Los Angeles Authorities Sue A Company For Coronavirus-Related Fraud
AILSA CHANG, HOST:
Prosecutors across the country are trying to crack down on fraud related to the coronavirus. And today, authorities in Los Angeles announced a lawsuit against the company Wellness Matrix Group for, quote, "shocking deceptive conduct." The company allegedly sold tests that were not FDA approved and falsely claimed that they had a disinfectant that could keep places virus-free for a full 28 days. Here is LA City Attorney Mike Feuer.
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MIKE FEUER: It is inexcusable to try to profit from this pandemic at the expense of people's health. And we allege that these defendants have been attempting to do just that.
CHANG: Well, this company first came to the attention of law enforcement through reporting by the NPR podcast Embedded. And NPR investigative reporter Tom Dreisbach joins us now to talk about it.
TOM DREISBACH, BYLINE: Hey, Ailsa.
CHANG: All right. So take us back. Where did this story start?
DREISBACH: Well, I first heard about the company back in March. I got a tip about them selling supposed at-home coronavirus tests for about 50 bucks each. They claimed online and also in an interview with me that they had FDA approval for these at-home tests, but that was false. The FDA had not approved any at-home coronavirus tests at the time.
I talked to several customers who say they bought the tests 'cause they were worried about getting sick themselves or getting relatives sick. One person I talked to bought the test 'cause he was just trying to safely visit his mother, who has Alzheimer's and is on hospice care. But all these customers say the tests never arrived, and they really felt like they had been scammed.
CHANG: Yeah. OK. So you reported out this story more than a month ago. Tell us what happened next.
DREISBACH: Well, because of our reporting, the LA city attorney began investigating. So did members of Congress from the House Oversight Committee. And then the Securities and Exchange Commission, which regulates Wall Street - they also stepped in. Now, Wellness Matrix Group is a small company based here in California, but it was publicly traded as a penny stock. And the SEC temporarily suspended trading of the company's shares, which is a pretty severe step by the SEC.
DREISBACH: And most of the customers we talked to did get refunds after the reporting, but we hadn't heard anything else in weeks until this latest lawsuit.
CHANG: OK. And so this announcement by the city attorney in Los Angeles - tell us what we learned from it today.
DREISBACH: Well, the city attorney, after their investigation for more than a month and a half now, they're alleging a, quote, "sophisticated and wide-ranging" fraudulent scheme by the company, involving multiple websites that they set up over time. The lawsuit says the company even created a fake scientific study to make it look like their disinfectant was legit. But that study, they say in the lawsuit, was a total fiction. The lawsuit also claims that the company kept trying to sell tests and disinfectant even after all these investigations started. And the company had even been talking about trying to sell their products to local governments in California.
CHANG: And has there been any response from this company so far?
DREISBACH: They're denying all of the allegations in the lawsuit. An attorney representing the company said his clients have been falsely accused. And in an email, he said, quote, "It's unfortunate that a molehill is being blown up into this inaccurate mountain that wildly misstates the facts." And so he is suggesting that they're going to fight the lawsuit.
CHANG: All right. And just sort of big-picture real quick, what do you think we should make of a case like this?
DREISBACH: Well, experts in general told me that when we have a big public health crisis when there are limited tests, limited treatments, scammers always try to come out of the woodwork, trying to exploit people's fears and make a buck. So regulators are telling customers to be very careful, check with official sources. And the biggest thing - if you see something that seems just too good to be true, it probably is.
CHANG: Probably is. That is NPR's Tom Dreisbach.
Thank you, Tom.
DREISBACH: Thanks. Transcript provided by NPR, Copyright NPR.