Full text
Mayer Brown LLP
1999 K Street, NW
Washington, D.C. 20006
United States of America
T: +1 202 263 3000
www.mayerbrown.com
Carmine R. Zarlenga
T: +1 202 263 3227
czarlenga@mayerbrown.com
June 4, 2020
Via ECF
The Honorable Loretta A. Preska
United States District Judge
United States District Court, S.D.N.Y.
Daniel Patrick Moynihan United States Courthouse
500 Pearl Street
New York, New York 10007
Re: 3M Company v. Performance Supply, LLC; Case No. 1:20-cv-02949-LAP
Update on Status of the Action
Dear Judge Preska:
We represent Plaintiff 3M Company (“3M”) in the above-referenced civil action. Pursuant
to this Court’s May 4, 2020 Order (Dkt. No. 22 at ¶ 6), I write to update the Court on two
developments that have occurred since it entered a preliminary injunction against Defendant
Performance Supply, LLC (“Defendant”) on May 4. See Dkt. No. 22.
First, Defendant failed to respond to the Complaint by its May 5, 2020 deadline to do so.
See Dkt. No. 18.
Second, on May 21, 2020, the United States District Attorney for the Southern District of
New York charged Defendant’s principal, Mr. Ronald Romano, in a three-Count criminal
Complaint regarding his participation in an alleged “multi-faceted fraud scheme” to sell 3M-
branded N95 respirators to government agencies at grossly inflated prices during the COVID-19
global pandemic. I enclose a copy of the unsealed criminal Complaint for the Court’s convenience.
As alleged in the criminal Complaint, Mr. Romano participated in the alleged conspiracy
with three co-conspirators, three brokers, and a vendor. 3M is working diligently to unravel this
vast, complex alleged conspiracy to assess whether it should: (i) seek leave to file an Amended
Complaint in this action based on the allegations in the criminal Complaint, and/or (ii) obtain a
Certificate of Default, and then move for a Default Judgment against Defendant. We expect to
move forward soon.
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 1 of 27
Mayer Brown LLP
The Honorable Loretta A. Preska
June 4, 2020
Page 2
Respectfully submitted,
/s/ Carmine R. Zarlenga
Carmine R. Zarlenga
Enclosure
cc (via USPS):
Performance Supply, LLC
c/o Ronald Romano
3 Westbrook Way
Manalapan, New Jersey 07726
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 2 of 27
1
Approved: ________________________________________
NICHOLAS W. CHIUCHIOLO / TIMOTHY V. CAPOZZI
Assistant United States Attorneys
Before:
THE HONORABLE KEVIN NATHANIEL FOX
United States Magistrate Judge
Southern District of New York
- - - - - - - - - - - - - - - - x
:
UNITED STATES OF AMERICA
:
SEALED COMPLAINT
:
- v. -
:
Violations of
:
18 U.S.C. §§ 371, 1343,
RONALD ROMANO,
:
1349, and 2
:
COUNTY OF OFFENSE:
Defendant.
:
NEW YORK
:
- - - - - - - - - - - - - - - - x
SOUTHERN DISTRICT OF NEW YORK, ss.:
DELEASSA PENLAND, being duly sworn, deposes and says that she
is a Special Agent with the United States Attorney’s Office for
the Southern District of New York (the “USAO”), and charges as
follows:
COUNT ONE
(Wire Fraud Conspiracy)
1.
From at least in or about February 2020, up to and
including in or about April 2020, in the Southern District of New
York and elsewhere, RONALD ROMANO, the defendant, and others known
and unknown, willfully and knowingly did combine, conspire,
confederate, and agree together and with each other to commit wire
fraud, in violation of Title 18, United States Code, Section 1343.
2.
It was a part and object of the conspiracy that RONALD
ROMANO, the defendant, and others known and unknown, willfully and
knowingly, having devised and intending to devise a scheme and
artifice to defraud, and for obtaining money and property by means
of false and fraudulent pretenses, representations, and promises,
would and did transmit and cause to be transmitted by means of
wire, radio, and television communication in interstate and
foreign commerce, writings, signs, signals, pictures, and sounds
for the purpose of executing such scheme and artifice, in violation
of Title 18, United States Code, Section 1343, which scheme
20 MAG 5276
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involved the use of interstate wires, including emails telephone
calls, and text messages transmitted into the Southern District of
New York.
(Title 18, United States Code, Section 1349.)
COUNT TWO
(Wire Fraud)
3.
From at least in or about February 2020, up to and
including in or about April 2020, in the Southern District of New
York and elsewhere, RONALD ROMANO, the defendant, willfully and
knowingly, having devised and intending to devise a scheme and
artifice to defraud, and for obtaining money and property by means
of false and fraudulent pretenses, representations, and promises,
and attempting to do so, transmitted and caused to be transmitted
by means of wire, radio, and television communication in interstate
and foreign commerce, writings, signs, signals, pictures, and
sounds for the purpose of executing such scheme and artifice, to
wit, ROMANO, and others known and unknown, participated in a scheme
to attempt to price gouge the City of New York (“NYC”), and other
victims, during the novel coronavirus/COVID-19 pandemic by making
false and fraudulent statements seeking to induce NYC to pay more
than $45 million for what ROMANO represented to be 3M-brand N95
respirators, representing a more than 400% markup of the list price
for such respirators, which scheme deprived victims of the ability
to make informed decisions and exposed those victims to economic
risk and involved the use of interstate wires, including emails,
telephone calls, and text messages transmitted into and out of the
Southern District of New York.
(Title 18, United States Code, Sections 1343 and 2.)
COUNT THREE
(Conspiracy to Violate the Defense Production Act)
4.
From at least on or about March 25, 2020, up to and
including at least in or about April 2020, in the Southern District
of New York and elsewhere, RONALD ROMANO, the defendant, and others
known and unknown, willfully and knowingly combined, conspired,
confederated, and agreed together and with each other to commit an
offense against the United States, to wit, hoarding of designated
scarce materials, in violation of Title 50, United States Code,
Section 4512.
5.
It was a part and object of the conspiracy that RONALD
ROMANO, the defendant, and others known and unknown, willfully and
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 4 of 27
3
knowingly would and did accumulate, for the purpose of resale at
prices in excess of prevailing market prices, materials which have
been designated by the President as scarce materials or materials
the supply of which would be threatened by such accumulation, to
wit, certain respirators and facemasks, in violation of Title 50,
United States Code, Section 4512.
Overt Acts
6.
In furtherance of the conspiracy and to effect the
illegal object thereof, the following overt acts, among others,
were committed in the Southern District of New York and elsewhere:
a.
On or about March 31, 2020, ROMANO caused to be
transmitted to NYC false and misleading references for the purpose
of causing NYC to purchase approximately seven million face
respirators at more than a 400% markup from the 3M list price.
b.
