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Scottsdale Man Charged With Defrauding Texas In COVID-19 Mask Scheme

The U.S. Attorney’s Office in Phoenix has accused 39-year-old Dale L. Hipes of Scottsdale of selling $16.65 million worth of 3M face masks to the state of Texas.

The problem is, they say Hipes never actually shipped any masks.

A complaint unsealed Wednesday charges Hipes with wire fraud and money laundering in connection with an alleged scheme to defraud the state of Texas by falsely claiming to be a distributor of personal protective equipment.

As CEO of BRI Supply Inc., Hipes promised he could deliver 9 million masks within three days, according to the complaint. The complaint alleges Hipes returned $12 million to the state, but then stopped all communication and kept the remaining $4 million for his personal use.

Law enforcement seized four bank accounts and a 2020 Kawasaki utility vehicle they believe was purchased with the funds.

“It’s truly reprehensible that someone would misrepresent themselves and promise to provide Personal Protective Equipment (PPE) during a pandemic then take millions of the fraudulently obtained money and use it for their own personal gain,” said Sean Kaul, special agent in charge of the FBI Phoenix Field Office. “It is also not lost on us that this act is deliberately contrary to the actions of the philanthropist who fronted the money to the state of Texas in the first place. We want to thank 3M for their assistance and cooperation with this investigation as well as the United States attorney’s office, district of Arizona.”

United States Attorney Michael Bailey and Arizona Attorney General Mark Brnovich launched the COVID-19 Fraud Task Force in April to combat fraud schemes related to the coronavirus pandemic. The FBI conducted the investigation in Hipes' case.

Hipes could get decades in prison and up to a half-million dollars in fines if found guilty. A conviction for wire fraud carries a maximum penalty of 20 years of imprisonment, a $250,000 fine, or both. A conviction for transactional money laundering carries a maximum penalty of 10 years of imprisonment, a $250,000 fine, or both.

Austin Fast joined KJZZ in 2020 as he finished his master's degree in investigative journalism at Arizona State's Walter Cronkite School of Journalism and Mass Communication.Before moving to Phoenix, he covered the world’s largest wild salmon fishery at KDLG Public Radio in rural Alaska, wrote breaking news at a Cincinnati TV station, and taught English overseas with the Peace Corps. He now works on the investigations team at National Public Radio in Washington, D.C.