October 24, 2020

Identifying the Wolf in ‘PPE’ clothing : The case of Money Laundering disguised as PPE sales and purchases

In the past many weeks, I may have written a dozen emails, replying out of pure good faith, to naive newbie PPE agents to avoid becoming the ‘drug mules’ of PPE opportunists.

There is a marked increase in sham transaction mongers placing queries with the rapidly budding PPE brokers which are obviously an invitation signal to the PPE market’s black sheep to respond quickly to an indication that suspicious funds need ‘facilitation’ are using PPE agents as bait.What is even sadder is despite the Billion on The Ground (OTG) glove boxes and 3M Masks, doctors and medical professionals still have to rely on expensive retail purchases of masks and gloves.

A number of friends and colleagues who changed their hats to ‘PPE experts’ and consultants within 15 days of COVID striking the USA and other regions of the world, have now entered the third phase of 2020, where the latest fad of running after OTG, wasting money on traveling after warehouses and PPE that does not exist is coming to a slower end than expected.The very words OTG and 3M and Gloves can elicit a Zombie like reflex from these brokers, if we recall how Zombies react in movies to fresh human meat.

I don’t blame these brokers.In fact I don’t blame anyone for becoming a puppet to these shady back actors, with promise of any money in a challenging economy.And by challenging I mean and that I have seen the sad collapse of many law firms we were formerly competing with. Ditto for businesses.

People have lost jobs, hope and their standard of living.

People have bills , mortgages and what not to clear.

There is no health licence required to become a PPE broker.No checks, no nothing.We had governments purchasing in panic from newly registered companies which had zero medical credentials. Educated and well-meaning procurement managers gave Letters of Interest and Banking information to chains of brokers, without checking their backgrounds and criminal records.

Reminds me of the infamous Varga, who intrigued us all in season 3 of Fargo.

V.M. Varga: Here’s some of the papers you need to sign. I’ve studied your books, and, you’re not just in the parking lot business anymore.
Emmit Stussy: What business am I in?
V.M. Varga: The billionaire business.

Then the next instance shows us; something familiar :

V.M. Varga: There’s an accounting coming, Mr. Stussy, and you know I’m right. Mongol hordes descending. Now what are you doing to insulate yourself and your family? You think you’re rich. You’ve no idea what “rich” means. “Rich” is a fleet of private planes filled with decoys to mask your scent. It’s a banker in Wyoming and another in Gstaad. So that’s action item one, the accumulation of wealth, and I mean wealth, not money.
Emmit Stussy: What’s action item number two?
V.M. Varga: To use that wealth to become invisible.

The worldwide demand for personal protective equipment (“PPE”) has made the ground potent for  fraud and other illegal activity abound. Everywhere we see resellers, consultants and middlemen hawking their offers on LinkedIn, facebook and even via Google Advertisements.

These  transactions are not ordinary retail sales contracts protected by local laws and risk compliance becomes pertinent in cross-border transactions that may involve foreign interests of a less than legal nature giving rise to possible threats of money laundering.

The rush and panic created often means that lawyers are not given a chance to do proper due diligence on these buyers and sellers.There will be an increased spectacle of urgency and very often nervousness abounds.In our legal practice post Covid19 we have seen unfortunate cases where lawyers have concealed their business interests in a transaction and actually facilitated the bribes and kick-backs which may arise from a endorsing a defective sales transaction as legitimate.Advance payments are often given against the proper advice from banks to use certified escrow or letter of credit arrangements.

Furthermore another scam is on the rise which I need to address in my next articles here.This is the ‘sellers escrow’ scam.After watching the fate of atleast 5 transactions where neither the ‘escrow’ lawyer or the seller could be found, I am now warning the general public to be as conservative as possible with their financial information and to take steps to bind the Escrow lawyers into proper actionable contracts.I feared the IOLTA accounts in USA before but in Europe I am seeing much more fraud going on with Escrow mechanisms in Europe.

In essence, if anyone asks you to use the ‘Sellers’ Escrow, consider it an unfair term for a contract.In fact, there are many independent Escrow services out there.If the Seller has the title to the goods, and the details and proof of their existence, why should the funds be deposited in their escrow? Unless….and you guessed it correctly, they intend to use your funds to ‘buy’ or pretend to buy or scam a dozen other well-meaning people.

I will post the link for my next article here shortly.

 

 

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