On or about March 29, 2020, ROMANO caused to be
transmitted to the Florida Division of Emergency Management (the
“FDEM”) a formal quote for N99 facemasks at an approximately 500%
markup.
(Title 18, United States Code, Section 371.)
The bases for deponent’s knowledge and for the foregoing
charges are, in part, as follows:
7.
I am a Special Agent with the United States Attorney’s
Office for the Southern District of New York, and I have been
personally involved in the investigation of this matter which has
been conducted by the Special Agents of the USAO and Special
Investigators with the New York City Department of Investigations.
I have been a Special Agent with the USAO for approximately five
years. In that capacity, I primarily investigate complex fraud
schemes and public corruption.
8.
This affidavit is based in part upon my own observations,
my conversations with other law enforcement agents and others, my
examination of documents and reports prepared by others, my
interviews of witnesses, and my training and experience. Because
this affidavit is being submitted for the limited purpose of
establishing probable cause, it does not include all of the facts
that I have learned during the course of the investigation. Where
the contents of documents, including emails, and the actions,
statements and conversations of others are reported herein, they
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 5 of 27
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are reported in substance and in part, except where specifically
indicated otherwise.
OVERVIEW OF THE SCHEME
9.
The charges in this Complaint arise from a multi-faceted
fraud scheme by RONALD ROMANO, the defendant, and others to price
gouge victims, including NYC, exploiting the victims’ critical
need to obtain legitimate, potentially lifesaving personal
protective equipment (“PPE”), such as respirators (colloquially
referred to as facemasks), as quickly as possible in order to
supply frontline healthcare workers and first responders during
the COVID-19 public health emergency. As part of their scheme,
ROMANO
and
others
repeatedly
made
false
and
fraudulent
representations regarding, among other things, their authority and
ability to supply the promised PPE, and their track record in other
PPE deals. These misrepresentations were intended to and in fact
did cause their victims falsely to believe that they were
negotiating with legitimate PPE suppliers when that was not true,
thus depriving their victims of the ability to make informed
decisions during a global pandemic and exposing the victims to
tremendous risk. As set forth below, the defendant’s fraudulent
scheme included, among other things, a brazen and fraudulent
attempt to convince, via a series of misrepresentations, NYC to
pay the scheme’s participants more than $45 million for a promised
delivery of seven million 3M-brand N95 respirators, representing
a more than 400% markup from the 3M list price and the price at
which ROMANO and others attempted to acquire the respirators for
resale, during late March and early April of this year, when NYC
was at its most vulnerable. In addition, ROMANO and others
attempted to sell non-3M brand facemasks at prices marked up
between approximately 250% and 1,100% from the manufacturer’s
sales prices.
RELEVANT INDIVIDUALS AND ENTITIES
10.
RONALD ROMANO, the defendant, resides in Manalapan, New
Jersey, and operates a used car dealership (the “Car Dealership”)
in the same town. As alleged in greater detail below, ROMANO is
also
the
President
of
another
New
Jersey-based
company
(“Vendor-1”) that he and others used in furtherance of the fraud
scheme. Other than as alleged herein, ROMANO does not appear to
have experience selling PPE or medical equipment.
11.
Co-Conspirator-1 (“CC-1”) is a business associate of
RONALD ROMANO, the defendant, in ROMANO’s Car Dealership, and the
purported Vice President of Global Sales for Vendor-1. Other than
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 6 of 27
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as alleged herein, CC-1 does not appear to have experience selling
PPE or medical equipment.
12.
Co-Conspirator-2 (“CC-2”) has interests in various
business entities, including a company that manufactures heating
products (“CC-2 Company-1”) with locations in New Jersey and
Ireland. Based on my participation in this investigation,
including my review of email correspondence obtained pursuant to
judicially authorized warrants, I am aware that CC-2 was a friend
and business associate of RONALD ROMANO, the defendant, and claimed
to have sources of supply of certain PPE, including N95 and N99
respirators.
13.
Co-Conspirator-3 (“CC-3”) is a former Minister of
Foreign Investment of a European nation. CC-3 purported to have
expertise in transnational business transactions and, as set forth
in greater detail below, attempted to broker sales of respirators
and facemasks. At all relevant times, CC-3 resided in New York,
New York.
14.
“Broker-1” is the co-founder and Chief Executive Officer
of a Pennsylvania-based
packaging
company
(the
“Packaging
Company”) and, as alleged in greater detail herein, attempted to
broker sales of respirators and facemasks. At all relevant times,
Broker-1 resided in Philadelphia, Pennsylvania.
15.
“Broker-2” is the co-founder and Chief Operating Officer
of the Packaging Company, is married to Broker-1, and, as alleged
in greater detail herein, attempted to broker sales of respirators
and facemasks. At all relevant times, Broker-2 resided in
Philadelphia, Pennsylvania.
16.
“Broker-3” is an attorney and broker who purports to
have expertise in, among other things, raising capital for health
care companies and hedge funds. As alleged in greater detail
herein, Broker-3 attempted to broker sales of PPE facemasks. At
all relevant times, Broker-3 resided in the vicinity of Miami,
Florida.
17.
The 3M Company (“3M”) is a manufacturer and provider of,
among other things, PPE for healthcare professionals, industry
workers, and the public. 3M is headquartered in St. Paul,
Minnesota.
18.
Vendor-1 is a limited liability company organized under
the laws of New Jersey, with its registered place of business in
Manalapan, New Jersey, at an address where RONALD ROMANO, the
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 7 of 27
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defendant, is known to reside. ROMANO created Vendor-1 in or about
2012 and listed himself as the company’s President. While the
original business purpose of Vendor-1 is unclear, it appears to
have no record of selling PPE prior to the COVID-19 pandemic.
Based on my review of bank records, government records, and public
source materials, it appears that Vendor-1 was mostly inactive
until ROMANO and his co-conspirators commenced the fraud scheme
alleged herein, in or about February 2020. Indeed, Vendor-1 had
no legal status when the fraud scheme started. On or about
February 11, 2020, the New Jersey Department of the Treasury,
Division of Revenue and Enterprise Services, sent a letter to
ROMANO stating, in part, that Vendor-1 was in “revoked status”
because the company had failed to comply with the state’s reporting
requirements. Based on my review of Vendor-1’s bank records, I am
aware that on or about March 17, 2020, Vendor-1 paid $500 to
reinstate Vendor-1’s legal status with the State of New Jersey.
Vendor-1 appears to have no website or social media presence.1
THE GLOBAL COVID-19 PANDEMIC
19.
Based on my experience and my knowledge derived from
this investigation and my review of publicly-available documents
and public reporting, I have learned the following, among other
things:
a.
Towards the end of 2019, there was public reporting
of a novel coronavirus, within the Wuhan Province of the People’s
Republic of China, causing the coronavirus disease 2019 (“COVID-
19”). Individuals with COVID-19 can have a wide array of symptoms,
including: cough, shortness of breath, fever, chills, muscle pain,
sore throat, and/or loss of taste or smell. In some cases,
complications from COVID-19 may cause death. As of May 20, 2020,
there have been approximately 323,256 deaths worldwide publicly
attributed to COVID-19.
b.
