'I have the cure': slew of US scammers seek to capitalize on coronavirus fears

  • In US
  • 2020-04-08 11:30:15Z
  • By The Guardian
\'I have the cure\': slew of US scammers seek to capitalize on coronavirus fears  

As the coronavirus pandemic surged across America, Keith Middlebrook turned to his thousands of social followers and announced he'd found a solution.

"Yes, I've created the cure that shuts down the Covid-19," claimed the 53-year-old California actor in a YouTube video released in mid-March. He boasted of inventing a miracle treatment that "makes the cells from the coronavirus detach, release and die within 48 hours", later offering anyone who invested $300,000 a guaranteed return of $30m.

Middlebrook's claims were completely bogus. But the actor, who'd had bit parts in Marvel movies such as Iron Man 2 and Thor and amassed a decent online fanbase, had his videos viewed by nearly 2 million people, according to the FBI agents who later arrested him.

Investigators say Middlebrook is one of many alleged scamsters coming out of the woodwork to prey on the public's fears about a virus with no known treatments, vaccines or cures. Fraudsters and price-gougers are targeting everyone from elderly citizens seeking hand sanitizer to government officials procuring hospital supplies.

The FTC has received nearly 8,000 complaints about scams related to coronavirus with consumers reporting they were bilked out of $5m, according to a report by the Association of Certified Financial Crime Specialists. The complaints included fraudulent robocalls and donation solicitations. Meanwhile, Amazon has reported removing more than 500,000 "high-priced" products from its platform and suspended 2,500 sellers, in response to gouging complaints.

In California, the governor, Gavin Newsom, has spoken of how even state and federal purchasers are facing a "tsunami" of dubious-sounding requests, such as being asked to pay in bitcoin for medical supplies before ever seeing them, and urged consumers to act with caution.

"Be careful before you provide your credit card, your social security number, your mother's maiden name or your first pet …" Newsom warned in a public address last week. "Make sure you're being thoughtful."

A slew of new scams

Police are alerting residents about a host of schemes popping up around the country. Some, such as those identified in North Carolina and Florida, involve scammers pretending to be from government health departments in order to defraud people of money. Authorities in North Carolina warn of people being called and falsely told they had been exposed to coronavirus, while in Palm Beach, Florida, imposters have knocked on people's homes in white lab coats.

Other scams, such as the one Middlebrook is alleged to have run, have involved the hawking of fake Covid treatments, cures and protective gear. In Los Angeles, airport officials intercepted bags of fake Covid-19 tests that were being smuggled into the country, apparently destined for sale. Federal officials, meanwhile, charged a British man with importing mislabeled drugs and trying to sell them as coronavirus treatment kits.

In Brooklyn, federal agents arrested a man after he allegedly agreed to sell a doctor nearly a thousand N95 masks and additional medical supplies for $12,000 - which agents said was a mark-up of about 700%. When the agents confronted him, he coughed on them and told them he had coronavirus.

Even small time scamsters have been facing arrests. In San Diego police arrested eight people for price gouging after they placed online ads offering much-needed products, like toilet paper and hand sanitizer, for prices many times their usual value.

Undercover agents spring into action

Middlebrook's alleged scheme was among the most striking in its audacity. The actor and social media personality had gained a following with videos in which he brags about his fitness regime, expensive cars and pricey Newport Beach home. In his YouTube bodybuilding videos Middlebrook, who calls himself "the Real Iron Man", appears with bulging muscles and a tight black tank top telling viewers that "super wealth and super health" are both part of his "super-accelerated success program".

The FBI began investigating him after witnesses contacted them saying Middlebrook was seeking investors to bring his miraculous-sounding coronavirus "injection cure" and "prevention pills" to market, claiming the products would be worth "$100 billion" before an initial IPO offering.

People are trying to make money off the situation

Arnold Aldana, San Diego sheriff's department

In an Instagram video that received more than a million views, he bragged the pill would allow him to walk into a Staples Center (sports arena) full of Covid-19 patients and not contract the virus. In another video, he claimed that the pandemic was created by the "mainstream media" to destroy Donald Trump and "the greatest economy in history".

When an undercover FBI agent posing as a potential investor contacted Middlebrook, he responded with a text indicating that the former NBA basketball star Earvin "Magic" Johnson was "already onboard" and that his invention's future was secured with a $10bn offer from a company in Dubai.

Federal investigators, however, found that Middlebrook's Newport Beach address merely led to a post office box, and the company he was raising investments for was not actually a registered corporation. When contacted by agents, Magic Johnson said he had never heard of Middlebrook.

An undercover FBI agent posing as an investor met with Middlebrook before arresting him on charges of wire fraud, which could result in 20 years in prison.

'A particular opportunistic cruelty'

Social media has made it possible for fraudsters to reach thousands of potential victims without ever leaving their homes. But Thom Mrozek, a spokesman for the US attorney's office in Los Angeles, said law enforcement agencies have beefed up their teams and are monitoring posts, studying suspicious activity reports from banks, setting up hotlines and putting out calls for tips from the public.

Related: Fraudsters exploiting Covid-19 fears have scammed £1.6m

Mrozek described "what appears to be a sizable uptick in fraudulent behavior" as a result of the coronavirus crisis, adding that his team is worried that people receiving the billions of dollars in government relief money could become targets. For instance, he said, scammers may promise to deliver money early in order to obtain people's bank account information.

"We are particularly interested in nipping this in the bud," he said.

Authorities also say that while those selling fake cures are a menace, the price gougers stockpiling and selling off essential products are also a huge area of concern.

"People are trying to make money off the situation," said Lt Arnold Aldana of the San Diego sheriff's department, whose team has been cracking down on hoarders. In one operation, deputies contacted sellers advertising overpriced items such as toilet paper, gloves and hand sanitizer on sites like Craigslist and Facebook Marketplace. Undercover officers then met the sellers in parking lots to take delivery of the items, and arrested them on the spot.

In one case, Aldana said a seller offered a package including a box of gloves, a mask and several small bottles of hand sanitizer - items normally worth about $40 - for $200.

"They were charging much more than a moral person would charge," said Aldana, who added that those arrested could face up to a year in jail or a $10,000 fine for violating California law. The state prohibits "excessive and unjustified increases in prices for essential consumer goods and services during a declared emergency".

"With products flying off the shelves, it's human nature for some people to try to make a buck," he said. "Some consumers are panicking and thinking they need to spend their hard-earned money to get this overpriced stuff."

Meanwhile, the FBI will continue to use a variety of tools to fight those seeking to capitalize on pandemic panic, says Paul Delacourt, the assistant director in charge of the FBI's Los Angeles field office.

"There's a particular opportunistic cruelty in seeking to profit based on the fear and helplessness of others," Delacourt says. "The FBI is using a variety of tools to identify anyone who exploits the current crisis … and is proactively warning investors to thoroughly research any salesperson or any product claiming to save lives, before losing their money, or creating false hope."


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