1/ This
@ProPublica
investigation has it all: Money laundering allegations, Mennonite & evangelical Christians, Obamacare, CPAC, a family “conglomerate” that includes a pot farm, a private airline & a bank in the Ozarks.
Strap in as we magically whisk you away to… Canton, Ohio.
1) Let me tell you a crazy story. It's consumed 2 years of my life.
As COVID-19 shut down the world in April 2020, I decided to follow the money. I began with a call to a no-name federal contractor who’d somehow landed a $35M deal for masks. Hours later, I’m on a private jet …
1) The VA signed a $34.5 million deal for N95 masks with a company that advertised “block chain” solutions and had only existed for 2 years.
I called the company to see why
Ended up on a private jet, following one of the most bizarre stories of my career …
1/ A TaskRabbit contractor in San Antonio told me he stumbled onto a warehouse where people were repackaging non-medical Chinese masks so they could pass for medical use and be sold to Texas.
So began my latest journey into the world of COVID profiteers ..
16) I stitch it all together in my forthcoming book PANDEMIC, INC.: Chasing the Capitalists and Thieves Who Got Rich While We Got Sick.
It’s out April 12. Preorder here:
4) Data we
@ProPublica
analyzed revealed a broader trend: Anyone with an email address & an LLC could get multi million-dollar contracts for supplies - masks, gloves, test kits, etc - with no real vetting. The Trump admin, having failed to prepare & respond, was panic buying …
6) Finally, I got the go ahead. Pro tip: If ever in the course of an investigation you are invited aboard a private jet by the subject of said investigation, I highly recommend you do all you can to get on that damn plane. I digress …
18) It is an artifact of the pandemic, yes, but really a story about us, about America. My hope is it’s a warning to future generations and a blueprint of exactly what not to do when faced with such a crisis. I hope you’ll give it a read.
5) With most travel limited, I asked concerned
@ProPublica
editors to let me go. It took some convincing. I shared a working theory: Profiteers were filling the vacuum left by the failure to prepare and the official US response was to just throw money like chum into the sea …
9) A kind reader sent me an N95, which I preserved for a year. Over the next year, I found myself staking out secret warehouses, including in San Antonio, where men using TaskRabbit and Venmo repackaged subpar Chinese masks so they'd fly with hospitals ...
8) It would take time to unravel the mess, but I reported what I knew on May 1, 2020. Federal investigations began immediately. Editors cleared me to travel, so long as I quarantined on either side. I was just getting started …
13) Over two years I’d zig-zag across the U.S. chronicling profiteers & fraudsters. Many were charged with crimes, others not. I’d find that a sort of religious adherence to free markets and unfettered capitalism - and greed - frustrated the pandemic response at every turn …
17) I know we all have pandemic fatigue. Believe me, I considered this throughout the writing. I do not wish to depress us further. But this is the part of the story you might not have heard - of those who seized advantage of our vacuum of leadership and toxic politics …
10) At a separate warehouse in Houston, a former telemarketer with a history of fraud allegations paid temp workers to prepare plastic mini soda bottles to sell them to FEMA as real test kits. They were sent to all 50 states and territories but were totally useless …
19) And if you value this sort of journalism, please also consider donating to
@ProPublica
, the non-profit investigative outlet that prioritizes stories of impact in the public interest and is willing to send yours truly into the madness.
7) We flew DC>Georgia>Chicago and back, meeting various characters, including his parents? The masks had vanished, he’d claim. But more were coming. Then they’d disappear. I began to wonder if he’d lied about the whole thing, if he was committing a federal crime before my eyes
3) I’d asked to tag along because he was charging about $6/mask (normally ~$1). How did he win that deal? Was it price gouging? Also mystifying - he had NO experience importing or selling medical gear, yet he was somehow a crucial piece of the national pandemic response …
11) In Los Angeles, I met a plucky juicer salesman who’d filled a suitcase with cash to buy masks from a fly-by-night LLC already made rich by the Trump administration. The company owners had a history of fraud allegations, including selling bogus male sex enhancement pills …
12) Then there were my many encounters with ganjapreneurs and general marijuana enthusiasts who had, somewhat impressively, pivoted from weed into the medical supply space to get, like, totally rich, man …
2) Robert Stewart, CEO of Federal Government Experts, chartered the jet to oversee delivery of 6 million N95s to the VA (the largest hospital system in the US). These were the terrifying weeks. No vaccine, hospitals overrun, masks the only protection for healthcare workers …
15) That failure cascaded down to states, cities and individual hospitals who competed for the same supplies and struggled to navigate this greedy underbelly. As the pandemic dragged on, ludicrous scams gave way to good old fashioned corporate opportunism …
14) I dug in further to determine how we ended up in this mess to begin with and talked to the people who tried to better prepare us, such as
@RickABright
. But we didn't listen.