According to the Centers for Disease Control (the
“CDC”), the virus that causes COVID-19 is believed to spread
through respiratory droplets produced when an infected person
coughs or sneezes. The virus can be transmitted if these droplets
land in the mouths or noses of nearby people. Accordingly, the
CDC has issued guidance recommending the use of face coverings to
1 During the COVID-19 pandemic and the fraud scheme alleged herein,
ROMANO planned to create a website for Vendor-1. On or about March
13, 2020, ROMANO sent a text message to CC-2 that stated, “I’m
going to build a website. I’m told the second spike of virus will
be in October may be even bigger.”
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 8 of 27
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prevent the spread of the virus. Likewise, on or about April 15,
2020, New York Governor Andrew M. Cuomo issued an executive order
requiring all people in New York to wear face coverings in public.
c.
While the novel coronavirus was first detected in
China, the virus quickly spread across the globe. By March 2020,
NYC became the epicenter of COVID-19 within the United States,
having far more positive cases and deaths than any other state or
region in the United States.
d.
The rapid spread of COVID-19 across the country and
the New York metropolitan area threatened to overwhelm the
provision of healthcare services in the Nation generally and New
York specifically. To that end, federal and state officials in
New York and metropolitan area hospitals took extraordinary steps
to meet the critical need to treat those infected, including the
creation of makeshift hospitals.
THE DEFENSE PRODUCTION ACT
20.
To address the national emergency caused by the spread
of the novel coronavirus, on or about March 18, 2020, the President
of the United States issued Executive Order 13909, which invoked
the powers of the Defense Production Act of 1950, 50 U.S.C. §§
4501 et seq. (the “Act”). Among other things, the Act authorizes
the President to “allocate materials . . . in such a manner, upon
such conditions, and to such extent as he shall deem necessary or
appropriate to promote the national defense. Id. at 4511(a)(2).
Under the Act, the President may control the “general distribution
of any material in the civilian market” upon a finding: “(1) that
such material is scarce and critical material essential to the
national defense, and (2) that the requirements of the national
defense for such material cannot otherwise be met without creating
a significant dislocation of the normal distribution of such
material in the civilian market to such a degree as to create
appreciable hardship.” Id. at 4511(b).
21.
To prevent the hoarding of scarce and critical materials
during a national crisis, the Act provides that “no person shall
accumulate (1) in excess of the reasonable demands of business,
personal, or home consumption, or (2) for the purpose of resale at
prices in excess of prevailing market prices, materials which have
been designated by the President as scarce materials or materials
the supply of which would be threatened by such accumulation.”
Id. at 4512.
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22.
The President delegated authority to the Secretary of
Health and Human Services (“HHS”) to identify specific health and
medical resources that meet the criteria under the Act. On March
25, 2020, HHS exercised such authority and published a notice, see
85 Fed. Reg. 17592, designating the following health and medical
resources, among others, under the Act as scarce materials or
materials the supply of which would be threatened by the
accumulation in excess of reasonable demands for the purpose of
resale at prices in excess of prevailing market prices: (i) N95
filtering facepiece respirators; (ii) other filtering facepiece
respirators (e.g., those designated as N99, N100, R95, R99, R100,
or P95, P99, P100), including single-use, disposable half-mask
respiratory protective devices that cover the user’s airway (nose
and mouth); (iii) PPE facemasks, including any masks that cover
the user’s nose and mouth and may or may not meet fluid barrier or
filtration efficiency levels; (iv) PPE surgical masks; and (v) PPE
face shields.
THE DEMAND FOR N95 RESPIRATORS
23.
Based on my experience and my knowledge derived from
this investigation,
including
my
participation
in
witness
interviews, my review of reports and records, and my review of
publicly-available documents and public reporting, I have learned
the following, among other things:
a.
Due to the combination of the highly transmissible
nature of the novel coronavirus and the unprecedented demand for
emergency medical services to treat patients presenting with
COVID-19 symptoms, hospitals and medical professionals have
experienced critical shortages of PPE, such as one-time usage
facemasks. PPE is necessary to protect medical professionals and
first responders who are on the frontline battling the global
COVID-19 pandemic. In particular, N95 respirators can prevent
virus-carrying
particles
from
reaching
the
wearer
when
appropriately selected, fitted, and worn over the mouth and nose.
b.
By March 2020, it was widely reported that
healthcare providers and first responders, including police
departments and fire departments, faced critical shortages of PPE,
including face respirators. Because of New York’s critical
shortage of certain PPE and the exponential demand, Governor Andrew
M. Cuomo signed an executive order authorizing the New York
National Guard to seize unused PPE from private health care
organizations and place them in hospitals that need them the most
in NYC.
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 10 of 27
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c.
Based on my review of public source material and my
participation in witness interviews, I am aware that 3M-brand N95
respirators were generally (and remain) a sought after brand of
respirators
by
healthcare
providers
and
state
and
local
governments. 3M’s N95-rated filtering respirators have a
filtration efficiency of at least 95% against non-oily particles.
d.
Notwithstanding this surging demand, 3M has not
increased the prices that it charges for 3M-brand N95 respirators.
3M’s per-respirator suggested retail price, i.e., list price, for
3M-brand models 1860 and 8210 respirators are $1.27 and $1.02-
$1.31, respectively.
e.
3M sells its safety products through authorized
distributors. 3M controls the distribution of its safety products
to ensure that its authorized distributors adhere to strict
quality-control standards, given that consumers rely on the
efficacy of 3M’s products for their health and safety. Thus, 3M
vets its potential authorized distributors and controls the
distribution of its products through authorized distribution
agreements. 3M does not authorize third parties to manufacture
its products, and authorized distributors must acquire 3M products
directly from 3M.
f.
At all times relevant to the allegations contained
herein, neither RONALD ROMANO, the defendant, nor his company,
Vendor-1, was authorized to sell or solicit orders for 3M products,
including 3M-brand N95 respirators.
THE FRAUD SCHEME
ROMANO, CC-1, and CC-2
Enter PPE Market
24.
Based on my experience and my knowledge derived from
this investigation,
including
my
participation
in
witness
interviews, my review of reports and records, my review of
correspondence and documents obtained pursuant to judicially-
authorized warrants, and my review of publicly-available documents
and public reporting, I have learned the following, among other
things:
a.
Beginning in or about February 2020, RONALD ROMANO,
the defendant, and others, including his business associate, CC-1,
and his friend and business associate, CC-2, commenced efforts to
obtain for resale large quantities of PPE, including N95
respirators. As described below, the potential sources of PPE
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 11 of 27
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included a Mexico-based company, a “hedge fund” associated with
CC-2, a Peruvian-based exporter, and 3M itself.
b.
