Federal authorities say they've uncovered a scam to sell a fake stockpile of tens of millions of N95 respirator masks manufactured by 3M

A major California labor union that claimed to have discovered a stockpile of 39 million masks for health care workers fighting the coronavirus was duped in an elaborate scam uncovered by FBI investigators, according to a newspaper report Sunday.

Investigators stumbled onto the scheme while looking into whether they could intercept the masks for the Federal Emergency Management Agency under the Defense Production Act, the US attorney's office said Friday.

The federal government has been quietly seizing supplies across the country as the outbreak spreads.

On March 26, the Service Employee International Union-United Healthcare Workers West (SEIU) announced that it had located a stockpile of 39 million masks.

The announcement generated significant media attention at the time as the public started to come to grips with the scale of the coronavirus crisis.

The union said that several government agencies and hospitals expressed interest in buying some of the masks.

SEIU’s president, Dave Regan, claimed that the purchase was complete and that hospital workers would soon be receiving the masks.

Health maintenance organizations like Kaiser Permanente and Sutter Health started to place orders for millions of masks.

But as days went by and no masks were distributed, frustration began to build among employees at Kaiser Permanente and elsewhere.

A California-based union claimed last month that it located a stockpile of 39 million masks - only to realize that the deal was masterminded by scam artists, according to the federal government. Boxes filled with 3M N95 face masks are seen above in Bangkok on Friday

On April 3, Kaiser announced that it was withdrawing because the seller ‘repeatedly failed to provide reliable information about where we could verify and inspect the shipment.’

Federal prosecutors said that an unnamed Pittsburgh businessman who was working with the union to secure the deal told investigators that he was purchasing the masks at $3.50 each, in the process turning a ‘slight profit.’

SEIU claimed that the masks were being bought for $5 apiece. It said it did not intend to turn a profit.

Investigators claim that the Pittsburgh businessman was in contact via WhatsApp with a supplier in Kuwait and a broker in Australia - both of whom are now the target of a federal probe.

The Australian broker told the man in Pittsburgh that 2 million masks were sitting in a warehouse in Georgia.

The foreign middlemen were also said to be asking for a 40 per cent cut up front, according to investigators.

Federal prosecutors say that no money was exchanged.

But in this case, there was no warehouse, and there were no masks to seize, the Los Angeles Times reported.

US Attorney Scott Brady told the Times that the union and the Pittsburgh businessman are not under investigation and both appear to be among a string of middlemen who were fooled, Brady said.

'There are opportunists who are looking for any victim,' he said.

Experts in the global supply chain say dubious brokers and suppliers have flooded the market with suspect offers, creating an atmosphere of confusion and distrust just as hospitals are trying to stock up on the gear doctors and nurses need to protect themselves from the virus.

Steve Trossman, spokesman for SEIU-UHW, told the Times that union officials had been trying to find equipment for members, and the group had no financial interest in any transactions.

'As far as we knew, he had legitimate masks,' Trossman said of the supplier, 'and the people who were going to purchase those masks were going to fully vet it and check it out and do their due diligence.'

Brady said federal investigators had reason to suspect the arrangement.

The 39 million masks were advertised as N95 masks from 3M, the largest US-based manufacturer.

But 3M told federal investigators it manufactured only 20 million such masks last year, making that large of a stockpile unlikely unless the product was counterfeit.