Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Corporate Crime & Compliance UK newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360, London (April 14, 2020, 6:33 PM BST ) Two German government contractors hired to find and buy €15 million ($16.4 million) worth of face masks during the pandemic were duped by con artists, European law enforcement said Tuesday.
By the time the scam was discovered after the first promised shipment of masks never arrived, more than €2.3 million had already been forwarded to the fraudsters, and the sales companies hired by German health authorities contacted their bank in Germany, "setting off an international race to intercept the funds and follow the money trail," Europol said Tuesday.
The European law enforcement agency's financial intelligence unit coordinated with authorities across Germany, Ireland, the Netherlands and the U.K. and were able to recall all the funds, according to a Europol spokeswoman. To date, two individuals connected to the scam have been arrested in the Netherlands and investigators across Europe are continuing to work on the case, she said.
With countries around the globe scrambling for desperately needed protective medical equipment for health care workers, German health authorities had contacted the two sales companies in Zurich and Hamburg in mid-March, ready to buy €15 million worth of face masks.
"With a global shortage on medical supplies complicating usual business channels, the buyers followed new leads in the hopes of securing the masks," Interpol said.
The sales company buyers tried to reach out to a Spanish equipment provider, but unknowingly connected to a fake website with a slightly different IP address that had been disguised as a legitimate business, the Europol spokeswoman said. As a result, they sent emails to individuals connected to the scam.
The con artists initially told the buyers for the German government health authorities that they could secure 10 million masks — but later said that the shipment fell through.
The scammers purportedly referred the buyers to a 'trusted' dealer in Ireland. That middleman promised to put them in touch with a supplier in the Netherlands, once again providing assurances that 10 million face masks could be secured, according to Europol.
The buyers agreed to make an up-front payment of €1.5 million for an initial shipment of 1.5 million masks and initiated a bank transfer to a U.K. bank branch in Ireland.
The sales company buyers then prepared for their expected delivery, arranging for 52 trucks and a police escort to transport the masks from a warehouse in the Netherlands to the final destination in Germany, according to the Europol announcement.
However, just before the date the masks were due to be delivered, the scammers told the buyers that the €1.5 million had not been received and demanded an "emergency transfer" of €880,000, which they indicated would go directly to the Dutch supplier.
The buyers sent the additional funds, but the masks never arrived, the agency said.
The Dutch company, which existed, had no official record of the order and its website had also been cloned, according to Europol.
After the buyers realized that they'd been hustled, law enforcement was contacted. Europol sent out an alert to financial institutions, and the U.K. bank where the first €1.5 million was sent was able to recall those funds. Interpol, which also got involved, froze the funds and identified the Irish company connected to that account, Tuesday's press release said.
A Dutch agency, the Fiscal Information and Investigation Service, tracked down the €880,000; €500,000 of those funds had already been sent to the U.K., and all of the money had been destined for an account in Nigeria, according to Europol.
"No money made it to Nigeria," the Interpol spokeswoman said. "We were lucky to stop the transfers very quickly," she said, adding that the investigation is ongoing.
Law enforcers worldwide have warned of a range of scams connected to the coronavirus pandemic, and some have already begun cracking down on fraud.
Earlier this month, a British man tried to ship a fake "miracle cure" panacea labeled as a treatment for the novel coronavirus from the U.K. to California and Utah in an effort to make money off the deadly pandemic, U.S.prosecutors alleged in a complaint filed in California.
In addition, investigators from the U.S. Attorney's Office in Pittsburgh said that they broke up a fake sale of medical masks to protect against the coronavirus, potentially saving a California health care company from spending more than $7 million on nonexistent equipment.
--Editing by Alyssa Miller.
For a reprint of this article, please contact reprints@law360.com.