ROMANO and CC-2 discussed, in substance and in
part, that they could get rich quick by closing a sale of
respirators. On March 9, 2020, ROMANO sent a text message to CC-2,
stating in part, “I’m working on a few deals that if I get any of
them you might be buying a Ferrari.”
The Purported Mexico-Sourced Respirators
c.
Starting in or about February 2020, ROMANO’s friend
and business associate, CC-2, began negotiating with a Mexico-
based company to purchase, for purposes of resale, face coverings
and other PPE, and ROMANO and CC-2 had an ongoing dialogue about
obtaining PPE from various sources. In turn, ROMANO, among others,
attempted to sell the PPE sourced by CC-2. To that end, in or
about March 2020, ROMANO contacted CC-3, whom ROMANO met a few
years prior, and asked CC-3 to sell face respirators sourced by
ROMANO. ROMANO and CC-3 agreed that CC-3 would receive a 25-cent
commission per mask sold through CC-3’s efforts.
d.
On or about March 2, 2020, ROMANO emailed CC-3,
“here are the specs for the mask[s] we have available.” ROMANO
listed prices ranging from $4.01 to $4.11 per respirator. Later
that day, CC-3 responded to ROMANO’s email, stating in part, “WOW!!
I just saw the prices. They are outrageous on a per mask basis.
The N95 mask I sent you in the last e-mail with a valve is only
$1.95 per mask. And you want to charge over $4?” Shortly after
sending this email, CC-3 sent ROMANO another email expressing
astonishment over the pricing: “Look, I really have a problem
with the pricing. It’s one thing to charge (as [CC-1] told me
last night) 25-30% more than the usual price -- but here you are
charging around 260%. . . . I feel like the prices you have sent
me are taking advantage of people.” Nonetheless, CC-3 attempted
to sell these respirators on ROMANO’s behalf.
e.
Based on my review of ROMANO’s and CC-1’s and CC-3’s
emails, I am aware that ROMANO and others attempted to sell the
Mexican-made
PPE
facemasks
at
prices
marked
up
between
approximately 250% and 1,100%.
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 12 of 27
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The Purported Hedge Fund
Sourced Respirators
f.
On or about March 12, 2020, CC-2 emailed ROMANO,
among others, about a separate purported opportunity to acquire up
to 400 million 3M-brand respirators. CC-2’s email stated, in part,
that one of CC-2’s entities (“CC-2 Company-2”), which had a name
similar to CC-2 Company-1’s name, “has secured the rights to
manufacture . . . with 3M factories 3M N95 NIOSH particulate
respirator Models 1860 and 8210, with a cap amount of *400 million
units worldwide*.” CC-2 offered per-mask prices of $5.20 and $5.50
for 3M models 8210 and 1860, respectively, on orders of at least
5 million.
g.
Based on my investigation, CC-2 Company-2, which,
as described below, ROMANO represented to be a “hedge fund,”
appears to be a fictitious entity. Also, based on my review of
records obtained during the course of the investigation and my
conversations with 3M’s representatives, I am aware that 3M never
agreed to manufacture respirators for CC-2 Company-2 and none of
CC2 Company-1, CC-2 Company-2, or CC-2 was authorized to distribute
3M products or solicit purchase orders from prospective customers
on behalf of 3M.
h.
In the days that followed, ROMANO (with the
assistance of CC-2) created a document on CC-2 Company-1’s
letterhead stating that Vendor-1 was authorized to sell 3M products
on CC-2
Company-1’s
behalf (the
“Fictitious
Authorization
Letter”). On or about March 15, 2020, ROMANO emailed CC-2 a draft
of the Fictitious Authorization Letter. The body of the email
stated, “Make changes if needed.” The draft document that ROMANO
had prepared stated:
[CC-2 Company-1] through [CC-2 Company-2] has secured
the rights to manufacture 400 million Units (Masks) with
3M factories in the US. 3M will produce the N95 NIOSH
particulate respirator Models 1860 and 8210 FOB 3M
factories.
This letter represents that [Vendor-1] is an authorized
agent to represent our products around the world, to
take and accept orders, deposits, and payment through
their business operations headquartered in Manalapan NJ
USA.
All orders are subject to inventory availability’s [sic]
to be confirmed by [Vendor-1]. All Purchase orders,
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 13 of 27
12
deposits, payments, and or letters of credit are to be
secured with [Vendor-1].
[Vendor-1] will monitor each order and provide details
and
confirmations
of
manufacturing
so
shipping
arrangements can be made for delivery. [Vendor-1]
represents the pricing on each product, in USA dollars.
i.
The following day, on or about March 16, 2020, CC-2
emailed ROMANO a signed copy of the Fictitious Authorization Letter
on CC-2 Company-1 letterhead. CC-2’s spouse signed as the
“President” of CC-2 Company-1.
ROMANO Begins Attempts
To Sell 3M-Brand Respirators
j.
At or around the same time that ROMANO created the
Fictitious Authorization Letter, ROMANO began in earnest his
efforts to sell 3M-brand respirators to multiple buyers, even
though ROMANO was not an authorized 3M distributor and ROMANO knew
or had reason to know that CC-2 Company-1 and CC-2 Company-2 had
no ability to procure face respirators from 3M. For example, on
or about March 16, 2020, ROMANO sent an email to CC-1 stating, in
substance and in part, that CC-1 could submit the Fictitious
Authorization Letter to potential buyers.
k.
Likewise, based on my participation in this
investigation, including my review of information and records
obtained from CC-3’s legal representatives, I have learned that
ROMANO told CC-3 in or about mid-March, in substance and in part,
that ROMANO could obtain up to 400 million 3M-brand face
respirators from a “hedge fund” that had purportedly preordered
400 million face respirators from 3M. Thus, on or about March 14,
2020, ROMANO sent an email to CC-3, stating in part, “Our situation
has changed, our partners have secured a commitment for 400 million
masks from 3M.” A few days later, on or about March 17, 2020,
ROMANO emailed the Fictitious Authorization Letter to CC-3, but
redacted the name of CC-2 Company-2, i.e., the “hedge fund” entity
that purportedly had a contract with 3M to manufacture 400 million
respirators. Based on my participation in this investigation,
including my review of email and text correspondence between ROMANO
and CC-2, I believe that ROMANO was aware that CC-2 and CC-2
Company-2 had no such contract with 3M to obtain 3M-brand face
respirators. I further believe that ROMANO redacted the name of
CC-2 Company-2 in an effort to conceal CC-2’s association with the
entity that claimed to have rights to manufacture 3M “masks” with
3M factories.
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 14 of 27
13
l.
CC-3 told ROMANO that the Fictitious Authorization
Letter was “good -- but not great. It really needs to be dated
and it should have an expiration date (say 1 year).” On March 17,
2020, ROMANO emailed CC-3 a revised version of the Fictitious
Authorization Letter, which had been backdated to March 2, 2020
and listed a March 2, 2021 expiration.
m.