27) The VA agreed to pay nearly $5.75 per mask, a 350% markup from the manufacturer’s list price. One of the experts I talked to said that’s “absolutely” price gouging. Another said the VA and other agencies are fueling this black market by setting such high prices.
24) I still don’t know why Stewart let me observe his company’s frantic effort to find 6 million N95 respirators.
I do know that 20 VA staff have died of COVID-19 while the agency continues to face a shortage of masks.
26) But the ultimate unraveling of his $34.5 million deal provides a rare window into the federal government’s mad scramble to buy PPE in a “wild west” black market …
2) The CEO, Robert Stewart, had ZERO experience getting medical supplies. But he told me he had found 6 million N95 masks.
He was flying to Chicago on a private jet to see them delivered. I asked to tag along.
Every reporter who has had to cover one of these mass killings comes across sensory detail and info they decide is too horrific to responsibly report. And each time it happens, it’s all you can think about.
4) “I’m talking with you against the advice of my attorney,” he said.
His lawyer was supposed to come but slept in and wasn’t answering.
I confessed a small fear. It was my 1st time on a jet.
“My first time, too,” he said. After liftoff, the story took a strange turn.
3) Here we are getting on this Legacy 450 FlexJet the next morning. His company paid more than $22,000 for this trip, according to receipts he shared.
(ProPublica reimbursed FGE for the cost of a commercial ticket.)
30) In the end, after ProPublica asked questions, the VA terminated this contract and referred the case to its inspector general.
The VA ended up with zero additional N95 masks from Stewart.
The VA paid no money to FGE.
More than 2,200 VA employees tested positive for COVID-19.
6) Why on earth were we flying to Chicago — stopping first in Georgia to pick up his parents — when he didn't actually have any masks?
“It was kind of a faith thing,” he said.
5) Stewart revealed that the 6 million masks that were supposed to be shipped to Chicago had been sold to another buyer when he didn’t produce the money fast enough.
So, he had no masks.
29) Stewart was not the only untested contractor tapped for supplies. The Trump admin had handed out at least $5.1 billion in no-bid contracts to address the pandemic, federal purchasing data shows. Stewart maintained that he was going to get the masks to the VA but ...
7) According to the deal he had signed with the VA, he had to deliver 6 million N95 masks by midnight that day.
So, he had been frantically working the phones, talking to brokers and middlemen. Here’s what happens next...
15) King also sent Stewart a “POL.” That stands for Proof of Life, which suppliers often demand to prove that something they’re shipping exists. But the short cellphone video showed what appears to be hundreds of 3M boxes.
That didn’t prove much - WHAT’S IN THE BOX?
8) Just hours before we first talked on the phone, Stewart said he got connected to a broker - someone with a connection to 3M, a major mask maker in the U.S. This fixer wasn’t just anybody...
11) Stewart claimed he had a contact within the White House Coronavirus Task Force, who was working to help him smooth the new deal over with the VA. But spokespeople with the task force and the VA had never heard that “contact’s” name, and there were no employment records...
13) Much of what Stewart told me either proved false or impossible to confirm, which he says is because he was being lied to by brokers and middlemen, who he later referred to as “buccaneers and pirates.”
25) Stewart maintained he was trying to do a public service and plans to tell investigators how he was taken for a ride by the multiple layers of intermediaries, fixers and lawyers standing between respirator mask producers and front-line workers.
