SANTA MONICA, CA — A Santa Monica day spa owner was charged Tuesday in federal court with accumulating N95 respirators in anticipation of the COVID-19 pandemic and then selling the scarce masks at up to $15 each — sometimes charging nearly 1,100% over list price.
Niki Schwarz, 55, of Santa Monica, the owner of Tikkun Holistic Spa, was named in a criminal information charging her with one count of hoarding and price gouging, which carries a sentence of up to a year in federal prison. In a plea agreement also filed Tuesday, Schwarz agreed to plead guilty to the misdemeanor offense, according to the U.S. Attorney's Office.
In the plea agreement, Schwarz admitted that she began accumulating N95 respirators in February in anticipation of a shortage that would be caused by a global pandemic resulting from the spread of the novel coronavirus.
From the beginning of February until the end of June, Schwarz 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, according to federal prosecutors.
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," according to the plea agreement.
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.
Schwarz will receive a summons directing her to make an initial appearance in Los Angeles federal court, likely in early November.
"This matter was investigated by the United States Postal Inspection Service," officials said.
- City News Service and Patch Editor Nicole Charky contributed to this report.