Security News: Court Orders Washington, D.C. Man and His Two Companies to Cease and Desist From Engaging in Fraudulent N95 Mask Scheme

A Washington, D.C. man and his two companies have been ordered to stop engaging in fraud and transferring fraud proceeds in an N95 mask scheme.  He must also return over $2.4 million to his victims.  In a civil judgment filed in federal court in Cedar Rapids, Iowa, on May 12, 2022, Alex St. James Railey Cisco, also known as “Alex St. James” and “William Sir Knight Alex-St. James,” from Washington, D.C., had the judgment entered against him on an Amended Civil Complaint filed by the United States on February 16, 2021.  The Amended Civil Complaint alleged that Railey Cisco and his two corporations, US FED Group, LLC (“USFG”) and Trade-Backed Equity, LLC (“TBE”), engaged in wire fraud and money laundering as part of a fraudulent 3M N95 mask scheme in 2020.  

Evidence at multiple temporary restraining order and preliminary injunction hearings in 2021, as well as additional materials filed in conjunction with a motion filed in February 2022, showed that Railey Cisco controlled USFG and TBE and their bank accounts in Washington, D.C.  In October 2020, a Cedar Rapids first-aid manufacturer contracted with an intermediary in Florida for the purchase of one million 3M masks, which were in high demand at that time due to the COVID-19 pandemic, by means of a purported contract the intermediary had with USFG.  The intermediary represented that USFG was an authorized distributor of 3M masks, but in truth at no time was USFG an authorized 3M distributor.

Believing USFG was an authorized 3M distributor, the Cedar Rapids company wired over $2.4 million to a Florida lawyer for the purchase of the masks.  The Florida lawyer in turn wired those funds to an account that Railey Cisco controlled on behalf of USFG.  The Cedar Rapids company never received the masks or its money back, despite the Cedar Rapids company’s repeated demands. 

Instead of returning the Cedar Rapids company’s money or providing the one million 3M masks, Railey Cisco transferred the Cedar Rapids company’s funds to an account he controlled at TBE.

The Cedar Rapids company was not Railey Cisco’s only victim.  In September 2020, a California company had also agreed to wire over $250,000 to USFG’s account in Washington, D.C. in anticipation of receiving 3M masks, but the California company never received the 3M masks or its money back from Railey Cisco or USFG.  The court found Railey Cisco received the money even though he knew that he, USFG, and TBE were unable and would be unable to fulfill any order for 3M masks.  Railey Cisco was the sole owner of the USFG and TBE bank accounts at all relevant times.

United States District Court Judge C.J. Williams ordered the return of over $2.4 million dollars to St. James’s victims and entered a permanent injunction forbidding Railey Cisco, USFG, or TBE from engaging in fraud or transferring fraud proceeds.  However, the court will retain jurisdiction over related matters including, but not limited to, enforcement of the permanent injunction order and the discovery, restraint, disgorgement, collection, and return of fraudulent and laundered funds for any victims of the scheme.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The case was handled by Assistant United States Attorneys Timothy L. Vavricek and Matthew Gillespie and investigated by the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation, Office of Inspector General.  Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl. 

The case file number is 21-CV-8.

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