A US man conned R5bn out of a ‘friendly’ foreign country for non-existent masks
- A US man tried to sell 50 million nonexistent N95 masks to an unnamed foreign government, authorities there say.
- The 64-year-old was caught by the US Secret Service after the country wired $317 million – nearly R5 billion – to the US.
- He was sentenced to six months of home confinement, three months of probation, and a fine.
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A man in the US attempted to sell 50 million nonexistent N95 face masks to a foreign country – which paid a great deal of money – but he was apprehended by the American Secret Service, according to the US Department of Justice.
The country has not been named, but US authorities refer to it as a "friendly foreign country."
Paul Penn, 64, pleaded guilty to conspiracy to commit wire fraud and was sentenced to six months of home confinement for the crime, a $1,500 fine (around R22,000), and three years of probation.
N95 masks are the most effective personal protective equipment currently in use against the Covid-19 pandemic as they seal tightly around the mouth and filter out at least 95% of aerosols. The masks have become a hot commodity across the world among militaries, health professionals, and the general population.
Through his company, Spectrum Global Holdings, LLC, Penn worked with unnamed co-conspirators as a middleman in the endeavour to defraud the country.
Court filings show Penn and the co-conspirators negotiated the price of the masks over 500% of the normal market value. The group was set to receive $317 million – the equivalent of some R5 billion – and Penn was promised a small percentage for his efforts.
When the foreign country inquired about the masks, US prosecutors allege that Penn responded with detailed information for the nonexistent face coverings. When the country later demanded proof about the product, Penn refused and told the foreign government to wire the money without a previously discussed guarantee letter.
The country quickly acquiesced.
According to court records, the foreign government wired the huge amount into a co-conspirator's Citibank account with the intention that it would later be moved to Penn. The country then demanded Penn provide more information about the status of the masks, which Penn ignored.
In a press release, the DOJ acknowledged that the money was sent, but said the Secret Service disrupted the purchase before the wire transfer was fully completed. The scheme likely would have deteriorated relations with the friendly foreign country if Penn had not been caught and the money returned, according to US Attorney Bobby Christine.
"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 Christine. "Instead, they halted the scheme before the criminals got a dime, and prevented these crooks from profiting from pandemic fear."