North Shore Businessman Accused Of Coronavirus Price Gouging

CHICAGO — A Winnetka man faces the possibility of time in federal prison after prosecutors accused him of illegally profiteering from the coronavirus pandemic earlier this year through his Skokie medical supply company. His attorney says he was merely buying items in bulk and repackaging them for individual sale with shipping and handling included in their price.

Krikor Topouzian, 60, was charged with one misdemeanor count of violating the Defense Production Act by illegally hoarding scarce N95 respirator masks in March and April and selling them online for an average markup of more than 230 percent.

Starting on about March 6, Toupouzian, the owner of Concord Health Supply, 9052 Terminal Ave. in Skokie, purchased about 80,000 respirator masks in bulk orders from out of state and sold about 40,000 to individuals, mostly online, federal prosecutors alleged in a charging document filed Thursday.

On March 18, President Donald Trump invoked the Defense Production Act, which allows the president to control the allocation of materials necessary for national defense and forbids the accumulation of things designated as "scarce materials." Under that authority, U.S. Secretary of Health and Human Services Alex Azar declared N95 masks and other surgical masks to be scarce on March 25.

Topouzian received "repeated warnings, including from law enforcement," but nonetheless continued to gouge buyers of personal protective equipment in the early days of the COVID-19 pandemic, according to Assistant U.S. Attorney Christopher Parenti.

But according to Topouzian's defense attorney, Tom Leinenweber, those warnings consisted only of a call from a sheriff in Michigan and a visit from the FBI in early April to discuss complaints of price gouging.

At the time, Topouzian told investigators his margin on the masks was about 40 percent, the same as the rest of the medical equipment his company sold, according to his attorney. Federal authorities did not specify what they considered a threshold for price gauging.

"Prior to the COVID-19 epidemic, Mr. Topouzian’s company, Concord Health Supply, primarily sold pulse oximeters, non-touch thermometers and hand-sanitizing wipes, often one at a time, to the public. As it turns out, selling these items turned Concord and its employees into an essential business and essential workers literally overnight, due to COVID-19," Leinenweber said in a statement on Topouzian's behalf.

"Mr. Topouzian has been in the medical supply business for over a decade and was not looking to get into the mask business until a former employee, who could not sell them on his own, approached Mr. Topouzian and asked him for help selling them," Lenenweber said.

The masks sold like hotcakes, he said. Concord Health Supply priced the N95s at up to $19.95 for single masks, with discounts for those who purchased multiple masks at a time. The defense attorney said the overwhelming majority of the company's customers were extremely satisfied with its products and services, pointing to its online reviews.

"Mr. Topouzian’s business is one of the few medical supply businesses that accepts orders from the public seeking to purchase one item rather than bulk. Concord priced the masks for individual purchase and was absolutely not gouging," he said. "He will have his day in court."

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U.S. Attorney John Lausch's office is prosecuting the case, with assistance from attorneys with the Illinois Attorney General's Office.

“Amassing and reselling personal protective equipment at large markups during a global health crisis is not only greedy, it’s illegal under the Defense Production Act,” Lausch said in a statement. Topouzian appears to be the first person in Illinois to be charged with a violation of the rarely invoked act.

“Our office is working tirelessly with our law enforcement partners to protect the public and hold individuals accountable for attempting to illegally profit from the sale of scarce protective equipment," Lausch added.

The Department of Justice has created a COVID-19 Hoarding and Price Gouging Task Force to investigate and hoarding and illegal profiteering on PPE. And the Illinois Attorney General's Office has also created its own price-gouging task force, and took part in the development and investigation and development of the case .

The FBI also assisted in the investigation against Concord Health Supply, according to an announcement from Lausch's office. Emmerson Buie, chief of the FBI's Chicago field office, encouraged the public to report any COVID-19 related crimes they may know about.

“Illegal price gouging on critically scarce medical equipment during a global pandemic is reprehensible," Buie said, "and these charges send a clear message that it will not be tolerated."