LOS ANGELES (CBSLA) — The owner of a Santa Monica day spa has admitted to hoarding, then selling N95 masks for as much as 1,100% over list price, according to Department of Justice officials.
Niki Schwarz, 55, of Santa Monica, is the owner of Tikkun Holistic Spa, 1460 4th St. Schwarz, who was charged in federal court Tuesday with one count of hoarding and price gouging, agreed to plead guilty to the misdemeanor offense, federal officials said.
Schwarz admitted that she started buying up N95 respirators in February, in anticipation of a shortage as the novel coronavirus outbreak turned into a global pandemic, according to her plea agreement. From the beginning of February until the end of June, prosecutors say Schwarz bought nearly 20,000 N95 masks – including 3M masks that had been priced between $1.02 to $1.27 and 86-cent Alpha Pro masks. In her plea deal, Schwarz admitted she bought the masks for the purpose of reselling them at above-market rates, and sold them for up to $15 each.
N95 respirators were designated as “scarce materials” in March by the federal government. On March 1, prosecutors say an associate told Schwarz she was going to stop selling N95 masks because she believed it was crime, with price gouging punishable with one year in prison, but Schwarz continued to sell the masks at inflated prices.
Schwarz “accumulated and resold the masks at prices in excess of the prevailing market prices willfully, that is, with knowledge that masks that 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,” according to the plea agreement.
The hoarding and price gouging that Schwarz admitted to in the plea deal carries a statutory maximum sentence of a year in federal prison, according to the Department of Justice. Schwarz will likely be summoned to make her first court appearance in United States District Court in early November.