Businessman challenges federal price-gouging charge: ‘Sellers are left to guess’

A suburban businessman accused last year of price gouging customers looking for personal protective equipment is challenging his federal prosecution by arguing he had no way of knowing whether the prices he charged for respirator masks broke the law.

Rather, attorneys for Krikor Topouzian said the federal government under then-President Donald Trump chose “to leave state governments and private buyers to compete for critical medical equipment and supplies in the market” and offered no guidance on “prevailing market prices” during the coronavirus pandemic.

“Sellers are left to guess whether the prevailing market price is the one that existed before the COVID-19 crisis, or whether it reflects the increased demand and disrupted supply chains created by the pandemic,” lawyers Thomas Leinenweber and Matthew McQuaid wrote in a court filing earlier this month.

The defense attorneys have asked U.S. Magistrate Judge Jeffrey Cole to dismiss the charge filed against Topouzian in October. Prosecutors asked last week for additional time to respond to the challenge, telling the judge it was the first time the issue had been raised in the Chicago-based 7th U.S. Circuit.

Topouzian, owner of Concord Health Supply, was charged with violating the Defense Production Act. Prosecutors said he purchased 79,160 respirator masks — including N95 masks — from companies in Oregon and Georgia between March 6 and April 7 at prices ranging from $4.27 to $7 each.

Then, between March 29 and April 22, they said he sold 11,492 of the masks for prices as high as $19.95 per mask. They said he offered discounts to customers who purchased multiple masks, ultimately selling the masks at a mean price of $16.82 each.

Prosecutors also said that Topouzian, of Winnetka, received multiple warnings about the prices, including from law enforcement.

But Leinenweber has previously said Topouzian’s prices covered packaging and shipping costs, and were based on other products sold by Topouzian’s company. He said Topouzian only got into the mask business when a former employee sought his help.

Leinenweber and McQuaid say the charge filed against Topouzian should be tossed for vagueness.

“Knowing that one is increasing the price of goods in order to increase profits or cover higher costs does not equate to knowing that one’s conduct violates the law,” the attorneys wrote this month.