Coronavirus Creates Cornucopia of Fraud

Covid-19 Opens up Vast Opportunities for Today’s Snake Oil Salesmen

The COVID-19 crisis in the United States has opened vast opportunities for fraud of every type. The scale and scope of COVID-related criminal activity is so vast, we need to take an Aristotelian approach and separate it into categories. 

          My favorite is the movable Roach Motel approach. In numerous locations, large semi-tractor trailer trucks have pulled up into parking lots, quickly erected signs advertising COVID testing, set up tents, and started taking drive-through “customers.” The unsuspecting citizen drives by, makes a U-turn, gets in line, hands over their Medicare and Social Security cards to “verify” that they “qualify” for the “government subsidized rate of $245 per test,” has their nose swabbed, then drives away, never to hear anything further. The tent disappears, the receipt means nothing, the 800 number to call does not work (“don’t call for 72 hours,” customers are advised ), no test results ever arrive, and the scammer sells off the confidential Medicare and Social Security information to criminal networks involved in filing false claims and other forms of identity fraud. Like the traveling snake-oil salesmen of 19th-century America, after a few days, the mobile testing tent complex moves to another location, whereupon more roaches walk into the trap. One government warning noted that if the tester is “wearing construction clothing instead of PPE,” it might indicate potential fraud. You think?

          There is much more snake oil to be had. The Food and Drug Administration (FDA) has reported 69 fraudulent coronavirus disease products. Many are simply herbal compounds or essential oils being repackaged as coronavirus products. Examples include the “COVID-19 Core Formula,” “Immunity Blend,” and “Protection Blend.” One has CBD plus silver, iodine, medicinal mushroom, Vitamin C, selenium, zinc, Vitamin D3, astragalus, and elderberry. By the way, astragalus is also known as “milkvetch,” “goat’s-thorn,” and “locoweed,” and can contain the neurotoxin swainsonine.

The names of these drugs perhaps sound convincing. Examples include “Alpha 11” and “Alpha 21,” made in India, “NAD+,” “Sani-Bar GK95,” “Coronavirus Protocol,” “Coronavirus Boneset Tea,” “Coronavirus Cell Protection,” “FullerLifeC60,” and “China Oral Nosode.” My favorites include the “Miracle Mineral Solution,” the “Superblue Silver Immune Gargle,” “True Viral Defense,” “IMMUNE SHOT,” and “Germ Stopper.” The winner is “Homeopathic Genus Epidemicus.” Some are based on CBD (Cannabidiol), presumably because you need to be stoned to believe the advertising. 

          A few of the products are just plain weird. EUCYT Laboratories is selling an entire coronavirus line derived from human umbilical cords and umbilical blood. These products are “VidaCord(TM),” “VidaGel(TM),” and “VidaStem(TM).” There also is an amniotic fluid-derived product called “VidaFlo(TM).” Pardon me for getting sick just thinking about it.

          One company was selling a hand sanitizer product that was “alcohol free.” A flavored honey product was being sold as “COVID-19 COUGH Syrup.” There also is a “Corona-Cure Coronavirus Infection Prevention Nasal Spray” on the market, as well as “CoronaDefender Herbal Sachet-S.” In early June, a temporary restraining order was issued against “whiteeaglenativeherbs.net,” which was engaged in selling “unapproved and unproven products related to COVID-19 cures and treatments.”

          A few days ago, the president of a California-based medical technology company was charged with participation in schemes to mislead investors, to manipulate the company’s stock price, and to submit over $69 million in false and fraudulent claims for allergy and COVID-19 testing. One count of securities fraud and one count of conspiracy to commit healthcare fraud. The complaint alleges that the defendant “turned to exploiting the pandemic by fraudulently promoting an unproven COVID-19 test to the market.”

          Last week, a federal grand jury returned an indictment against a person who had been soliciting persons to invest in a company manufacturing tablets that would purportedly prevent coronavirus infections and produce an injectable cure for those already suffering from COVID-19. The cure was called “QC20,” and the treatment was called “QP20.” The promoter cited a “patent-pending” cure, but there was none. The investment was “risk free” and had a “guaranteed” return on investment of 100 percent. Somewhere between $750,000 and $1,000,000 already had been scammed when the alleged cozener was busted.

          The same week, the United States filed a civil forfeiture complaint against a group in China that had swindled more than half a million dollars selling N-95 face masks and respirators at inflated prices. The payments were being made through PayPal accounts. After placing the orders, the customers (individuals, a Florida municipality, and a Wisconsin sheriff’s office, among others) would receive toys or rhinestone necklaces. (See Case 7:20-cv-00321-EKD, U.S. District Court, Western District of Virginia, “Verified Complaint for Forfeiture In Rem”). I suppose if you are going to engage in this type of scamming, don’t target a sheriff’s office.

          Of course, the Payroll Protection Program loan was bound to bring out the criminal element. A number of companies that filed for this help learned that someone already had filed for them and was diverting the funds. It seems that a number of loans went out to non-functioning businesses, such as “Motorcity Solar Energy, Inc.,” which allegedly obtained $590,000 to help cover for 68 non-existent employees. Another person was busted when they simply converted to cash or a cashier’s check approximately $140,000 of the $190,000 that had been received through the loan program. I believe the term for this type of transaction is “a red flag.”

          The Small Business Administration imposes a set of very stringent controls on how the money is to be used and accounted for. Converting everything to cash and getting ready to disappear is not one of the approved uses.

          There also are a number of “services” standing by ready to help the small business-owner file for help. But actually, they are simply fraudsters who take the required information, file the papers, abscond with the money, and leave the helpless small business-owner holding the bag.

          The information technology criminals also have been active. A number of websites advertise COVID-19 information simply to serve as “honey traps” to attract viewers who will click on a link and download malware into their computer. Some websites are fake, but have web addresses that are similar to the real ones. For example, there may be a “CDC.com,” when the real government website is “CDC.gov.”

          Finally, a number of fake charities have sprung up offering to help those suffering from coronavirus.

          Both the federal and state governments have issued numerous warnings to citizens, but it appears only a tiny fraction of the criminals have been rounded up.

          America has retained its reputation as being a fertile ground for innovation – of every type.

Note: The graphic of the snake oil bottle is no longer under copyright.