A Santa Monica spa owner pleaded guilty Tuesday to accumulating N95 respirator masks at the outset of the coronavirus pandemic and then selling the scarce items at up to $15 each — sometimes charging nearly 1,100% over list price.
Niki Schwarz, 55, owner of Tikkun Holistic Spa, admitted a misdemeanor count of hoarding and price gouging, which carries a possible sentence of up to a year in federal prison, according to the U.S. Attorney’s Office. Sentencing is scheduled for May 6.
Schwarz admitted that she began accumulating N95 respirators in February in anticipation of a shortage that would be caused by the pandemic.
From the beginning of February until the end of June, she accumulated nearly 20,000 N95 masks that had been manufactured by 3M — list price ranging from $1.02 to $1.27 — and Alpha Pro — list price of 86 cents, according to court papers.
In March, the United States government designated N95 respirators as “scarce materials” under the Defense Production Act of 1950 due to the overwhelming need of health-care providers dealing with COVID-19 patients to use personal protective equipment.
Schwarz admitted that she obtained the N95 respirators for the purpose of reselling them at above-market rates, and that she sold the masks for up to $15 each.
The defendant “accumulated and resold the masks at prices in excess of the prevailing market prices willfully, that is, with knowledge that masks had been designated as scarce materials and with knowledge that accumulation of the designated materials to resell in excess of prevailing market prices was unlawful,” her plea agreement states.
On March 1, an associate informed Schwarz that the associate was going to stop selling N95 masks because she believed it was crime — and that price gouging could result in one year in prison — but Schwarz continued to sell the masks at inflated prices, according to court papers.