavit for his arrest. “Investors who come in at ground level say $1M will parachute with $200M - $300M…Conservative Minimum.”
Middlebrook was busted on March 25, after meeting with an undercover agent, who posed as a potential investor, and bringing the supposed pills, the release states.
He was charged with attempted wire fraud.
Kickbacks involving unnecessary tests on seniors in need of COVID-19 testing
A Georgia man was charged on March 26 in connection to allegations he was tacking on additional exams for seniors receiving COVID-19 testing so he could profit from the expensive Medicare kickbacks, the Justice Department announced on March 30.
Eric Santos, 49, ran a marketing company that provided testing companies with client leads for people seeking COVID-19 testing, particularly Medicare beneficiaries over the age of 65. He would arrange to allegedly bundle their exams with additional expensive respiratory testing that is completely unrelated to the virus, officials said in a release
In turn, he was allegedly paid kickbacks for each test, according to the Justice Department.
Santos and the other suppliers allegedly made cold calls, used targeted internet advertisements and made in-person solicitations for medical services to elderly Medicare beneficiaries throughout the United States, according to court papers.
The Braselton, Ga., man first started his scheme in November 2019, but he expanded it to include COVID-19 as the outbreak grew to become a health care crisis, officials said.
Medicare only offers a $35 reimbursement for each COVID-19 test. But when it is bundled with the respiratory pathogen panel, or RPP, test, the repayment would be between $300 to $400 for a positive COVID-19 test, and up to $650 for each negative one. Santos once told a cooperating witness, according to court papers.
With the additional, albeit unnecessary RPP testing, Santos could expect a reimbursement of up to $250 for each negative COVID-19 test, according to papers.
“We’re trying to have more of the asymptomatic patients going through,” Santos allegedly told the witness during a recorded conversation. “If we got 1,000 tests a day to do, we don’t want 999 coming in at just COVID.”
He was charged with conspiring to violate the Anti-Kickback Statute and conspiring to commit health care fraud.
“The complaint in this case describes a defendant who saw the spread of COVID-19 as nothing more than an opportunity to profit personally,” U.S. Attorney Craig Carpenito said in a statement. “[H]e offered kickbacks in exchange for medically unnecessary tests – including potentially hard-to-obtain COVID-19 tests – thus preying on people’s fear in order to defraud the government and make money for himself.”
Hoarding and price gouging through WhatsApp
A Brooklyn man was scamming doctors and other health care workers by selling much-needed medical supplies, including N95 filtering face respirators at sky-high inflated prices, the Justice Department said.
Baruch Feldheim, 43, was arrested on March 30 for hoarding the highly coveted supplies through his company, Solo Suplies Inc., which has warehouse space in New York City and New Jersey, officials said.
Feldheim would allegedly contact individuals who posted in a WhatsApp chat group for health professionals, which was called “Virus 2020!”
In March, he sent a message to someone who had contacted the group hoping to buy COVID-19 supplies, specifically 1,000 N95 masks, 2,000 3PLY surgical masks, 2,000 sterile gowns and 800 Hazmat suits, according to court papers.
Feldheim, in turn, sold the doctor the requested products for $12,000, which is roughly 700 percent more than what the person would typically have paid.
When the doctor met with Feldheim at a designated location to pick up part of the purchase on March 16, the client “observed approximately 20 pallets of Coronavirus medical supplies, including boxes of N95 masks, surgical supplies, and different varieties of hand-sanitizer,” according to court papers.
Upon returning to retrieve the remainder of the purchase just days later, the doctor saw dozens of pallets of medical supplies and potential Designated Materials, including prepackaged Clorox wipes and hand sanitizers of different brands, chemical cleaning supply agents, and surgical supplies for an operating room, according to court papers.
The witness told authorities Feldheim’s warehouse was storing enough supplies “to outfit an entire hospital,” the court documents state.
When FBI agents confronted him on March 29, Feldheim allegedly coughed on them and told them he was infected with COVID-19, before lying about his reasons for having the large quantities of products. He then allegedly denied having them altogether, officials said.
The agents charged Feldheim the next day with assaulting a federal officer and with making false statements to law enforcement.