On or about March 18, 2020, CC-3 introduced ROMANO
to Broker-1 and Broker-2 for the purpose of selling face
respirators sourced by ROMANO. CC-3 stated in an email to Broker-1
and Broker-2 that ROMANO had “enormous contracts both with 3M and
another company with a plant in Mexico” to manufacture face
respirators.
n.
Thereafter, Broker-1 and Broker-2 attempted to sell
PPE facemasks on ROMANO’s behalf. On or about March 19, 2020,
Broker-1 sent an email to NYC offering to sell certain PPE
facemasks on behalf of Vendor-1. In particular, Broker-1 offered,
among other things, 2-layer pleated masks and 3-layer pleated
masks. Based on my review of emails and text messages between
Broker-1 and the City, and ROMANO and CC-2, I am aware that ROMANO
and Vendor-1 attempted to sell PPE facemasks to the City at prices
marked up between 390% and 1,129% from the manufacturer’s prices.
o.
Broker-1 also informed NYC’s Office of Citywide
Procurement that Vendor-1 could sell a large volume of 3M-brand
face respirators, conveying to NYC several of ROMANO’s materially
false statements, including that Vendor-1 had a relationship with
a hedge fund that had a contract with 3M to obtain 400 million
face respirators and that the respirators would be manufactured in
the United States. In reality, Vendor-1 had no ability or
authority to procure or sell 3M-brand face respirators.
p.
While Broker-1 and Broker-2 negotiated with NYC on
ROMANO’s behalf, CC-3 continued to express concerns about ROMANO’s
pricing, but ROMANO refused to adjust prices. On March 22, 2020,
at approximately 5:58 p.m., ROMANO sent a text message to CC-3,
stating in part, “I think we are finally at a point of desperation
where institutions and governments are willing to consider our
pricing.” On March 25, 2020, which, as described below, was the
same day that Vendor-1 submitted its initial formal quote to NYC
to provide NYC with N95 respirators, CC-3 sent an email to Broker-1
that (again) expressed alarm about ROMANO’s pricing: “I’m really
cringing over the prices. I’m worried about allegations of price
gouging especially with all the emphasis that has been placed on
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 15 of 27
14
this concept by the government in their communications with the
citizens. . . . Although I believe you know me to be an optimist,
I would be scared to send this out.”
q.
While CC-3 was concerned about allegations of price
gouging, ROMANO appeared concerned about the Defense Production
Act. Based on my review of a transcript of the White House press
conference held on or about March 22, 2020, starting at
approximately 5:55 p.m., I am aware that Presidential advisor Peter
Navarro discussed the Defense Production Act. Navarro explained
that the Act authorizes the President to regulate scarce resources,
“both from the supply chain to the manufacturers, and from the
manufacturers
to
the
end
users,
such
as
the
healthcare
professionals.” Navarro remarked that he had received “a lot of
calls” about hoarding that were “very disquieting.” Navarro noted
that “[b]rokers are offering millions of items, whether goggles,
masks, or whatever. And you go through three different brokers,
tracking to a warehouse in LA that’s allegedly got 10 million masks
and they might charge you seven times what they cost. That’s price
gouging.”
r.
On
or
about
March
22,
2020,
starting
at
approximately 6:30 p.m., i.e., approximately thirty-five minutes
after the White House press conference began, ROMANO and CC-2
exchanged the following text messages:
ROMANO:
Trump press conference not promising for us
CC-2:
What did they say
ROMANO:
Going after brokers. If your [sic] hoarding
medical supplies come forward with fair
price and they will pay. If not we will get
you
CC-2:
We are not hoarding we are producing and
selling as produced
ROMANO:
I know. So can we still produce 3m?
CC-2:
Waiting for contract
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 16 of 27
15
ROMANO Attempts to Acquire
3M Face Respirators at List Prices
25.
Based on my experience and my knowledge derived from
this investigation,
including
my
participation
in
witness
interviews, my review of reports and records, my review of
correspondence and documents obtained pursuant to judicially-
authorized warrants, and my review of publicly-available documents
and public reporting, I have learned the following, among other
things:
a.
By late March, RONALD ROMANO, the defendant, still
had no viable source to obtain 3M respirators. On March 24, 2020,
ROMANO sent a text message to CC-2, asking if there was “[a]ny
news on N95?” CC-2 responded, in part, “Only Chinese right now
not confident . . . .”
b.
On or about March 24 and 25, 2020, ROMANO discussed
with CC-1 and CC-1’s son the topic of acquiring 3M face respirators
directly from 3M. Specifically, on or about March 25, 2020, ROMANO
directed CC-1 to contact 3M: “see if you get a contact who can
take the order.” Approximately twenty minutes later, CC-1 emailed
3M, falsely stating in substance and in part, “My company
[Vendor-1], has a purchase order for the n95 mask, model numbers
1860 for 5 million and model number 8210 for 2 million.” This
statement, which appears to refer to a purchase order from NYC, is
false.2 Vendor-1 did not have (and never obtained) a purchase
order from NYC.
c.
Later that day, 3M sent an automated email response
to CC-1, stating, in substance and in part, that response times
were delayed due to the COVID-19 crisis. CC-1 forwarded this email
to ROMANO, who replied, “i’M GOING TO SUBMIT IT TO THEM,” which I
believe, based on my participation in this investigation and the
context of this communication, to be a reference to Vendor-1’s
fraudulent submission of a formal quote to NYC for the sale of 3M
respirators despite the fact that ROMANO and Vendor-1 had no supply
or ability to obtain such respirators.
d.
On or about March 24, 2020, CC-1 sent a high-
priority mass email to prospective purchasers of PPE, informing
them that “3m masks are no longer available.” However, neither
2 As set forth below, Vendor-1 submitted numerous formal quotes to
NYC for seven million 3M face respirators: five million model 1860
respirators and two million model 8210 respirators.
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 17 of 27
16
ROMANO nor CC-1 (nor Broker-1 or Broker-2, who were in regular
communication with NYC on Vendor-1’s behalf) informed NYC that 3M
face respirators were no longer available. Instead, as set forth
in greater detail below, the day after CC-1 told other customers
that 3M face respirators were unavailable, ROMANO caused Vendor-1
to submit to NYC the first of several formal quotes for 3M
respirators.
e.
On or about March 26, 2020, 3M emailed CC-1 and
stated, in substance and in part, that 3M only sells its
respirators to authorized distributors.
Romano Causes the Submission of
Numerous False and Misleading
Formal Quotes to NYC
For 3M Face Respirators
26.
Based on my experience and my knowledge derived from
this investigation,
including
my
participation
in
witness
interviews, my review of reports and records, my review of
correspondence and documents obtained pursuant to judicially-
authorized warrants, and my review of publicly-available documents
and public reporting, I have learned the following, among other
things:
a.
