Justice Department Announces Its First Enforcement Action Involving COVID-19 Following Attorney General’s New Directive to Prioritize Investigation and Prosecution of Coronavirus-Related Fraud

On March 22, 2020, the U.S. Department of Justice (DOJ) announced that the U.S. Attorney’s Office of the Western District of Texas has filed the first action in federal court concerning fraud related to the COVID-19 (coronavirus) pandemic.  The announcement follows Attorney General William Barr’s directive earlier in the month to all U.S. Attorneys to prioritize the investigation and prosecution of Coronavirus-related fraud schemes.  The enforcement action, involving the promise of an alleged fake vaccine for the virus, signals the speed and the seriousness with which the federal government intends to handle instances where the public’s safety is put further at risk during the current health crisis.

Filed on March 21, 2020, the civil complaint alleges that the currently unknown or unnamed operators of the website “coronavirusmedicalkit.com” fraudulently seek to induce visitors to the website to pay a $4.95 “shipping fee” for a “free” World Healthcare Organization “vaccine kit.”  The offer is completely fake; the World Health Organization is not offering vaccine kits for COVID-19, free or otherwise.  As alleged in the complaint and accompanying exhibits, the operators used techniques to lend credence to the kit offer such as including on the website a photograph of Dr. Anthony Fauci, the head of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health (NIH) and linking to a payment/billing information webpage bearing the FedEx logo.  The complaint pleads one count of wire fraud under 18 U.S.C. § 1343. As a part of the relief requested, the Government asked for a preliminary injunction against the operators of the website as well as “all other persons or entities in active concert or participation with them.”

One day later, U.S. District Judge Robert Pitman granted the Government’s request.  The Court issued a temporary restraining order enjoining the operators from maintaining and/or doing business through the website.  The TRO further required the website registrar, identified as NameCheap, Inc., to take immediate action to block access to the false and fraudulent information posted to the website. Specifically the TRO requires, among other steps, that the registrar change the Domain Name System (DNS) record to remove any named server and leave it blank, impose a registry lock on the domain name, and lock any accounts to prevent any change, transfer, or deletion without previous court authorization.  The Court has ordered a hearing to show cause for March 31, 2020.

According to the filed papers, the fraudulent statements were discovered when an agent with the Federal Bureau of Investigation visited the website last week.  The enforcement action comes after Attorney General Barr issued a memorandum on March 16, 2020 to all U.S. Attorneys prioritizing the detection, investigation, and prosecution of criminal conduct related to COVID-19.  In the memorandum, Barr stated “[t]he pandemic is dangerous enough without wrongdoers seeking to profit from public panic and this sort of conduct cannot be tolerated.”  Three days later, Deputy Attorney General Jeffrey Rosen followed up with the specific directive that each U.S. Attorney appoint a Coronavirus Fraud Coordinator to serve as legal counsel for the respective judicial district on matters involving COVID-19, to direct the prosecution of related crimes, and to conduct outreach and awareness.  Both memoranda are available to the public on the Department of Justice’s website.

As of the writing of this Alert, the website subject to the enforcement action remains accessible online in spite of the Court’s order.  This fact illustrates the need for the public to protect themselves in these uncertain times by remaining vigilant in verifying information and following directives only from trustworthy official sources.  To that end, the Department of Justice has issued the following helpful recommendations:

• Independently verify the identity of any company, charity, or individual that contacts you regarding COVID-19.
• Check the websites and email addresses offering information, products, or services related to COVID-19. Be aware that scammers often employ addresses that differ only slightly from those belonging to the entities they are impersonating.  For example, they might use “cdc.com” or “cdc.org” instead of “cdc.gov.”
• Be wary of unsolicited emails offering information, supplies, or treatment for COVID-19 or requesting your personal information for medical purposes. Legitimate health authorities will not contact the general public this way.
• Do not click on links or open email attachments from unknown or unverified sources. Doing so could download a virus onto your computer or device.
• Make sure the anti-malware and anti-virus software on your computer is operating and up to date.
• Ignore offers for a COVID-19 vaccine, cure, or treatment. Remember, if a vaccine becomes available, you won’t hear about it for the first time through an email, online ad, or unsolicited sales pitch.
• Check online reviews of any company offering COVID-19 products or supplies. Avoid companies whose customers have complained about not receiving items.
• Research any charities or crowdfunding sites soliciting donations in connection with COVID-19 before giving any donation. Remember, an organization may not be legitimate even if it uses words like “CDC” or “government” in its name or has reputable looking seals or logos on its materials.  For online resources on donating wisely, visit the Federal Trade Commission (FTC) website.
• Be wary of any business, charity, or individual requesting payments or donations in cash, by wire transfer, gift card, or through the mail. Don’t send money through any of these channels.
• Be cautious of “investment opportunities” tied to COVID-19, especially those based on claims that a small company’s products or services can help stop the virus. If you decide to invest, carefully research the investment beforehand.  For information on how to avoid investment fraud, visit the U.S. Securities and Exchange Commission (SEC) website.

The public has been asked to report suspected fraud schemes related to COVID-19 by calling the National Center for Disaster Fraud (NCDF) hotline (1-866-720-5721) or by e-mailing the NCDF at disaster@leo.gov.

Please refer to the AGG Coronavirus webpage for additional legal alerts.  This alert is not intended to be comprehensive, nor does it constitute legal advice.  Please reach out to an AGG attorney if you require specific advice.