News

Sep 05, 2023

Two Lexington men plead guilty in case involving sales of counterfeit COVID

Two Lexington businessmen have pleaded guilty in connection with selling

Two Lexington businessmen have pleaded guilty in connection with selling counterfeit protective masks during the COVID-19 pandemic.

Adam K. Sloan, chief commercial officer for Old World Timber, pleaded guilty June 1 in federal court in Lexington to a charge of introducing a misbranded device into interstate commerce with the intent to defraud or mislead.

Nathan Brown, founder and chief executive officer of the company, pleaded guilty to the same charge in April.

The plea agreements for both men call for a sentence of at least five months in jail but not more than 10 months.

Old Word Timber, which has its manufacturing facility in Lexington, specializes in turning wood from old barns and other structures into flooring, wallboard, stair treads and other products.

The business has made a point of providing job opportunities to people who have overcome substance abuse or had criminal convictions, making "second chance wood by second chance people," as its website says.

In the fall of 2020, Brown decided to import and sell 3M company medical-grade masks, called N95 masks, according to the court record.

At the time, health officials were urging people to wear masks to protect against the spread of the COVID-19 virus, and the need for masks in healthcare facilities had gone up.

Old World Timber obtained masks from two companies in China, but one provided invalid documentation on whether the masks were legitimate 3M products, so Brown stopped selling them and refunded customers’ money, according to his plea agreement.

The second Chinese company said it had a deal with a medical-supply company that was an authorized 3M dealer in Hong Kong and provided documentation on the authenticity of the masks.

After Old World Timber started selling the masks, however, Brown and Sloan began to learn "various facts" that raised questions about whether they were authentic, according to their plea agreements.

Sloan had sent information on the masks in December 2020 to a 3M team aimed at reducing fraud and counterfeiting. In a response a few days later, the company said some of the documentation Old World Timber had received was fake.

In February 2021, 3M issued several alerts about counterfeit masks that included lot codes for some of the masks Old World Timber had bought.

One alert said 3M masks exported from China of the same model Old World Timber had bought "should be viewed as counterfeit."

The masks had a type of seal on them that indicated they were likely counterfeit, according to the court record.

On March 3, 2021, Brown had those seals removed from some of the masks, according to his plea agreement.

In a motion in a separate bankruptcy case, a federal official said Old World Timber employees used heat from a hair dryer to remove the seals.

The company "took active steps to hide that the masks it was selling were counterfeit," that motion alleged.

Old World Timber kept selling the masks until April 9, 2021, and made no effort to follow up with the anti-counterfeit unit at 3M, according to their plea agreements.

The two men acknowledged that by March 3, 2021, they were "deliberately ignoring a high probability" the masks Old World Timber had were not genuine.

Their plea agreements covered sales from March and April 2021.

In the separate bankruptcy case, an attorney for the acting U.S. Trustee — an office whose job includes detecting fraud in bankruptcy cases — said in a motion that Old World Timber sold $584,980 worth of masks in 2020 and just over $1 million worth of masks in 2021, before federal authorities seized them.

That upshot was that Old World Timber significantly stepped up sales after 3M first told the company some documents it had received raised questions about whether the masks were counterfeit, the trustee's motion said.

In a response at the time, attorneys for Old World Timber said the company disputed any allegation of intentional deception.

Old World Timber "was operating under emergency circumstances to try to increase access to (protective gear) that it believed to be authentic and reliable," its attorney said.

That was before Brown and Sloan entered guilty pleas.

3M sued Old World Timber in May 2021, alleging the company was deceiving customers by selling counterfeit masks.

The Lexington company agreed in July 2021 to an injunction to stop selling the masks, and ultimately agreed to pay 3M a total of $451,277, covering 3M's costs in the case and a portion of what Old World Timber made from mask sales.