A criminal complaint was unsealed today in federal court in Brooklyn charging Kent Bulloch and William Young, Sr., with conspiracy to violate the Defense Production Act by seeking to resell one million KN95 protective masks in New York City at a 50 percent mark-up. Bulloch, an attorney, was arrested Monday night in California and will make his initial appearance via teleconference in federal court in San Francisco and Young will appear via teleconference in federal court in Phoenix.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, Craig Carpenito, head of the Department of Justice’s nationwide COVID-19 Hoarding and Price Gouging Task Force, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Jonathan D. Larsen, Special Agent-in-Charge, Internal Revenue Service Criminal Investigation, New York Field Office (IRS-CI), announced the charges.
On March 18, 2020, in response to the COVID-19 pandemic, President Donald Trump issued Executive Order 13909 invoking the Defense Production Act making it illegal to acquire medical supplies and devices designated by the Secretary of Health and Human Services (HHS) as scarce in order to hoard them or sell them for excessive prices.
According to court filings, between March 2020 and April 2020, Bulloch and Young sought out potential investors to sell one million KN95 respirator masks for double or triple the purchase price. To conceal their exorbitant markup on the masks, Bulloch created and signed an escrow agreement for a purported investor that falsely stated that the profits on the re-sale of the masks would not exceed 10 percent. Unbeknownst to the defendants, the purported investor was a federal law enforcement agent.
“As alleged, the defendants conspired to turn a huge profit from the urgent need for surgical masks in New York during the pandemic,” stated United States Attorney Donoghue. “When the Attorney General said that those engaged in price gouging should expect a knock on the door, he meant it and when we knock with one hand, we usually have a warrant in the other.” Mr. Donoghue expressed his grateful appreciation to the United States Attorney’s Offices in New Jersey, the Northern District of California and the District of Arizona, and the San Francisco and Phoenix Field Offices of the FBI and IRS-CI for their invaluable assistance in this case.
“This is precisely the type of price gouging for which Attorney General Barr created our nationwide task force,” stated Carpenito. “The Department of Justice will not allow greedy profiteers to take advantage of the public during this health crisis.”
“While the need for an influx of medical equipment and supplies continued to mount as a result of the COVID-19 crisis, Young and Bulloch allegedly claimed they could acquire approximately one million highly sought after KN95 masks. As detailed in the complaint, the next phase of their plan was pretty straightforward–find investors who would sell these masks for far more than their purchase price, in turn earning the defendants a 50 percent mark-up on the sale. It’s hard to believe anyone could take advantage of a situation like this, but this case clearly proves that theory wrong. The FBI is proud to work with all of our partners as we confront the threats posed by those who are looking to game the system in this current environment,” stated FBI Assistant Director-in-Charge Sweeney.
“The invocation of the Defense Production Act was implemented to protect our healthcare workers, the heroes of 2020,” stated IRS-CI Special Agent-in-Charge Larsen. “As alleged, Bulloch and Kent attempted to personally enrich themselves by preying on potential investors during this pandemic.”
