Licensed pharmacist charged with hoarding and price gouging of N95 masks in violation of Defense Production Act

 

Defendant Richard Schirripa is also charged with making false statements to law enforcement, committing healthcare fraud, and committing aggravated identity theft

Date: May 26, 2020

Contact: newsroom@ci.irs.gov

Richard Schirripa, a/k/a "the Mask Man," a licensed pharmacist, was arrested today on charges of violating the Defense Production Act by hoarding and price gouging scarce N95 masks; making two false statements to law enforcement; committing healthcare fraud; and committing aggravated identity theft. Schirripa surrendered today and will be presented before U.S. Magistrate Judge Ona T. Wang in Manhattan federal court.

According to the allegations in the Complaint unsealed today[1]:

Schirripa engaged in at least three different criminal schemes: (1) hoarding and price gouging of thousands of N95 masks in late March and April 2020, in violation of the Defense Production Act ("DPA"); (2) lying to officers of the Drug Enforcement Administration ("DEA") on two occasions in early 2020; and (3) causing Medicare and Medicaid to be billed for prescriptions based on false representations, from 2014 to 2019, as well as using his pharmacy patients' identifying information, without authorization, in connection with his health care fraud scheme.

As for the first scheme, from at least late March to April 2020, Schirripa engaged in hoarding and price gouging of thousands of 3M N95 masks. Between February and April 8, 2020, Schirripa purchased at least approximately $200,000 worth of N95 masks. On March 25, 2020, the DPA was invoked, making it a crime to engage in hoarding or price gouging of specified equipment, including the types of masks Schirripa had. Schirripa admitted to law enforcement that he was aware of the DPA and its restrictions on price gouging and hoarding. Nevertheless, in the two weeks after March 25, 2020, Schirripa (1) continued to add to his stockpile of N95 masks by buying thousands of additional N95 masks; and (2) charged his customers inflated prices in connection with at least approximately 50 sales that, together, yielded approximately $50,000 in sales revenue. For instance, SCHIRRIPA charged up to $25 per mask for a mask that he purchased for $20 per mask and that generally costs an end-user only approximately $1.27, according to 3M, the manufacturer. Moreover, Schirripa purchased another model of 3M N95 mask for $10 and repeatedly resold it for as much as $15, which constitutes a markup of 50%. His customers were in eight states and included funeral homes and doctors. Agents recovered approximately 6,660 masks from Schirripa.

Schirripa made various statements during this scheme. During a recorded call with an undercover agent (the "UC"), Schirripa said, "We're in a time of emergency and shortage," but added, "when you have something no one else has, it's not a high price." In a text message dated April 2, 2020, Schirripa bragged to a potential customer that he "saw it coming" and the "good thing is no one has them." Schirripa repeatedly sold masks out of his car, including to the UC; during that sale, Schirripa told the UC, "I feel like a drug dealer standing out here."

Second, in both January and February 2020, Schirripa made material false statements to the DEA. On each occasion, Schirripa falsely represented that as part of the recent closure of his pharmacy in New York, New York, he had transferred to others, sold, or destroyed all controlled substances. In fact, Schirripa remained in possession of thousands of controlled substance pills/patches, including fentanyl, oxycodone, and oxymorphone. These substances were all recovered from a safe in Schirripa's home. When agents executed a search warrant at Schirripa's home in April 2020, Schirripa acknowledged that these controlled substances were from his pharmacy and he needed to destroy them. There were nearly 4,000 pills/patches, in total.

Third, Schirripa caused Medicare and Medicaid to be billed for these controlled substance prescriptions, and he falsely represented that these prescriptions were for patients of his pharmacy. In fact, these prescriptions were not for patients of his pharmacy, and Schirripa himself possessed those prescriptions at his home on Long Island. In connection with this scheme, Schirripa used the personal identifying information of his pharmacy's patients, without their authorization.

Schirripa of Fort Salonga, New York is charged with one count of violating the Defense Production Act, which carries a maximum sentence of one year in prison; two counts of making false statements, each of which carries a maximum sentence of five years in prison; one count of healthcare fraud, which carries a maximum sentence of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory minimum sentence of two years in prison, which must run consecutively to any other sentence of imprisonment.

This investigation is being conducted by Internal Revenue Service – Criminal Investigation, HSI-NY, the U.S. Postal Inspection Service, the DEA, the New York City Police Department, U.S. Customs and Border Protection, and the Port Authority Police Department. The U.S. Department of Health and Human Services, the New York State Department of Corrections and Community Supervision, and the Northvale, New Jersey, Police Department are assisting.

This matter is being handled by the Office's Complex Frauds and Cybercrime Unit. Assistant United States Attorney Michael D. Neff is in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.