Federal authorities are investigating an international, coronavirus-related scam that conned a California healthcare union into believing it struck a deal for hospitals to buy 39 million N95 face masks, according to a report.
The FBI and prosecutors in Pennsylvania uncovered the scheme while trying to determine whether the personal protective equipment could be seized under the Defense Production Act that President Trump invoked last month, the Los Angeles Times said.
“We believe we disrupted fraud,” Pittsburgh US Attorney Scott Brady told the paper.
The Greater New York Hospital Association, which represents more than 160 hospitals and health care systems across the state, was among the organizations that planned to purchase the masks, according to an announcement that the United Health Care Workers West made late last month.
The union, which represents 97,000 hospital employees across the Golden State, and an unidentified Pittsburgh businessman were both duped by the scheme, but no money ever exchanged hands and neither is under investigation, the Times said.
The targets of the probe are a purported broker in Australia and a supplier in Kuwait, both of whom used the encrypted WhatsApp messaging service to communicate with the Pittsburgh businessman, the Times said.
The businessman, who was serving as a middleman in the phony deal, told investigators he planned to buy the masks for $3.50 each and turn a “slight profit,” which the Times said could have amounted to $9 million.
The UHW — which is part of the powerful Service Employees International Union and which organized petition drives against three hospital networks that declined to buy masks — said the safety gear would be available for $5 each and that it wouldn’t make anything for its role in arranging the sales.
But the bogus deal collapsed when employees of the Oakland-based, Kaiser Permanente managed-care company complained that they hadn’t received any mask after their employer placed an order for 6 million.
Union spokesman Steve Trossman told the Times that the UHW’s only role was connecting the Pittsburgh businessman and the hospitals.
“As far as we knew, he had legitimate masks and the people who were going to purchase those masks were going to fully vet it and check it out and do their due diligence,” he said.
Trossman also said that the union “was trying to save the lives of healthcare workers and patients” and that it was “proud of having made that attempt.”