HOUSTON – Two suburban Houston men are accused of committing conspiracy and fraud after receiving millions of dollars from companies attempting to purchase much-needed personal protection equipment during the COVID-19 pandemic, but did not deliver anything and spent the money on lavish purchases instead, the U.S. Attorney’s Office announced.
After a two-year investigation, Caleb Jordan McCreless, 32, Richmond, and Christopher Luke McGinnis, 39, of Spring, were taken into custody Tuesday.
“The allegations against these guys are serious and it is a huge dollar amount,” said Harris County Precinct 1 Constable Alan Rosen. “There are victims in this case that deserve restitution.”
The six-count indictment returned on July 28 charges McCreless and McGinnis with conspiracy to commit wire fraud. McCreless also faces an additional five counts of wire fraud.
The indictment alleges McCreless purported to have access to medical-grade nitrile gloves during the ensuing demand for medical PPE amidst the pandemic. Medical companies allegedly paid him $39 million to buy the in-demand gloves. However, McCreless did not have any gloves at all and never delivered them to anyone that had made purchases, according to the charges.
“The amount that they’ve alleged to have stolen and the sentencing guidelines that they face upon conviction, or a plea, are draconian,” KPRC 2 Legal Analyst Brian Wice said. “This was nothing more than a scheme to sell merchandise, in this case, personal protective equipment, that these defendants allegedly did not have.”
McGinnis served as a logistics operator and delayed or stalled the delivery process when companies became concerned about their order of gloves not arriving, according to the charges. As a result of this alleged scheme, one victim lost over $13 million.
Healthcare professionals who were on the frontlines during the fight against COVID-19 were expected to use the gloves.
If convicted, forfeiture in the indictment indicates McCreless may lose the home records show he purchased in late 2020 in Fort Bend County. The feds allege he bought it using money profited during the scheme.
“He lives in a $2 million home and has got luxury vehicles, a Rolls-Royce, a beautiful home, and he was taken into custody without incident,” Rosen said.
If convicted, both men face up to 20 years in federal prison and a possible $250,000 maximum fine. Both are expected to appear before a federal magistrate on Wednesday afternoon.
KPRC 2 Investigates found McCreless is facing at least four fraud lawsuits in Harris County that were all filed in 2021. Records show federal lawsuits are also pending in Florida and California.
In 2013, a federal grand jury indicted McCreless as part of an El Paso-based drug trafficking organization following a joint operation that included the DEA and FBI. He was charged with possession with intent to distribute and/or distribution of cocaine, according to a U.S. Attorney’s Office news release.
Christopher Carlson, an attorney for McCreless, said he will be representing him in court on Wednesday.
“I have not seen the allegations other than the DOJ news release. The story in that press release cannot be further from the truth,” Carlson wrote in an email to KPRC 2. “I don’t know why the DOJ has decided to intervene in these civil disputes (maybe the indictment will shed light on that) but even where the trier of fact has decided that McCreless owed money to the other side, no fraud was ever found. These are solely civil business disputes and not criminal at all.”
A copy of the indictment was not available on Tuesday evening.