Abbreviated Government Investigations and

Permanent Injunctions

On May 11, 2020, we posted a blog regarding enforcement trends during Covid-19, which noted the shifting priorities of DOJ and its increased reliance on civil remedies to quickly shut down Covid-19 related frauds. We have continued to see an uptick in the number of these civil Covid-19 enforcement actions, possibly reflecting the government’s policy decision to prioritize efficiently stopping Covid-19 related frauds over conducting comprehensive criminal investigations. After all, it is easier for the government to obtain a permanent injunction by way of a civil complaint than it is to establish criminal culpability. These types of civil cases often follow the same pattern: 

• a person provides a tip to the government alleging a Covid-19 related fraud;
• the government conducts an abbreviated investigation;
• the alleged fraud implicates either one or some combination of the wire, mail, or healthcare fraud statutes;
• the government files a civil complaint in federal court seeking to prevent the defendant from continuing to perpetrate the fraud; and
• the government and defendant often agree to the entry of a permanent injunction that prohibits the conduct and dispenses with the civil case.

Notably, permanent injunctions do not prevent the government from pursing criminal charges at a later date based on the same underlying conduct. However, cases that proceed along this civil enforcement path often involve abbreviated investigations that are substantially shorter than typical fraud investigations, and the less time the government spends investigating the fraud, the less evidence it obtains. The less evidence the government has, the more difficult it is to prove a criminal case. As a result, relying on this civil remedy to shut down Covid-19 related fraud may be efficient, but it may also stymie the government’s ability to pursue criminal charges against such individuals at a later date for the same conduct. It is clear, however, that many of these civil enforcement actions involve abbreviated investigations that proceed at an unusually quick pace.

A.  United States v. Hugo Chico – Fraudulent Covid-19 Prevention: From Anonymous Tip on July 16, 2020 to Permanent Injunction by October 27, 2020[1]

The government received an anonymous tip on July 16, 2020 that an El Paso resident was administrating Covid-19 prevention treatments and charging patients approximately $300 for the treatment. The alleged treatment involved removing blood from a patient, mixing the blood with medication obtained from Mexico, and injecting the new substance back into the patient to boost the immune system and prevent Covid-19. The defendant advertised the treatment through online social media and claimed it was from a medical center located across the border in Ciudad Juarez, Chihuahua, Mexico. The government began its investigation on July 16th, filed its civil complaint in the Western District of Texas on October 9th accusing the Defendant of wire and mail fraud, and the accused agreed to a permanent injunction on October 27th, thereby dispensing of the case. 

B.  United States v. Leslie Tatum, et al. – Fraudulent Covid-19 Testing: From Anonymous Tip on July 8, 2020 to Permanent Injunction by August 24, 2020[2]

The government received a complaint on July 8, 2020 regarding Covid-19 rapid blood testing administered by a massage therapist at a holistic medicine clinic in New Braunfels, Texas. Soon thereafter, the government initiated an investigation and filed a civil complaint on August 5, 2020 alleging the defendant committed wire and mail fraud in offering and advertising the Covid-19 testing. According to the complaint, the defendant massage therapist fraudulently offered and performed Covid-19 antibody tests and mislead the public into believing the tests could detect active Covid-19 infections. The defendant not only performed tests that had yet to be approved by the FDA, but she also had no qualifications to do so. The defendant agreed to a permanent injunction on August 24, 2020.

In these two cases, the government clearly prioritized speed over conducting a lengthy investigation into the alleged frauds, and it is a reoccurring theme throughout the legal system. Ultimately, these fast-tracked investigations may benefit defendants who are facing Covid-19 related enforcement actions and provide an avenue to challenge the sufficiency of the government’s evidence in the event of future criminal charges. Despite the frequency of these cases, it remains unclear whether or not the government will pursue these type of criminal charges.

If you need help with a Covid-19 related enforcement action, please do not hesitate to contact the attorneys at Elliott Sauter. We can be reached at (469) 758-4150.

[1] https://www.justice.gov/usao-wdtx/pr/federal-court-issues-temporary-restraining-order-against-el-paso-man-offering-0

[2] https://www.justice.gov/usao-wdtx/pr/federal-judge-grants-temporary-restraining-order-against-new-braunfels-business