Source: Blog – Alliance for American Manufacturing

Screenshot of ALG’s Instagram page, captured on Aug. 19, 2022.

False Made in USA claims are always horrible, but the fraud that’s recently been revealed by the Federal Trade Commission (FTC) is especially nasty.

Amid the chaos and crisis of early 2020, Adam J. Harmon saw an opportunity to serve the nation and foster the economic health of the local Ohio community. He could help meet America’s massive need for PPE by manufacturing millions of face masks in the Ohio facility from which he operated his lighting company, Axis LED, and newly created ALG Health. He just had to fight his way through the flood of cheap Chinese imported masks that were pouring into the United States.

“Last year, mayors and governors pleaded for businesses to manufacture PPE here in the United States. We helped answer the call,” states in one post from ALG Health’s Instagram account in May 2021 (see above). “Now, China is dumping PPE in the US well below actual cost. Members of the American Mask Manufacturers Association are calling for help against these unfair trade practices. We join them in this call.”

The problem: nearly all of ALG Health’s masks were wholly Made in China, the Federal Trade Commission (FTC) alleges in a new complaint.

According to the FTC, Harmon directed workers to unpack finished KN95 masks imported from China, strip off Chinese origin labels, slap on ALG and NIOSH certification labels, and then package everything back up with ALG and Made in USA labels. He then brandished Made in USA labeling over the company’s products and website.

Not only did Harmon falsely claim that his masks were manufactured in America, but he also presented his products as the safer Made in USA option in a market saturated with imports.

Chad Hutson, who served as ALG Health’s vice president of Operations in 2021, attests in the FTC’s complaint that the ALG’s facility in Bryan, Ohio, was packed with “hundreds of thousands of KN95 respirators, all made in China.”

“It is my belief that Mr. Harmon never intended to make masks on a large scale in the USA. Instead, Mr. Harmon set up operations to make it look like he had USA mask-making capacity, and then overwhelmingly sold wholly imported Chinese masks,” Hutson told the FTC. “During my time at ALG, the company had some capacity to make masks on a very small scale, but never enough to cover the orders the company received.”

As for that minuscule quantity of masks that ALG was making in Ohio, all the materials were imported from China and made with Chinese mask-making machines that “routinely shocked operators,” according to Hutson.

According to Burt Morlock, a former warehouse manager for Axis, a sister company to ALG, there were just two mask-making machines in their facility. “We had zero instruction on how to use the mask-making machines, and they were operated very little. … The machines would often break. They were down more than they worked,” he told the FTC.

Morlock’s testimony also corroborates Hutson’s telling of events, asserting that Harmon ordered employees to replace Made in China stickers with Made in USA ones on finished masks imported from China and repeatedly and deliberately misled government regulators.

When the National Institute for Occupational Safety and Health (NIOSH) discovered that a component of a mask marketed as Made in USA was actually Made in China, Murlock alleges that Harmon lied and said that that part was the only piece that was imported. Nonetheless, NIOSH ordered ALG to stop selling masks.

But rather than sacrifice his profitable venture, Murlock states that Harmon continued to order more KN95s from China and relabel them as Made in USA N95s to be sold through his other business, Axis LED.

“Mr. Harmon never stopped selling masks; he told us the stop-sale only applied to ALG Health and that he could continue to sell masks through Axis LED,” Murlock told the FTC.

As it turns out, this wasn’t Harmon’s first foray into fraud. As early as 2016, the FTC had received reports that Axis LED, under Harmon’s control, falsely advertised a line of imported LED bulbs named “Patriot Tubes” as Made in the United States.

During the FTC’s investigation into these 2016 reports, Harmon confessed that Patriot Tubes included significant Chinese components but claimed that they were assembled in the United States. At the time, Harmon agreed to remove all unqualified Made in USA claims from his website and was reminded of Made in USA labeling standards. And yet, he continued to market Patriot Tubes as Made in USA to both consumers and the U.S. government.

“From the moment I started working [at Axis LED], I had questions,” Morlock told the FTC. “We got packages of lights from China with ‘Made in China’ stickers off and replace them with new ‘Made in USA’ stickers.”

Note that before the FTC’s complaint against Harmon, ALG Health, and Axis LED, the Alliance for American Manufacturing (AAM) had included these masks in our Made in America shopping directory and on our blog. As we state in our directory, “We rely on the companies listed to provide accurate information regarding their domestic operations and their products.”

We try our absolute best to verify Made in USA claims, but ultimately, we depend on companies being honest about their production practices, and ultimately it is up to federal agencies like the FTC to hold companies accountable for their marketing. And thus, news that the FTC is demanding that Harmon stop falsely claiming that his products are Made in USA and pay a $157,683.37 civil penalty is extremely welcome.

Harmon is a flagrant repeat offender when it comes to Made in USA fraud, and this penalty signals that there are real consequences for his lies.

As AAM President Scott Paul said last year when the FTC established financial penalties for false Made in USA claims:

“When wrongdoers making fraudulent claims go unpunished, it robs consumers of their spending dollars, and it hurts U.S. manufacturers who have invested in our nation. The Made in USA label isn’t a PR tool. It is a way to recognize the hard work and dedication required of American manufacturers and their employees who make their products in our local communities.”

Beyond fooling thousands of customers who sought out Made in USA PPE, Harmon’s deceit also injures the American manufacturers and their workers who took the financial risk of establishing domestic production — companies like Luosh USA. The Marietta, Ga., family-owned face mask manufacturer started from the ground up in 2020 as an answer to Chinese-made counterfeit masks. You can hear more about why and how they did it on our podcast.   

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