COVID19 Update: AG Barr Issues Memo Focusing Enforcement on Corona Related Fraud and Crime

Alerts / March 19, 2020

It should come as no surprise that the federal and state response to the COVID-19 pandemic is touching upon all facets of life. This is no less true in the world of government enforcement. Indeed, in the face of increased reporting of COVID-19-related fraud and misconduct, officials are shifting their criminal and civil enforcement priorities. Most notably, on March 16, 2020, the U.S. Attorney General directed all U.S. Attorneys across the country, in conjunction with DOJ litigating components such as the Civil Division’s Consumer Protection Branch, to focus on COVID-19-related wrongdoing. So, for at least the foreseeable future, COVID-19 will likely dominate these officials’ agendas. This alert briefly summarizes these changes.

The Attorney General’s Directive

On March 16, 2020, the U.S. Attorney General issued a rare memorandum to all U.S. Attorneys redirecting their enforcement priorities. First, it highlighted examples of prevalent COIVD-19-related frauds. These included “fake cures for COVID-19,” phishing emails purporting to be from key health authorities like the WHO or CDC, and phone applications promising assistance but actually putting malware on consumers’ phones.

As a result, the Attorney General mandated a change in criminal enforcement across the country. He directed all U.S. Attorneys’ Offices to “remain vigilant in detecting, investigating, and prosecuting wrongdoing related to the crisis.” The Attorney General also ordered all offices to “prioritize the detection, investigation, and prosecution of all criminal conduct related to the pandemic.” He further noted that the offices should “consult with the Civil Division’s Consumer Protection Branch … the Criminal Division’s Fraud Section … and the Antitrust Division’s Criminal Program.” Although it has been only a few days, offices around the country have taken up this call.

Federal and State Authorities Focus on COVID-19-Related Misconduct

As noted, U.S. Attorneys’ Offices across the country have started to implement this directive and to focus on COVID-19-related action. For example, the U.S. Attorneys in the Western District of Pennsylvania and the Southern District of Mississippi have each appointed a dedicated COVID-19 fraud coordinator to respond to any potential fraud. Likewise, the U.S. Attorney’s Office in the Eastern District of Virginia issued a public bulletin of potential scams. The U.S. Attorney for the District of Columbia, in conjunction with the D.C. Attorney General, created a dedicated hotline for potential victims of COVID-19-related fraud. Over the coming days, we anticipate that other U.S. Attorneys across the country, in conjunction with the DOJ’s Civil Consumer Protection Branch, Criminal Fraud Section, and Criminal Antitrust Division, will implement similar changes and will redirect their resources to prioritize this enforcement.

Critically, this change is consistent with a shift that was already occurring among federal agencies, including the FTC and FDA. For instance, on March 9, 2020, the FTC and FDA jointly threatened enforcement action against seven companies selling fraudulent products claiming to treat or prevent COVID-19. The FDA commissioner said, “We have an aggressive surveillance program that routinely monitors online sources for health fraud products, especially during a significant public health issue such as this one.” FTC Chairman Joe Simons added that, “These warning letters are just the first step. We’re prepared to take enforcement actions against companies that continue to market this type of scam.” Both agencies have emphasized that this is a top priority moving forward.

Across the states, Attorneys General have likewise shifted their focus. They are notifying citizens of potential scams, and have promised increased enforcement actions against potential fraud. The Attorneys General in Ohio, South Dakota, New York, Illinois, New Jersey, Minnesota, and Missouri have already announced this change in policy. Over the coming days and weeks, we expect that most, if not all, state Attorneys General will similarly focus their resources on addressing COVID-19-related issues.

Takeaways and Conclusion

Given this change, there are a number of actions that may catch regulators’ eyes in the coming days and weeks. These include:

  • Correspondence from purported experts selling or advertising medical products;
  • Offers of vaccinations, treatments, or any other COVID-19-related health promises;
  • Solicitations for COVID-19-related charities; and,
  • Any COVID-19-related offer that requires an individual to download an application to their phone.

Those businesses selling products or providing services in the medical or pharmaceutical sectors should be particularly cognizant of their actions. And, as all companies navigate these rough waters, it is important to take extra steps to ensure that robust internal compliance measures are in place.

The situation is fluid, and COVID-19 and the government’s response will continue to touch on all aspects of businesses and lives. BakerHostetler’s White Collar, Investigations and Securities Enforcement and Litigation team is here to answer your questions and help you navigate through this complex time.

Authorship Credit: Joshua D. Rovenger, C. Shawn Cleveland, Steven M. Dettelbach and Kristen L. Jackson

Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Before you decide, ask us to send you written information about our qualifications and experience.