3M files 5 more lawsuits claiming fraud in sales of N95 masks

Minnesota antiviral mask maker 3M has filed five more lawsuits in its campaign to stop price gouging and fraud in the sales of its N95 mask. The mask is the most effective protection against transmission of the unique COVID-19 coronavirus that spawned the current pandemic.

Attempts to trade on public fear of the virus, which has now killed more Americans than the Vietnam War, led to a number of scam sales of N95 masks.

In the latest of 10 lawsuits filed in April, 3M charged businesses and an individual in Florida, Indiana and Wisconsin with falsely claiming business relationships with 3M that allowed them to sell millions — and in one case billions — of nonexistent masks to state agencies. N95 masks remain in critically short supply as health care workers treat victims and businesses like grocery stores, pharmacies and food processors try to provide essential services to the country in close quarters.

In the three Florida cases and one Indiana case filed late Thursday, and a Wisconsin lawsuit filed on Tuesday, 3M said it "is seeking injunctive relief to require the companies to cease illegal activities," including false claims of business relationships with 3M.

3M said it will donate any damages recovered to COVID-19-related nonprofit organizations.

The latest round of 3M suits claim that businesses based in Atlanta, St. Petersburg, and Orlando tried to sell Florida emergency-management agencies millions of nonexistent N95 masks at prices inflated from two to nearly five times higher than list price.

In Indiana, 3M alleged that an individual and two business affiliated with him told state officials he had access to 5 billion N95 masks.

In Wisconsin, a company claiming an affiliation with 3M allegedly told state officials it could sell up to 250,000 masks for double the normal price if the state would sign a nondisclosure agreement.

In each case, state officials notified 3M, the company said in a Friday news release.

In Indiana, 3M alleges, Zachary Puznak and two companies linked to him tried to sell up to 5 billion N95 masks to the state as an "Easter gift." The total sales price Puznak sought depended on the number of masks provided, according to 3M's suit. The total amount due ranged from $285 million to $14.25 billion, 3M said.

Puznak and his businesses "claimed to be working through 'two different 3M reps,' " the suit alleges. "When the Chief of Staff of the Indiana Economic Development Corporation asked Defendants to provide proof of their affiliation with 3M, Defendants responded that 'nobody [from 3M] has time or interest ... in satisfying ... paranoid irrationality' and that the State's diligence was 'quite sad ... for the people of Indiana.' "

In one Florida case, 3M alleged that several Atlanta-based businesses claimed to be working with a 3M attorney and someone named "Khalid" to provide the state's emergency management personnel with masks.

The businesses, 1 Ignite Capital LLC, also known as 1 Ignite Capital Partners, and Institutional Financial Sales LLC and Auta Lopes asked for money to be placed in an escrow account ahead of the delivery of the masks, which were being sold at a large markup over list prices.

3M also sued King Law Center, Chartered, in federal court in Orlando, saying the business had "initiated" actions that would make it the escrow agent holding funds in a transaction in which Florida's Department of Management Emergency Operations Center got 5 million N95 masks for which the state would pay more than four-and-a-half times list price.

The third Florida suit, filed in federal court in Tampa, involved TAC2 GLOBAL LLC, a business that 3M said tried to sell 5 million to 10 million N95 masks for the state's Emergency Operations Center at a price that was 430% over list price. The suit alleges that TAC2 GLOBAL promised Florida officials that 3M inspectors would examine each mask. TAC2 GLOBAL had no relationship with 3M, the suit said.

The Wisconsin case, filed Tuesday, alleged that a company, Hulomil LLC, claimed "direct access from 3M" in an effort to sell 250,000 N95 masks to the state at "inflated prices." Hulomil LLC wanted the state "to sign a nondisclosure agreement about the deal" that would keep terms secret, 3M charged.

One of 3M's first legal actions involving fraudulent N95 sales is slated soon for a telephone conference with a federal judge in California. The case against Utah-based RX2Live, LLC and RX2Live, Inc., filed April 10, surrounds an accusation by 3M that the Utah-based company tried to fraudulently sell N95 masks to a California heath center.

Federal Judge Dale A. Drozd of the Eastern District of California has issued a temporary restraining order and injunction against RX2Live to stop it from trying to sell masks as it awaits a May 12 telephone conference.

The defendants in the suits could not be reached for comment.

Jim Spencer • 202-662-7432