16) Once we landed in Chicago, Stewart said we’d drop his folks off at a hotel and then take a taxi over to the VA distribution center and wait for a mask delivery “even if we have to wait until 3 a.m.”
We never left the vast and vacant Hilton.
18) I sat there for hours as Stewart and his associates - most of them longtime friends - called trucking companies, people who had access to cargo jets and so on.
But … he still hadn’t purchased any masks.
No masks, no way to ship them.
28) I asked a VA spokesperson why any of this, the FGE contract & intermediaries, was necessary. Couldn’t the VA just buy masks directly? “To meet the remainder of its N95 respirator needs, VA conducts additional acquisition activities with other vendors,” a spokesperson said.
17) In the lobby, Stewart worked the phones. He needed the VA to sign off on his new arrangement, but to win approval, he needed invoices and other documentation that he said King wasn’t sending over.
23) The next morning, as the dejected party boarded for a return flight, the pilot asked: “Anything I can get you before we take off?”
“Six million N95 masks,” Stewart quipped.
19) King says they had never signed any agreement or deal. “After several conversations over the weekend, Mr. Stewart informed us that he had secured these masks through another source and that he would not need our services to secure the masks,” King said through a spokesperson.
22) Stewart drafted a formal extension request, citing provisions in federal law. But as it grew late, the group came to accept that they had no masks, that they wouldn’t meet the deadline. At one point, Stewart turned to his mom and said: “Sorry we came up here for nothing.”
20) Then, a new idea emerged. Maybe they could get the VA to agree to an extension? Stewart’s friend, Roosevelt “Trey” Daniels, had worked as a district director for U.S. Rep. Sheila Jackson Lee, a Texas Democrat, and got her office to draft a letter in support of FGE.
1/ This company got a $10 million contract for test tubes & gave the gov’t mini soda bottles instead.
The owner shouted at me and slapped my notebook when I asked about it.
Just the latest absurdity we’ve found looking at who the gov’t is paying for
#coronavirus
supplies ...
8/ So I pulled out my phone and looked for him on Venmo and was delighted to see all his transactions were public.
Someone named Brennan Mulligan was paying him and others on Venmo to repackage masks. Check it out …
4/ Medical workers’ best defense against a virus that ravages the body with horrifying complexity is a simple, but trustworthy, mask. But many thousands of these repackaged ones were potentially making their way into the Texas supply. Here's the warehouse:
10/ Makes sense, I thought. As I found in this story, a lot of apparel and textile businesses used China connections to make their way into the mask market.
6/ These are labeled AYM-KN95. Early on the FDA approved these for use in healthcare settings. But they were taken off the list in May. They’re nowhere near the 95% effective required - tested as low as 39% in CDC tests …
2/ His name was Lucas Rensko and he showed up in a warehouse where there were other “Taskers” earning about $20/hr ripping Chinese masks out of plastic bags and stuffing them into new ones that were identical but for one potentially deadly difference …
9/ Turns out Mulligan is a successful San Francisco tech/apparel businessman. He runs SKYOU, whose 3D design software lets people customize apparel that ships directly from China …
11/ That “131 boxes to TDEM” is delivery of KN95s to the Texas Division of Emergency Management, Texas’ FEMA, which supplies to hospitals inundated with patients. As you can see … Texas is in trouble.
5/ Before flying down to Texas to look into it, I did a little research from my DC apartment. Jaime Rivera, who hired the TaskRabbits, had posted some intriguing photos on Facebook of boxes of masks bursting at the seams and stacked high in his garage.
17/ “Are you worried you were complicit in a crime?” I asked
“The more we talk about it, yes,” he said.
Before he hung up and cut off communication, he added: “I’m not the brains of the operation, and I’m definitely not the wallet for it.”
PS - it remains a mess out here in the Wild West of PPE trading - companies pooping up overnight, untested, some whose owners have questionable backgrounds. Federal agencies say they’re vetting these companies but we’ve found a ton of problems
Heard
@CNN
say it obtained records & video detailing the harrowing death of Javier Ambler. No mention that local reporter
@tplohetski
&
@statesman
- whose reporters are furloughed - fought for months to release those records. Poor form. Local news matters.