On or about March 24, 2020, CC-3 sent a text message
to RONALD ROMANO, the defendant, stating in part, “Ron! Good
morning! We are very close to a 5 million order from New York
City!!!!” In a subsequent text message, CC-3 asked ROMANO
“urgently” to call Broker-1 and Broker-2 because “NYC wants best
and final prices.” ROMANO and Broker-1 then worked together to
submit to NYC an IRS Form W9, which listed Vendor-1 as the seller
and was signed by ROMANO.
b.
On or about March 25, 2020, at approximately 10:03
a.m., NYC requested a formal quote for five million 3M-brand model
1860 face respirators and two million 3M-brand model 8210 face
respirators. According to Broker-1, NYC would issue a purchase
order if it agreed to the terms of the formal quote.
c.
On or about March 25, 2020, at approximately 12:44
p.m., CC-3 emailed ROMANO and CC-1 a draft formal quote for their
review. Approximately one hour later, ROMANO emailed CC-3 a signed
copy of the formal quote (the “First Formal Quote”). At
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 18 of 27
17
approximately 2:07 p.m., Broker-1 emailed the First Formal Quote
to NYC.3
d.
Through the First Formal Quote, Vendor-1 stated
that it would sell the respirators for $6.33 per “mask” for two
million 3M 8210 respirators and for $6.65 per “mask” for five
million 3M 1860 respirators, for a total of $45,910,000. As
alleged herein, ROMANO attempted to source these respirators from
3M directly. 3M has not raised its prices during the COVID-19
pandemic. Thus, ROMANO attempted to sell 3M respirators to NYC at
more than a 400% markup.
e.
The First Formal Quote further provided that
“payment in full must be made before shipping,” that the 3M
respirators would be manufactured in the United States, and that
“acceptance of the purchase order is at the full discretion of 3M
and supplies are based upon availability. The N95 masks from 3M
can be produced at any of 3 plants in the USA according to their
manufacturing schedule.” Based on my involvement in this
investigation, including my review of records and discussions with
3M representatives, I am aware that Vendor-1 was not authorized to
solicit purchase orders from customers for submission to 3M for
approval. Nor was Vendor-1 authorized to state how, where, or in
what quantity such orders would be filled. Also, 3M does not
accept purchase orders from unauthorized distributors. Through
submission of the First Formal Quote (and the formal quotes that
followed), ROMANO implied a relationship with 3M that does not
exist. Based on my discussions with a supervisor at NYC’s Office
of Citywide Procurement (“City Employee-1”) responsible for the
potential transaction with Vendor-1, I am aware that, based on
Vendor-1’s submissions to NYC, City Employee-1 believed that
Vendor-1 had a legitimate business relationship with 3M. City
Employee-1 was also particularly interested in a potential deal
with Vendor-1 because the respirators were asserted to be
manufactured in the United States, which indicated a quicker
delivery time.
f.
After receiving the First Formal Quote, NYC
responded, in substance and in part, that NYC does not issue
purchase orders that provide for payment before delivery. After
3 Based on my review of cell site location information from
Broker-1’s cellphone obtained from the cellphone’s service
provider pursuant to a search warrant, I am aware that Broker-1
was in the vicinity of Philadelphia, Pennsylvania when Broker-1
emailed the First Formal Quote to NYC’s Office of Citywide
Procurement in New York, New York.
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 19 of 27
18
NYC responded, CC-3 sent a text message to ROMANO, stating in part,
“Could you please call [Broker-1 and Broker-2] they want to discuss
. . . what they learned regarding payment terms and to strategize.”
g.
On or about March 26, 2020, Broker-2 emailed a
revised formal quote (the “Second Formal Quote”) to NYC’s Office
of Citywide Procurement. The payment terms were revised to state
that “[p]ayment must be made upon receipt of Each shipment Net 15
days.”
At
the
same
time,
Broker-2
submitted
Technical
Specification Sheets for both models of 3M-brand N95 respirators
that Vendor-1 purported to have available for sale. 3M’s famous
design mark appeared throughout both Technical Specifications,
inferring a relationship between 3M and Vendor-1 that did not
exist.
h.
Between approximately March 26 and March 31, 2020,
Broker-1 and Broker-2 continued to correspond with NYC on behalf
of ROMANO about the sale of 3M respirators. At no time during
this period did ROMANO disclose that Vendor-1 had no ability or
authorization to sell 3M face respirators. During this time
period—-while NYC was facing an unprecedented crisis and in
desperate need of PPE for its healthcare workers and first
responders—-NYC expended employee time and resources in attempting
to purchase 3M respirators from Vendor-1, time and resources that
could have been directed towards legitimate suppliers.
i.
On or about March 30, 2020, City Employee-1 emailed
Broker-1 in substance and in part, “As discussed, if you can get
both masks 8210 and 1860 in the less than $6 price point, that
will greatly enhance the chances that this gets approved. So if
you could revise the quote with your best and final offer that
will be greatly appreciated.”
j.
After consulting with ROMANO, on or about March 31,
2020, Broker-1 emailed NYC another revised formal quote (the “Third
Formal Quote”). Through the Third Formal Quote, Vendor-1 stated
that it would sell the respirators for $6.05 per “mask” for two
million 3M 8210 respirators and for $6.35 per “mask” for five
million 3M 1860 respirators, for a total of $43,850,000. This
“best and final offer” represented an approximately 380% markup
from the 3M list price.
k.
Later that evening, on or about March 31, 2020, at
approximately 9:29 p.m., CC-3 sent an email to ROMANO and Broker-1
stating in part, “I just heard from someone who knows well that
anyone caught selling masks at or about $6.50 will face an FBI
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 20 of 27
19
investigation.” ROMANO responded, “They should investigate who is
paying it. I thought we are a free market of supply and demand?
We are not the manufacturer price gauging [sic]. we are a buyer
and seller marking up about 20 to 25% from OEM price with multiple
costs, Not illegal or enforceable.” But, as alleged herein, the
manufacturer, 3M, did not raise its prices, and ROMANO attempted
to mark up the prices significantly more than 25% from the list
price.
Romano Causes the Submission of
False and Misleading References
To NYC
27.
Based on my experience and my knowledge derived from
this investigation,
including
my
participation
in
witness
interviews, my review of reports and records, my review of
correspondence and documents obtained pursuant to judicially-
authorized warrants, and my review of publicly-available documents
and public reporting, I have learned the following, among other
things:
a.
Based on my conversations with city personnel
including City Employee-1, I am aware that during the COVID-19
crisis NYC suspended its usual practice of procuring goods and
services only from approved vendors. Given NYC’s immediate and
critical need for PPE, NYC received bids and quotes from never-
before-used vendors, such as Vendor-1. However, NYC required new
vendors to provide references.
b.
