[MUSIC FADES IN]
Shumita Basu, Narrating: This is “In Conversation,” from Apple News. I'm Shumita Basu. Today, how fraudsters and opportunists profited off the pandemic.
[MUSIC FADES OUT]
[PULSING MUSIC]
Basu, Narrating: In April of 2020, as COVID-19 was upending the world, reporter David McSwane was getting on a private jet. The plane had been chartered by a man who'd made a big promise to the U.S. government. Robert Stewart Jr. said he was going to deliver six million N95 masks to the Department of Veterans Affairs, the V.A. This was at a time when masks were extremely scarce in the U.S., and David wanted to tag along and see how Stewart was gonna get them.
David McSwane: As we took off from Dulles International, we're just airborne, he says, Oh, I don't actually have the masks. They were bought out from under me. And I asked him, Well, why the hell are we going to Chicago to deliver these masks? He says, Well, it's kind of a faith thing.
Basu, Narrating: Stewart had been awarded a $34.5 million contract from the federal government for these masks, even though he had no experience importing or selling medical supplies. Back on the plane, Stewart tells David that while he doesn't have the masks right now, he'd been up all night making calls and he had promising new leads.
McSwane: He describes to me this network of brokers he was working with, and how he was going to get these masks. And he was dealing with what he called buccaneers and pirates and it was this sort of sleazy sea of merchants who were involved and he was gonna do everything he could.
Basu, Narrating: They eventually land in Chicago, where the mask delivery is supposed to take place. They go to a practically-empty hotel because, remember, these are the early days of the pandemic. Stewart's in the lobby, making more phone calls…
McSwane: Basically it turns from this faith and this energy that he had to sort of finger pointing, and I began to realize with each call that maybe this was a performance and he never had masks. And by the end of the night, I began to wonder if the whole thing was made up.
Basu, Narrating: The masks never materialized. A year later, Stewart would plead guilty to three counts of making false statements, wire fraud, and theft of government funds. He was sentenced to one year and nine months in prison.
Now, that story sent David down a rabbit hole to find other examples of people trying to pull off near-impossible tasks without the necessary skills or resources, all to profit off of a public health crisis.
David spent a year and a half reporting on this for “ProPublica,” and ended up turning his work into a book, out now, called “Pandemic, Inc.”
You might be thinking, Why was the federal government giving out multi-million dollar contracts to people without experience or supplies, wasting time and resources in a pandemic? To answer that, we have to talk about how the government was caught so flat-footed, how truly unprepared we were for a crisis. David spoke with one guy down in Texas, Mike Bowen, who had been sounding the alarm about government unpreparedness for years.
[MUSIC FADES OUT]
McSwane: For 13 years, going back to the George W. Bush administration, he'd been saying we need to invest in domestic manufacturing of masks, which seems like a silly issue that no one would care about, right? And he didn't mince words. We will be reliant on China and China will shut it down and we will not have masks and Americans will needlessly die. And there was one organization within the federal government that was listening to him and it was the Biomedical Advanced Research and Development Authority, which most Americans didn't have a reason to know about pre-pandemic, and--
Basu: Also known as BARDA.
McSwane: Exactly, yeah, BARDA. And their money's tied up with private industry and, you know, pharmaceutical companies. They can't actually buy masks. So he's endeared himself to the wrong agency [LAUGHS], but they're-- they're at least listening to him.
Basu: So, what happened when he finally establishes this relationship with the director there at BARDA and seems to really get through to him? What kind of flag waving were they able to do? What was-- what was successful? What was not successful?
McSwane: Well, very little was successful. So, he forms a friendship with Rick Bright, who's the former director of BARDA. Rick's fighting from the inside, Mike's, you know, yelling from the rooftops. They're kind of working in tandem. They're texting each other and, they share these texts with me and these emails, trying to get it done. And despite Rick's efforts, being one of the top infectious disease experts in the country, a leader in vaccines, devoted his life to pandemics, Mike is the one who gets on Steve Bannon's podcast, which gets him a line to the White House. So, it took [LAUGHS] the guy down in Texas, you know, who's the mask guy, it took him getting on a right-wing podcast to get the White House to pay attention to Rick Bright. And next thing you know, Rick Bright's having a meeting with a Trump advisor in the White House.
Basu: Yeah, so what happened in that meeting?
