Houston man pleads guilty in scheme to sell $317 million bogus masks to Australian state

(Reuters) -A Texas man has pleaded guilty to involvement in a scheme to fraudulently sell 50 million N95 respirator masks he did not have for $317.6 million to the government of New South Wales in Australia, U.S. prosecutors said.

Arael Doolittle entered his plea to a wire fraud conspiracy charge on Tuesday before U.S. District Judge Lynn Hughes in Houston.

Prosecutors said Doolittle and co-defendant Paschal Eleanya tried to sell 3M-branded masks at five times the list price, hoping to collect up $275 million with the rest going to their "broker" and to representatives of New South Wales' government.

The U.S. Secret Service broke up the transaction before it was completed, an indictment last November said.

Doolittle, of Houston, faces up to five years in prison at his scheduled Oct. 25 sentencing, and will remain in custody until then.

Kevin Cobb, a federal public defender representing Doolittle, declined to comment on Wednesday.

Charges remain pending against Eleanya. In an email, his lawyer Ali Fazel called Eleanya a "middleman" who tried to ensure the parties got what they were negotiating for.

"We are working hard to demonstrate his conduct was above board and hope the government will dismiss his charges," Fazel said.

Doolittle separately pleaded guilty in June to wire fraud in connection with an alleged scheme to defraud investors in oil and gas transactions.

Prosecutors in that case agreed to recommend he spend four years in prison in addition to his sentence in the mask case.

3M Co, the world's largest maker of N95 masks, has tried since the COVID-19 pandemic began to stop price-gouging and other improper sales for its masks, including by filing 36 lawsuits and seizing more than 41 million counterfeit masks.

In a statement, the St. Paul, Minnesota-based company said it was pleased with the guilty plea, and appreciated U.S. Department of Justice efforts to stop people from illegally exploiting demand for its masks.

(Reporting by Jonathan Stempel in New York; editing by Richard Pullin and Diane Craft)