Businesses behaving badly: Task force to investigate misconduct

U.S. Attorney Craig Carpenito, New Jersey Attorney General Gurbir Grewal and acting state Comptroller Kevin Walsh on Monday announced the formation of the New Jersey COVID-19 Fraud Task Force, a joint federal-state task force to investigate and prosecute a wide range of misconduct arising from the COVID-19 pandemic.

Investigations will include, but are not limited to, the unlawful hoarding of medical supplies, price gouging, charity scams, procurement fraud, insurance fraud, phishing schemes and false and misleading investment opportunities, according to a release.

The three organizations have pledged to marshal the collective investigative power of federal and state law enforcement agencies by forming joint investigative and prosecution teams to quickly address fraud complaints.

Possible misconduct can be reported through a hotline established by the National Center for Disaster Fraud at (866) 720-5721 or Complainants may remain anonymous.

The task force warned New Jerseyans about the most common types of COVID-related frauds and misconduct, including:

  • Unlawful hoarding: The U.S. Department of Health and Human Services, in accordance with President Donald Trump’s Executive Order 13910 and the Defense Production Act, designated health and medical resources necessary to respond to the spread of COVID-19 that are scarce or the supply of which would be threatened by excessive accumulation. These designated materials are subject to the hoarding prevention measures authorized under the order. Individuals or businesses that violate the act will be subject to prosecution.
  • Price gouging: Individuals and businesses may not sell essential goods, like hand sanitizer, for significantly higher prices than in a nonemergency setting. New Jersey’s price gouging law bans excessive price increases during a declared state of emergency and for 30 days after it ends. A price increase is considered excessive if the new price is more than 10% higher than the price charged during the normal course of business prior to the emergency. Price gouging violations are punishable by fines of up to $10,000 for the first violation and $20,000 for each subsequent violation.
  • Treatment scams: Scammers are offering to sell fake cures, vaccines and advice on unproven treatments for COVID-19.
  • Supply scams: Scammers are creating fake shops, websites, social media accounts and email addresses claiming to sell medical supplies currently in high demand, such as surgical masks. When consumers attempt to purchase supplies through these channels, fraudsters pocket the money and never provide the promised supplies.
  • Provider scams: Scammers are also contacting people by phone and email, pretending to be doctors and hospitals that have treated a friend or relative for COVID-19, and demanding payment for that treatment.
  • Charity scams: Scammers are soliciting donations for individuals, groups and areas affected by COVID-19.
  • Phishing scams: Scammers posing as national and global health authorities, including the World Health Organization and the Centers for Disease Control and Prevention, are sending phishing emails designed to trick recipients into downloading malware or providing personal identifying and financial information.
  • App scams: Scammers are also creating and manipulating mobile apps designed to track the spread of COVID-19 to insert malware that will compromise users’ devices and personal information.
  • Investment scams: Scammers are offering online promotions on various platforms, including social media, claiming that the products or services of publicly traded companies can prevent, detect or cure COVID-19, and that the stock of these companies will dramatically increase in value as a result. These promotions are often styled as “research reports,” make predictions of a specific “target price,” and relate to microcap stocks, or low-priced stocks issued by the smallest of companies with limited publicly available information.

Carpenito explained the reason for the task force.

“Attorney General Grewal and I have a well-established, close working relationship, and we both felt it was incredibly important at this time that we combine our resources and form a joint COVID-19 Task Force,” he said in the release. “Our two offices, working in concert with all of our law enforcement partners, will ensure that there is a solid front protecting the public from criminals who are attempting to illegally profit from this health crisis. Whether you’re price ouging on necessities or hawking phony cures or protections, if you’re trying to rip off the public, we will find you and come after you.”

Grewal agreed.

“An unprecedented public health crisis creates an unprecedented opportunity for scammers and con artists,” he said. “Now more than ever, we need to work together to protect our community from fraud. I applaud U.S. Attorney Carpenito for his national leadership on this issue, and I thank acting Comptroller Walsh for his work protecting New Jersey’s taxpayers from waste, fraud, and abuse.”

The task force will include the following federal agencies: the Federal Bureau of Investigation; the U.S. Department of Health and Human Services, Office of the Inspector General; the U.S. Secret Service; the U.S. Postal Inspection Service; Immigration and Customs Enforcement, Homeland Security Investigations; Social Security Administration, Office of Inspector General; and the U.S. Department of Education, Office of Inspector General.

In addition, the task force will include several divisions within the New Jersey Attorney General’s Office, including the New Jersey State Police, the Division of Criminal Justice, the Division of Consumer Affairs, the Division of Law, the Office of the Insurance Fraud Prosecutor and the Office of Public Integrity and Accountability.

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