• New York's attorney general is investigating whether a health-care clinic in the state fraudulently obtained Covid vaccine doses and distributed them to the public, Gov. Andrew Cuomo said.
• The case involves the ParCare Community Health Network, which the state identified as a provider in Orange County.
• It's among the first cases of alleged fraud associated with Covid vaccines, but it's unlikely to be the last, Cuomo said.

New York's attorney general is investigating whether a health-care clinic in the state fraudulently obtained Covid vaccine doses and distributed them to the public, Gov. Andrew Cuomo said Monday.

Cuomo declined to provide details of the investigation because it's ongoing, but he noted that it involves the ParCare Community Health Network, which the state identified as a health-care provider in Orange County, New York. ParCare allegedly misrepresented itself to the state's department of health to obtain vaccine doses, Cuomo said.

New York State Health Commissioner Dr. Howard Zucker said in a statement released over the weekend that the clinic may have "diverted [the vaccine] to members of the public — contrary to the state's plan to administer it first to frontline healthcare workers, as well as nursing home residents and staffers."

Because doses of the vaccine are in such short supply, states are rationing the vials out to certain priority groups before they're made more broadly available.

ParCare said Monday in a statement to CNBC that it will "actively cooperate" with the investigation. A representative for the clinic added that "Cuomo himself stressed the importance of getting all the facts, and providing the facts to the state is exactly what we have done and will continue to do."

It's among the first cases of alleged fraud in the U.S. associated with Covid vaccines, but it's unlikely to be the last, Cuomo said, adding that fraud involving a valuable commodity is "almost an inevitable function of human nature."

"We want to send a clear signal to the providers that if you violate the law on these vaccinations, we will find out and you will be prosecuted," Cuomo said Monday at a news briefing. "You're going to see more and more of this. The vaccine is a valuable commodity and you have many people who want the vaccine."

New York State Police have been conducting a criminal investigation, Cuomo noted, and will refer the case to New York AG Letitia James, whose office did not return CNBC's request for comment.

To send a clear signal to potential vaccine scofflaws, Cuomo said he will sign an executive order on Monday delineating the consequences of defrauding the state when it comes to vaccine distribution. He said the state may fine violators up to $1 million and will revoke the health-care provider's license to practice in New York.

"We are very serious about this," he said. "We will find out and it's not worth risking your license, as well as a possible civil and criminal penalty."

Cuomo described the penalties as "the strictest in the nation," adding that New York is taking a "hyper-cautious, hyper-vigilant" approach.

"We have the penalties in place. We have the safeguards in place, but when you're dealing with thousands of people, and hundreds of organizations, and a valuable commodity, expect a level of fraud," Cuomo said. "As sure as night follows day, you're going to have people who defraud the government."

"I understand the value of one vial," he added. "Some of those vials can do 10 vaccines. You could sell that one vial, so I understand the temptation."