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Texas firm accused of price-gouging by auctioning 750,000 medical masks

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The state of Texas has sued a Houston auctioneer after halting an auction of 750,000 medical-grade and N95 face masks, alleging price gouging in the sale of the masks used by health professionals on the front lines battling the coronavirus pandemic.

The lawsuit filed Thursday by the Texas Attorney General's Office alleges that an auction by Auctions Unlimited had bidding on N95 respirator masks reaching as high as $180 for a package of 16 masks. Amazon sold a set of 100 for $4.21 in late January. The lawsuit seeks an injunction against the auctions and civil penalties of up to $10,000 per violation.

Texas Attorney General Ken Paxton said the auction violated the state's Deceptive Trade Practices Act. He also alleged that his office as well as police warned Auctions Unlimited owner Tim Worstell against holding the auction.

"The Texas Deceptive Trade Practices Act expressly prohibits anyone from selling necessary items at an excessive price when a disaster is declared and, despite repeated warnings from law enforcement, that is exactly what we've seen Auctions Unlimited do," Paxton said in a statement. "My office will not tolerate anyone taking advantage of Texans in need and profiting from this health crisis."

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It was unclear how many bids were taken on the masks, but Worstell denied price gouging.

"It is literally impossible to price gouge using the auction method when all bids start at $1," he said in a statement to the Associated Press. "The bidders, not Auctions Unlimited, decide the price. We did not, or attempt (to), collect a single penny from the auction as alleged."

Auctions Unlimited also sold hand sanitizer, disinfectant wipes and hand soap during the auction, which generated $154,000 in sales, according to court documents.

Medical masks have become so scarce that manufacturers in other industries have begun making them, and some hospital systems have asked volunteers to make masks by hand.

Worstell declined comment on the lawsuit Thursday until he had a chance to review it. Earlier, however, he said the state's halt to the auction left him caught in the middle with 750,000 masks in his warehouse in a legal limbo.

"Even though the price would go up every week that went by, we need to get rid of them so that people that need them get them," he said.

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Price gouging has become a familiar complaint across the nation and around the world in the face of the coronavirus pandemic. President Donald Trump has signed an executive order that makes it a crime to hoard needed supplies during the emergency.

The winning bids from the auction varied, but all went above retail value. For now, Worstell cannot collect money from the buyers for the sellers. The masks can't be given to the winning bidders or anyone else who needs them.

"The people who own these lots are good people and in the past they've never made a dime on these auctions," Worstell said. "They want to help too." 

Texas has reported 23 deaths due to COVID-19, the disease caused by the coronavirus, and nearly 1,700 confirmed cases. Across the country, 1,380 people have died, with nearly 93,000 cases, according to Johns Hopkins University. The U.S. this week surpassed China as the nation with the largest outbreak of the lethal virus.

The impact of the coronavirus on the Texas economy could cost the state 1 million jobs, according to economic research firm The Perryman Group.

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