Home » S.I. business owner on hook for $90K and jail time in COVID-19 PPE sales scheme – SILive.com

S.I. business owner on hook for $90K and jail time in COVID-19 PPE sales scheme – SILive.com

by Arifa Rana

The defendant jacked up prices and failed to deliver goods as quickly as promised, said prosecutors. He was sentenced in Brooklyn federal court. (Staten Island Advance/Joseph Ostapiuk)
STATEN ISLAND, N.Y. — When the coronavirus (COVID-19) pandemic struck the country over two years ago, a Staten Island businessman saw his chance to make some quick cash, federal prosecutors said.
Kevin Jay Lipsitz, 63, stocked up on personal protective equipment (PPE), including thousands of surgical masks and N-95 face and KN-95 filtering face-piece respirators and sold them at “large markups” through his online business, said Brooklyn federal prosecutors.
Lipsitz enticed customers by promising speedy shipment on their orders, yet failed to deliver on that pledge, prosecutors said.
Now, comes payback time — literally.
Lipsitz, who pleaded guilty last year to mail fraud, must forfeit $90,000 and fork over a fine of $5,000, a Brooklyn federal court judge ordered.
In addition, the defendant was sentenced on Thursday to three months in jail and is subject to three years’ post-release supervision.
According to court filings and facts presented during his plea hearing in October, Lipsitz operated SuperGoodDeals.com Inc. (SGD), an online business based on Staten Island.
The company sold various types of merchandise to customers across the United States.
Prior to the COVID-19 outbreak, Lipsitz and SGD “did not market or sell PPE in the normal course of business,” wrote Assistant U.S. Attorney Andrew Wang in a pre-sentencing memorandum.
However, as the pandemic swept through the United States, Lipsitz accumulated huge quantities of PPE between March 2020 and May 2020, said prosecutors. The merchandise included surgical masks and N-95 and KN-95 filtering face-piece respirators.
Lipsitz took advantage of the “increased public demand for medical equipment” with false claims to customers regarding SGD’s inventory and ability to quickly fill and ship orders of PPE, said prosecutors.
In that regard, Lipsitz prominently featured statements on the business’ website that customers could “pay today” and their orders would “ship tomorrow,” authorities said.
Customers placed orders relying on these statements, and Lipsitz issued false same-day shipping confirmations to include tracking numbers for clients to purportedly monitor the shipment of their orders, authorities said.
Despite those vows, Lipsitz did not fulfill orders for PPE on the promised timeline for hundreds of customers, said prosecutors.
About 170 clients didn’t receive their merchandise until three weeks or longer after the original order date, said Wang.
In some instances, the defendant didn’t mail PPE ordered from the web site until over five weeks after the order date, Wang said.
In addition, Lipsitz sold PPE at big markups, ranging from 150% to over 500% above what he paid for the goods, authorities said.
Prosecutors recommended the defendant be sentenced to 15 to 21 months in jail in accordance with federal sentencing guidelines.
Those guidelines, however, are advisory and judges are not bound by them.
“During the early days of the COVID-19 pandemic, when fear of the novel coronavirus gripped the country and thousands of people sought out whatever protective measures they could, the defendant cynically took advantage of the crisis by selling PPE through false promises of speedy delivery,” wrote Wang. “Ultimately, the defendant’s conduct was wide-ranging, cynical, and harmful to a large number of desperate customers in the midst of a pandemic.”
Lipsitz’s lawyer Joseph Caldarera, called the sentence “fair” and said the defense is “appreciative of the judge’s leniency.”
“When my client began selling face masks and personal protective equipment (PPE) at the beginning of the pandemic, he was well intentioned,” said Caldarera. “Mr. Lipsitz successfully shipped PPE to people all around the country who otherwise would not have been able to find any. Mr. Lipsitz did make some mistakes along the way, and for that he has accepted full responsibility.”
“The entire legal team at Robert Tsigler’s office fought tirelessly for our client to get the very best outcome possible,” said the lawyer.
Lipsitz has a criminal history, prosecutors said.
In September 1999, he was convicted of grand larceny in state court, said prosecutors.
Lipsitz forged multiple checks, deposited them in a Staten Island bank and illegally withdrew $82,000, prosecutors said.
He was sentenced to five years’ probation.
The defendant contended he had deposited the checks with the intention of paying back the bank, prosecutors said.
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