On or about March 31, 2020, at approximately 1:16
p.m., NYC sent an email to Broker-1 requesting “3 references that
we may contact to verify delivery, responsiveness, etc.” After
receiving this email, Broker-1 notified RONALD ROMANO, the
defendant, through email and text message, that NYC requested
references.
c.
Following
NYC’s
request
for
references
from
Vendor-1, ROMANO engaged in discussions with others that, I
believe, reflect his reluctance to submit references and efforts
to deceive and make false statements to NYC:
i.
On or about March 31, 2020, at approximately
6:08 p.m., ROMANO texted CC-3: “I’m not sure when we actually
have to give them these references so I’m holding out for now.”
Approximately twenty minutes later, CC-3 sent ROMANO a voice
message, stating in substance and in part, “I thought the
references were the last step to getting the purchase order.”
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 21 of 27
20
Several minutes later, CC-3 forwarded to ROMANO a text message
from Broker-1, stating in part, “I need 3 references of companies
that [Vendor-1] has sold masks to, as proof due to the massive
fraud going on. They will not issue the PO without the references,
so the sooner we receive it, the better.” Approximately ten
minutes later, ROMANO responded, “Ok will send later tonight.”
ii.
Later in the evening of on or about March 31,
2020, ROMANO and CC-3 discussed, in substance and in part, using
CC-1 as a reference for Vendor-1, despite the fact that CC-1 was
ROMANO’s business associate and the Vice President for Global Sales
at Vendor-1. On or about March 31, 2020, at approximately 8:47
p.m., ROMANO sent a text message to CC-1, stating in part, “I may
need to list has [sic] a reference for NYC PO that we did business.”
iii.
On or about March 31, 2020, at approximately
8:47 p.m., CC-3 sent a text message to ROMANO, stating in part,
“Did you see the email? NYC specifically says what questions will
be asked—so you will need to prep them and agree with the answers.”
iv.
On or about March 31, 2020, at approximately
9:29 p.m., Broker-1 sent a text message to ROMANO and CC-3, stating
in part, “Hi Ron don’t forget the 3 references.” Approximately
one minute later, ROMANO responded, “What questions are they going
to ask? Will they definitely call?” Broker-1 responded, in part,
“Maybe their [sic] just want to make sure [Vendor-1] has sold to
other companies.” “[They need] Name of Company Contact Name
Contact Number Service Provided Contract Amount.” “Again their
[sic] is a lot of fraud going on so their [sic] want to make sure
[Vendor-1] has sold to other buyers.”
v.
On or about March 31, 2020, at approximately
11:37 p.m., Broker-1 sent ROMANO a text message, stating in part,
“Ron are you still up to send the 3 references?”
vi.
On or about March 31, 2020, at approximately
11:46 p.m., ROMANO emailed CC-3 and Broker-1 a document that listed
references for Vendor-1 (the “References Document”). The
References Document listed three references: (1) a Purchasing
Agent for the Florida Division of Emergency Management (the
“FDEM”); (2) a naturopathic medical university (the “Medical
University”); and (3) CC-2 and CC-2 Company-1.
vii.
The three references listed on the References
Document were materially false and misleading. First, the
References Document listed a $5,460,000 sale of three million
facemasks to the FDEM. Based on my conversations with the Director
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 22 of 27
21
of the FDEM, I am aware that the individual listed on the
References Document as the “Purchasing Agent” of the FDEM is not
an employee, agent, or representative of FDEM; rather, that person,
Broker-3, was a broker who attempted to sell respirators to the
FDEM on ROMANO’s behalf. Also, Vendor-1 never sold respirators to
the FDEM. Rather, as set forth below, Vendor-1 attempted to sell
respirators to the FDEM via Broker-3 but ultimately was unable to
procure financing. Second, the References Document falsely stated
that Vendor-1 had sold $123,600 worth of 5-ply surgical masks to
the Medical University. ROMANO sold face coverings to the Medical
University
for
approximately
$12,000
(not
$123,000), and,
according to the Medical University, those face coverings appeared
to be of such inferior quality that the Medical University did not
distribute them.4 Third, the References Document indicated that
Vendor-1 supplied CC-2 and CC-2 Company-1 with 3-ply face
respirators. Based on my participation in this investigation,
including my review of text messages and email correspondence
between ROMANO and CC-2, I believe this representation was false.
I have seen no indication that ROMANO supplied respirators to CC-2
or CC-2 Company-1. To the contrary, ROMANO attempted to acquire
respirators from CC-2.
4 On or about March 20, 2020, the Medical University purchased
4,000 respirators from Vendor-1 to be distributed to staff and
students. Based on my discussions with an employee of the Medical
University involved in the purchase of the respirators from
Vendor-1, I am aware that the Medical University understood the
order to be for “5-ply,” virus-protection respirators, pleated
with elastic ear loops. On or about April 22, 2020, the Medical
University appeared to have received something very different. It
received the face coverings in packaging that stated, “For general
everyday protection only. NOT Reusable THIS IS NOT A MEDICAL
DEVICE, NOT FOR RESALE.” The face coverings were not pleated and
did not have elastic ear loops. Following delivery, the Medical
University inquired as to the specifications of the face coverings.
ROMANO
emailed
the
Medical
University
a
document
(the
“Specification Document”) stating that the face coverings were “5-
ply.” But based on my review of ROMANO’s, CC-1’s, and CC-2’s
emails, it appears that the original version of the Specification
Document indicated that the face coverings were “3-ply.”
Ultimately, the Medical University attempted to return the face
coverings because staff did not believe they were safe for their
intended
use.
Vendor-1
charged
the
Medical
University
approximately $12,360 for these face coverings, a markup of
approximately 360%.
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 23 of 27
22
d.
On or about April 1, 2020, at approximately 11:54
a.m., CC-3 emailed the References Document to NYC on ROMANO’s
behalf.
e.
On or about April 1, 2020, at approximately 12:05
p.m., ROMANO emailed CC-2 a copy of the References Document, and
wrote in the body of the email, “In case they call on the
reference.”
f.
Based on my review of records obtained from NYC’s
Office of Citywide Procurement, I am aware that, on or about April
1, 2020, NYC personnel contacted CC-2, whom ROMANO had listed on
the References Document. NYC personnel notes from that call
indicate that CC-2 stated, in substance and in part, “CC-2 has
worked with [Vendor-1] for numerous orders in the past for surgical
masks and medical supplies. CC-2 advised that [Vendor-1] is
straight forward, delivers on time and that product meets
expectations.” For the reasons set forth above, CC-2’s statements
to NYC appear to have been materially false and misleading.
NYC’s Requests for
Authorized Distribution Agreement
28.
Based on my experience and my knowledge derived from
this investigation,
including
my
participation
in
witness
interviews, my review of reports and records, my review of
correspondence and documents obtained pursuant to judicially-
authorized warrants, and my review of publicly-available documents
and public reporting, I have learned the following, among other
things:
a.
