Indiana files civil suit in alleged mask-selling scheme

Indiana Attorney General Curtis Hill on Friday said he has filed a civil lawsuit against an individual and a corporation that allegedly conspired to obtain hundreds of millions of dollars from the state by offering to sell it millions of N95 respirator masks made by 3M even though they had no ties to the manufacturer or an ability to obtain the masks.

The parties in question have already been sued by manufacturing giant 3M Co.

IBJ reported in May that 3M filed suit against a Nevada company that it alleged tried to “perpetrate a false and deceptive price-gouging scheme” by offering to sell the state of Indiana respirators for $285 million to $14.25 billion.

In the complaint, filed in U.S. District Court in Indianapolis, 3M accuses Reno, Nevada-based Zenger LLC and its agent, Zachary Puznak, of contacting high-ranking Indiana officials and offering to sell them up to 100 million N95 respirators on behalf of 3M.

“3M has no affiliation whatsoever with defendants, whose fraudulent scheme during a global pandemic represents not only a new low in rapacious profiteering, but also endangers lives by diverting state officials from legitimate sources of much-needed respirators,” Saint Paul, Minnesota-based 3M says in its complaint, filed by the Indianapolis office of law firm Faegre Drinker Biddle & Reath LLP.

The suit seeks relief for federal and state trademark infringement, false association, false endorsement, false designation of origin, trademark dilution, and unlawful, unfair, and fraudulent business acts and practices.

In addition to Zenger LLC—which does business as ZeroAqua—and Puznak, the complaint names 10 unknown individuals as defendants, calling them John Does 1-10.

On its website, ZeroAqua sells a device that it says disinfects N95 respirators. The site displays an unauthorized photo of the respirator and the 3M trademark, the complaint says.

The suit says Puznak first emailed Earl Goode, chief of staff to Gov. Eric Holcomb, on April 14 and said he had “a nice Easter gift for you and the State of Indiana.” Puznak offered to sell up to 100 million 3M respirators at a “special rate” of $2.82 each, which 3M said is more than double its posted list price.

The defendants also claimed to be working to “find procurement solutions with the States of Michigan, Connecticut, New York and Massachusetts,” the complaint says.

On April 24, the suit says, the defendants contacted Luke Bosso, senior vice president and chief of staff of the Indiana Economic Development Corp., and made another offer: a minimum of 100 million respirators or “up to 5 billion total” at $2.85 each.

The suit says the defendants included a 10%-off bonus offer, “as if they were a huckster at the state fair.”

The complaint points out that 3M’s current annual global production of all 3M N95 respirators is 1.1 billion, which is 3.9 billion fewer than Puznak offered to sell the state.

Bosso said the IEDC would need confirmation from “corporate 3M” to consider a deal, which the defendants failed to produce.

The complaint says Zenger LLC was registered to do business in Nevada in 2018. The address of its managing member, Dennis Puznak, is in Reno.

3M said Zachary Puznak sought customers internationally via his LinkedIn page, where he falsely claimed to be working directly with 3M.

3M said it filed the suit to force the defendants to provide an accounting of all manufacture, distribution and sales of products under the 3M marks. The company is seeking actual damages as well as statutory treble damages, costs and reasonable attorneys’ fees in undetermined amount.

The company said much of the award, if any, would be donated to charity.

Hill said his complaint seeks civil penalties to be determined at trial as well as reimbursement of litigation costs.

“These fraudsters tried to pull off their scheme in April of 2020,” Attorney General Hill said. “That’s when states across the nation were scrambling to obtain sufficient supplies of personal protective equipment to outfit first responders, health-care workers and essential businesses. Anyone attempting to use such times of crisis for unethical personal gain must be held accountable for their actions.”