16/ That’s when Rivera mentioned he and Mulligan had been contacted by the U.S. Department of Homeland Security.
“His analogy was you’re telling somebody you have a Ferrari but you’re selling a Honda,” Rivera said.
14/ Rivera spoke as if it was just common sense. They needed to take MEDICAL USE PROHIBITED off the package so Texas could accept the masks. It’s not a big deal, he said, because Texas will inspect the masks. He said it was just red tape.
12/ Rivera and I talked on the phone at length. He agreed to meet in person but then cut off contact as my questions became more uncomfortable. Here’s some of what he told me …
22/ I told TDEM what I had learned and they confirmed Mulligan and Rivera had tried to sell the poor quality masks and Texas rejected them. TDEM’s vetting is really good, a spokesperson said.
18/ The wallet was Mulligan, who didn’t respond to my calls but sent some brief emails. He blamed the FDA’s flip-flopping on chinese masks and onerous Chinese customs regulations.
15/ As our conversations progressed, Rivera started to worry that maybe this wasn’t such a good idea. He was desperate, he said. His main income - doing jobs via TaskRabbit - had dried up because of the pandemic.
25/ Oh, yeah, and that Homeland Security investigation? The agency said it’s real, but the statement also reads like the law enforcement equivalent of ¯\_(ツ)_/¯.
13/ Mulligan had hired him through TaskRabitt to pick up masks arriving in Texas airports via Southwest Cargo jet. Some he delivered to TDEM, others needed to be repackaged.
19/ He couldn’t get the masks out of China without the non-medical disclaimer, he explained. And the Texas emergency agency would reject anything that had the disclaimer.
23/ Mulligan tried to sell them to another guy, who was trying to sell masks to hospitals in Illinois, but the buyer told me he walked away when he learned they’d been repackaged.
21/ So “the only solution,” he said, was to repackage masks. But problem was - the masks he was repackaging weren’t on the FDA’s list of masks OK’d for emergency use. Mulligan says he broke no U.S. laws.
20/ He and other mask brokers told me they shipped all these masks in after the FDA cleared a bunch of KN95s, but before they could sell them the FDA kicked a bunch of manufacturers off the list.
When I was 21, my mother died, and I adopted my 15-year-old sister. We've been through hell and back. And this morning, she gave birth to Jacquelyn, named for our mother. My family is adding instead of subtracting for the first time in ages, and I might just cry about it.
I sincerely wonder what y’all hire on, then. Because people who didn’t go to fancy journalism schools, or have fancy connections, really only have their clips.
This is 1000% true. I never hired anyone based on clips when I edited
@texasmonthly
— I couldn’t tell if I was looking at a writer’s work or an editor’s work
1/ This company got a $10 million contract for test tubes & gave the gov’t mini soda bottles instead.
The owner shouted at me and slapped my notebook when I asked about it.
Just the latest absurdity we’ve found looking at who the gov’t is paying for
#coronavirus
supplies ...
5/ FEMA confirmed it sent these to all 50 states and territories. Quietly, it’s asked if the states can find “an alternative” use for the teeny soda bottles.
So far, FEMA has paid more than $7 million to Fillakit. The contract total is more than $10 million.
6/ As one former Fillakit employee told us: “It wasn’t even clean, let alone sterile.”
(Often employees didn’t wear masks, which could contaminate samples and lead to false positives).
2/ We heard from states & Fillakit workers that the company wasn’t actually selling test tubes.
It was selling oddly shaped plastic “preforms” better suited for, say, The Coca-Cola Company. They’re basically mini soda bottles that blow up with heat and air into 2L soda bottles.
12/ I went ahead and drove away but observed from the road as the team loaded up bags of the plastic bottles into the rental truck. (CDC guidelines call for the test tubes to be refrigerated, and the truck wasn’t).
3/ They’re too large to be used by standard lab machinery. So states can’t use them.
Even if they were the right size, they’re likely not sterile and could yield false test results.