In response to an inquiry by NYC about Vendor-1 and
RONALD ROMANO, the defendant, on or about April 1, 2020, 3M
personnel advised NYC that ROMANO was not an authorized 3M
distributor.
b.
On or about April 1, 2020, at approximately 6:07
p.m., City Employee-1 emailed Broker-1, “We need to be able to
track down the authorized distributor of these masks if we are
able to move forward. I will need documentation from 3M
authorizing the distribution of these masks and the connection to
[Vendor-1]. All of the paper work must be above board and able to
be verified.” At approximately 6:44 p.m., Broker-1 forwarded this
email to CC-3 and ROMANO. CC-3 responded, “Yikes.”
c.
Between approximately March 25 and April 2, 2020,
ROMANO discussed with CC-3, among others, the possibility of
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 24 of 27
23
obtaining up to 100 million 3M-brand respirators from a Peru-based
exporter that claimed to have obtained 100 million 3M-brand
respirators from 3M in the Netherlands. ROMANO discussed, in
substance and in part, selling these respirators to NYC and an
associate of CC-3. Between April 1 and April 2, 2020, ROMANO sent
CC-3, among other things, a “proforma invoice” purporting to
reflect the sale of 100 million 3M-brand respirators from 3M in
the Netherlands to a Peru-based exporter, and a contract between
an entity associated with CC-2 and the Peruvian export company.
The contract was for the sale of 100 million 3M model 8210 face
respirators. Based on my discussions with 3M representatives, I
am aware that these documents are fictitious. Among other things,
the “proforma invoice” listed a non-existent 3M legal entity and
incorrectly stated that the respirators would be manufactured in
Uruguay when, in fact, 3M does not manufacture respirators in
Uruguay.
d.
On or about April 3, 2020, at approximately 9:20
p.m., ROMANO sent a redacted version of the “proforma invoice” to
Broker-1 and stated, “let me know what you think.”
e.
At or about the same time that ROMANO asked about
sending the “proforma invoice” to NYC, ROMANO was questioning the
authenticity of the documents. Before sending the “proforma
invoice” and contract described above, on or about March 31, 2020,
CC-2 emailed ROMANO a link to a website that warned that the
Peruvian exporter was a “scammer.” The next day, on or about April
1, 2020, CC-2 sent ROMANO the “proforma invoice,” with the subject
line, “For your eyes only.” In an April 4, 2020, text message to
CC-2, ROMANO stated, “I haven’t believed anyone. Not even our guy
in Peru lol. . . . We need to verify orders.”
f.
As set forth above, notwithstanding ROMANO’s
concerns about the Peruvian exporter, on April 1 and 2, 2020,
ROMANO forwarded the “proforma invoice” and contract with the
Peruvian exporter to CC-3.
g.
On or about April 6, 2020, CC-3, Broker-1, and
Broker-2 ended their business efforts with ROMANO.
ROMANO’s Efforts to Sell
PPE Facemasks to Florida
29.
In addition to ROMANO’s fraudulent efforts to gouge NYC,
ROMANO similarly attempted to gouge a government agency in Florida.
Based on my experience and my knowledge derived from this
investigation, including my participation in witness interviews,
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 25 of 27
24
including my conversations with the Director of the FDEM, my review
of reports and records, my review of correspondence and documents
obtained pursuant to judicially-authorized warrants, and my review
of publicly-available documents and public reporting, I have
learned the following, among other things:
a.
In or about March 2020, CC-3 connected RONALD
ROMANO, the defendant, with Broker-3, an attorney and broker based
in Miami, for the purpose of selling PPE facemasks. Thereafter,
Broker-3 attempted to sell to Florida customers PPE facemasks
sourced from the same Mexico-based manufacturer referenced above.
b.
On or about March 27, 2020, Broker-3 sent an email
to FDEM offering to sell “5 million, 3-ply masks (specs attached)
FOB Laredo, Texas.5 Price $1.80/mask (quote attached).” The
formal quote attached to this email described the facemasks as “3-
ply N99 masks” and stated that the facemasks “were manufactured at
a factory in Mexico City and were brought to a warehouse in Laredo,
Texas on Thursday, 26 March.”6 The formal quote was on Vendor-1’s
letterhead and signed by ROMANO.
c.
The March 27 formal quote appears to have been false
insofar as it stated that the N99 facemasks were in Texas as of
March 26. On or about March 28, 2020, CC-3 sent a text message to
ROMANO and Broker-3 explaining, based on information that CC-3
appeared to obtain from ROMANO, that “the masks are in transit to
Laredo from the factory. It is a 700 mile 13 hour trip.” That
the PPE be physically present in the United States was apparently
important to the FDEM. In a March 28, 2020 email from CC-3 to
Broker-3, CC-3 stated in part, “They were not interested or
responsive to inventory not present in the US last time.”
d.
After several days of negotiations with the FDEM,
on or about March 29, 2020, Broker-3 submitted a revised formal
quote, at the direction of ROMANO, for 3 million N99 facemasks,
$1.82 per mask, for a total sale price of $5,460,000. Based on my
review of ROMANO’s and CC-2’s emails, I am aware that ROMANO and
CC-2 were able to obtain these facemasks from their source-of-
5 Broker-3 also sent this email to CC-3, who resided in New York,
New York.
6 Based on my review of HHS’s Notice of Designation of Scarce
Materials or Threatened Materials Subject to COVID-19, which was
published in the Federal Register on or about March 25, 2020, I am
aware that N99 facemasks were designated as “Scarce Materials”
under the Defense Production Act.
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 26 of 27
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supply, the Mexico-based manufacturer, for approximately 28 cents
per mask. Thus, ROMANO attempted to sell these three million N99
facemasks at an approximately 500% markup.
e.
On or about March 30, 2020, the FDEM issued a
purchase order for three million 3-ply N99 facemasks for
$5,460,000. ROMANO and Vendor-1 were unable to deliver these
facemasks, however, because they could not arrange for financing.
Nevertheless, as noted above, ROMANO listed the failed FDEM
transaction among the fraudulent references submitted to NYC.
WHEREFORE, deponent respectfully requests that a warrant be
issued for the arrest of RONALD ROMANO, the defendant, and that he
be arrested, and imprisoned or bailed, as the case may be.
s/Deleassa Penland by KNF, USMJ
DELEASSA PENLAND
Special Agent
United States Attorney’s Office
Southern District of New York
Sworn to me through the transmission
of this Affidavit by reliable electronic means,
pursuant to Federal Rules of Criminal
Procedure 41(d)(3) and 4.1, this 21 day of
May, 2020
___________________________________
THE HONORABLE KEVIN NATHANIEL FOX
UNITED STATES MAGISTRATE JUDGE
SOUTHERN DISTRICT OF NEW YORK
Case 1:20-cv-02949-LAP Document 28 Filed 06/04/20 Page 27 of 27