Justice Department Focuses on Fraud as a Result of Coronavirus Pandemic
Attorney General William Barr has directed federal prosecutors to prioritize the investigation and prosecution of fraud related to the coronavirus pandemic.1 Each U.S. Attorney in the country is to appoint a Coronavirus Fraud Coordinator to serve as the legal counsel for the district on coronavirus matters and direct prosecution of coronavirus-related crimes. Barr is also urging the public to report suspected fraud schemes related to the COVID-19 outbreak.
Last Saturday, March 21, 2020, the Department of Justice initiated its first enforcement action related to the coronavirus in the Western District of Texas, Austin Division. The civil complaint seeks a restraining order against a website offering fake coronavirus vaccines.
The complaint alleges that the website “coronavirusmedicalkit.com” was offering World Health Organization (“WHO”) vaccine kits in exchange for a shipping charge of $4.95.2 There are currently no official COVID-19 vaccines, distributed by WHO or otherwise. District Judge Robert Pitman issued the temporary restraining order the next day requiring the registrar of the fraudulent website to remove it from public view.3 The government investigators explained that fraudsters may seek to profit from the fear and uncertainty Americans feel for themselves and their families.
In the face of the pandemic, the DOJ elected to file a civil action to seek immediate relief to prevent harm to the public before the fraudster(s) piloting the website could be identified. Using a civil procedure buys the DOJ time to complete its investigation. We believe criminal charges are likely to ensue in this case. As U.S. Attorney John Bash of the Western District of Texas put it: “My office will continue to be aggressive in targeting these sorts of despicable frauds for the duration of this emergency.”4
In addition to fraudsters peddling fake cures and vaccines like the website discussed above, General Barr warned of fake charitable organizations soliciting donations, medical providers misusing patient information collected for COVID-19 testing, and phishing emails from entities posing to be legitimate healthcare organizations.
With COVID-19-related fraud rising to the top of the DOJ’s priorities, third parties such as domain name registrars and financial institutions need to be on alert lest they be wrapped up in an enforcement action. Banks and other money service businesses should be mindful of their know-your-customer policies so they can weed out those seeking to conceal assets after taking advantage of the crisis.
Recognizing that this pandemic is unlike any we have seen in recent memory, V&E has developed a task force to help clients tackle this and other COVID-19 related issues, such as public company disclosures and governance matters, remote workforce and IT considerations, and litigation considerations (including force majeure provisions). V&E stands ready to provide calm, competent counsel to its clients in the face of this crisis.
Please visit our Coronavirus: Preparation & Response series for a list of additional resources we hope will be helpful.
This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.