A truckload of medical supplies shipped from Canada to an American accused of profiteering has been intercepted by authorities, who are now redirecting nearly 200,000 surgical masks to doctors and nurses.
U.S. Federal Bureau of Investigation agents arrested 43-year-old Baruch Feldheim on Monday in New York, which is among the global epicentres of the coronavirus crisis. U.S. authorities say he is at the centre of the first concluded case of many similar price-gouging investigations related to COVID-19 equipment that are already under way.
U.S. authorities are invoking recently enacted emergency laws to crack down on price-gouging. Similar laws exist in Canada, but they have not yet been enforced, even amid mounting fears about shortages of medical equipment.
The Brooklyn man has since been released on a US$50,000 bond and a promise not to deal in medical equipment until his trial. He is accused of lying to federal agents about the nature of his business. He is also charged with assaulting FBI detectives by allegedly coughing on them during his arrest.
An affidavit from an FBI agent filed in a New Jersey court says detectives spent several days shadowing Mr. Feldheim in late March, watching him acquire and resell personal protective equipment out of an auto-repair shop and out of his house.
Some of the material came from Canada, although authorities would not say exactly how much or identify who shipped it. “According to records from [U.S.] Customs and Border Protection, on or about March 25, 2020, [Mr. Feldheim’s company] received a shipment by truck from Canada of approximately eight skids of surgical face masks," the FBI affidavit says.
Police and prosecutors say that a New York doctor with about 100 employees sought out such goods to protect his staff. “Feldheim agreed to sell the doctor approximately 1,000 N95 masks and other assorted materials for $12,000, an approximately 700-per-cent markup from the normal price.”
U.S. authorities say that Mr. Feldheim’s overall stockpile included 192,000 N95 respirator masks, 598,000 medical-grade gloves and more than 100,000 other pieces of equipment. N95 masks are designed to block tiny viral particles that can remain in the air for long periods.
The U.S. government is using some newly enacted powers under its Defense Production Act to redirect these goods. Federal authorities said in a statement Thursday they “will pay the owner of the hoarded equipment pre-COVID-19 fair market value for the supplies and [have] begun distributing to meet the critical need for the supplies among health-care workers in New York and New Jersey.”
Canadian officials are not commenting on the case.
University of Calgary law professor Michael Nesbitt said Canada has its own Defence Production Act, which could be invoked to restrict cross-border shipping or to curb price-gouging. But it hasn’t been used yet. "We do have it at our disposal should it be deemed necessary,“ he said.
James Moriarty, a lawyer for Mr. Feldheim, pointed out in an interview that his client had not been charged with price gouging.
Even so, U.S. authorities are publicly describing the suspect as a man who “hoarded” protective equipment and who then sought to resell it at steep markups as goods started to run short.
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