McSwane: So as-- as Rick tells it, he gets to the White House, I think it's a Friday, and he goes to Peter Navarro's office. Peter Navarro was the trade advisor to Trump who-- "The New York Times" described him as having like a Rasputin-like ability to whisper into Trump's ear. But he, being a China hawk, had really been paying attention to the virus in a way that the rest of the administration had not. So, Rick Bright shows up to the White House, he's in a press suit and Peter Navarro is in his athletic gear, which he was sort of known for, and Peter Navarro's like, Why are you dressed up? [LAUGHS] And he's like, Well, I'm at the White-- You know, I got called to a meeting at the White House. And Peter Navarro jumps right in, he says, Is this real? And Rick Bright says, Yeah, it is. And Peter Navarro says, Well, what do we need to do? And on a whiteboard, they sketch out what becomes Operation Warp Speed, which is not a bad idea. And it's sort of the Manhattan Project-style effort to get us the vaccine. And also to do a few things, among them stop shipping out our masks and gloves to China, hold onto what we have and speed up production, route them where they need to go. And it's the first moment where you see people inside the government saying, We're in trouble. We've really got to get a handle on this. But I was-- I was just very struck by the fact that it's this guy down in Texas who really sets this off.
Basu: Yeah, I mean-- I like the way that you described it. You write that in January and February of 2020, "not only did HHS ignore the tsunami before their eyes, they went so far as to throw our life rafts to the country that generated it." That's what you wrote. And that is selling personal protective equipment to China. So, tell us more about that. What was happening in those months?
McSwane: Yeah, this is bizarre. So, the assistant secretary for pandemic response, Robert Kadlec, who-- There are some conservatives who are writing books that are really focusing on Operation Warp Speed. They're trying to sort of rewrite history and make him a hero, but he was really kind of standing in the way of a lot of things, including Rick Bright really pressuring the government. But he, along with a few others, including the Commerce Department, were actually proactively helping to get U.S. supplies to China. And it was all under this really ridiculous notion that a contagion would not breach our shores, that this was a Chinese problem and if we sent them our supplies, it'll help them mitigate it. And problem solved. But the virus had already spread. And in fact, we'd find out later it was already within the country. So we're sending them masks. The commerce department is advising U.S. companies on how to ship things to China, and it really took a couple months to stop that. And by the time we did, things were gone, you know, and we needed them. So now we're hiring mercenaries to buy things and bring them to us, and most of them are getting it from China [LAUGHS], so… it was just this absurd scenario.
Basu: Right, right, right.
Basu: Let's talk about what happened when the federal government did start to take some kind of action. It started awarding contracts to companies to purchase supplies like masks. Now, I know that you focus on the V.A. in particular, the Department of Veterans Affairs, and it sounds like-- From your research, what was the V.A.'s vetting process for its contractors like at this time?
McSwane: Yeah, so we're so ill-prepared after, you know, a decade of defunding the stockpile that has these things and the Trump administration's denial of the pandemic and the sort of behind-the-scenes efforts by people like Rick Bright to get us to pay attention-- We're so ill-prepared that the national response really becomes to throw money at anyone and everyone who claims they can get things, just like chum in the sea. And I focused in on the Veterans Administration because-- well, for two reasons. In the data, they just popped out. They were spending a lot of money and it was going to a lot of places, but they also oversee the largest hospital network in the country, and this is where nurses and doctors were fashioning their own gowns and masks and were just terrified. So, looking in on them, took a look at their largest deals. And at the time it appeared that they were just handing these things out, and I would later find confirmation in this as a result of a congressional inquiry. They awarded their top contractor at the time $34.5 million for six million N95 masks based on a whim. There's an email that says "The guy looks legit" [LAUGHS] and that's how he got a contract. And in normal times, you take a look at the company, you evaluate a bid, and you figure out whether or not it's a good deal. And, granted, this was an emergency, you would expect less of that and you'd cut some red tape, but this was truly-- very little thought was put into who got these deals. And it really was indiscriminate. If you claimed you had a line on masks, you could get a contract for tens of millions of dollars. And that was our national response.
Basu: Maybe you can give us sort of a general overview of some of the more egregious contracts that you found over the course of your reporting.
