U.S. Secret Service lauded for stopping $317 million scheme
SAVANNAH, GA: A Georgia man has been sentenced after admitting he attempted to sell 50 million non-existent facemasks to a foreign government.
Paul Penn, 64, of Johns Creek, Ga., was sentenced to five months and 29 days of home confinement by U.S. District Court Judge R. Stan Baker after pleading guilty to Conspiracy to Commit Wire Fraud, said Bobby L. Christine, U.S. Attorney for the Southern District of Georgia. Judge Baker also fined Penn $1,500 and ordered him to serve three years of probation.
“If not for the vigilance of the U.S. Secret Service, Paul Penn and his co-conspirators likely would have lit the fuse on an international scandal by ripping off a friendly foreign government for more than $300 million,” said U.S. Attorney Christine. “Instead, they halted the scheme before the criminals got a dime, and prevented these crooks from profiting from pandemic fear.”
As described in court documents and testimony, Penn, through his company, Spectrum Global Holdings, LLC, agreed with unnamed co-conspirators to act as a middleman in the attempted sale of 50 million 3M Model 1860 Respirator Masks that he and his co-conspirators did not actually possess. Under the deal, Penn was to broker the sale in exchange for a cut of the $317 million sales price, which was more than 500 percent higher than the previous normal market value for N-95 masks.
Based on representations from Penn and others, the buyer, a foreign government, wired the funds to complete the purchase, which was disrupted by the U.S. Secret Service just before the transaction could be completed. All of the funds were returned to the foreign government.
“This case should serve as a strong deterrent to those considering exploiting the COVID-19 pandemic to enrich themselves through fraud. The nation’s citizens, businesses and our international partners are counting on the U.S. Secret Service and its federal law enforcement and private sector partners to safeguard it and maintain the public trust,” said Glen M. Kessler, Resident Agent in Charge of the Secret Service Savannah Office. “Tackling the threat of cyber-enabled COVID-19 scams requires an immediate response to safeguard our nation during these unprecedented times.”
Please report COVID-19 fraud, hoarding or price-gouging to the National Center for Disaster Fraud’s National Hotline at (866) 720-5721, or go to justice.gov/disastercomplaintform.
U.S. Attorney Christine acclaimed the hard work of the investigatory team, led by the U.S. Secret Service, for disrupting the scheme.
The case was prosecuted for the United States by the U.S. Attorney’s Office for the Southern District of Georgia.