McSwane: Sure, so we started sort of with the wide view, just looking at who are the contractors who'd never had a federal contract and now all of a sudden they're at the center of the pandemic response. And and we found something like a billion dollars had been awarded in that first month and a half, two months. One guy was a wannabe arms dealer. There was a company that was currently in bankruptcy. We found one that the V.A. had-- they'd hired a guy who'd been sued by the federal-- he was currently being sued by the federal trade commission for fraud related to bogus male sex enhancement pills he was selling. He gets a major deal. So it was just all over the place. One of the more egregious examples was a company named Fillakit incorporates in I think it was late March or early April, and six days later they get a $10 million contract from FEMA for COVID-19 test kits. And we know from looking at it that these are the PCR tests. You know, these are the tests that require lab equipment and some science, and they had no medical experience. We tracked it down, the proprietor has a history of fraud allegations, he'd been sued by the Federal Trade Commission. And I show up, we end up talking to some sources, and I can see that these are not test tubes, they're in fact mini soda bottle preforms, which you use to blow up into your two-liter soda bottle at the local grocery store. And temp workers in this nondescript warehouse outside of Houston were squirting saline into these little test tubes and throwing them into the bags. They had workers moving them from big bins, using snow shovels, into smaller bins. So I detail this to FEMA and they're completely unusable. And because FEMA had already accepted them and distributed them to 50 states and territories, that vendor was paid, and contract experts we talked to said because the federal government accepted it, it's hard to make a case that they could get a refund or that it could be referred for an investigation. But at the end of the day, taxpayers got screwed.
Basu: You know, a few weeks ago I was talking to Jon Stewart on this show and he said something that I'm still thinking about. And I was thinking about it also as I was reading your book. He said a lot of the failures of government that seem like they have to be evil can actually just be chalked up to public servants being overworked and understaffed. And I kind of wonder how you see it, David. I mean, what do you see as the root of the unpreparedness here? Was it a knowing negligence or was it a case of just under-resourced and over stressed agencies?
McSwane: Mm-hmm.
McSwane: Yeah.
McSwane: I'm so glad you asked that, and I'm glad that Jon realizes that. So there are two things that I bring into my work. One is pretty simple, and it's just an observation from covering government at different levels: I don't believe people get into government to be bad at their jobs. I-- I just don't believe that. I think they're trying, you know, they're people. So I try to keep that humanity in mind. The other is Hanlon's Razor, right? "Never attribute to malice that which can be explained by incompetence." So I walk in with that-- into every story with that in mind. And I have-- I can't help but have some empathy for the people who are awarding these contracts. These are people who are used to buying paperclips and chairs and desks, and now they're thrown into a national emergency. Because we didn't prepare, we're in a lot of trouble, and they are on a frontline of their own. They have to get these supplies because doctors and nurses and citizens are dying, so they're really hauling ass. And they don't know how to vet medical companies, people who understand the medical supply chain… We overburdened people who are just trying to do their jobs, and put them in an impossible situation. And then you add the real crooks who are coming in and doing crazy things, and before you know it, it's out of control. But I think on the frontlines, in the nitty gritty, in the weeds, government bureaucrats, I think most of them were just trying to get by and do what they could.
Basu: When you think about when the government preparedness plan started to really unravel and truly become underfunded, where do you place responsibility? Under which administration or administrations do you trace that line to?
McSwane: I mean, it's unfathomable that either George W. Bush or Barack Obama would have handled the pandemic as poorly as Trump did, right? Because he denied it, his administration didn't want to get on it… That is a political failure and a big one that history will never forget. But before that we weren't taking it seriously enough, and this falls on both parties and Congress and the administrations as well, we had warning signs for more than a decade that literally said we will be fighting over N95 masks. States are not ready, we will not have federal coordination, we need to get all of these things in place. And what do you know? We didn't listen. And instead, slowly due to politics, the funding for the national stockpile eroded. And as I dug further into it, I really began to look at this as: our shameful and enduring failure to prepare for COVID-19 was a bipartisan accomplishment. And I'm not interested in partisan reporting, I'm not really trying to make a case for one party or the other, but everyone in power over the last ten years is somewhat responsible for where we ended up.
Basu: Now, it would be naive to say that no one should make money during a pandemic, right? I mean, people shift their businesses to meet new demands all the time. That's not a crime, it's not even evil. It just is. But who gets to decide what's excessive profit during a public health crisis?
McSwane: Sure. So, I am not anti-capitalist. Someone on Amazon said that my book is a Marxist scree, which is absolutely--
Basu: Oh, no, you read the comments! You read the reviews. Don't do that [LAUGHS].
McSwane: [LAUGHS] I know, I know. I know, I-- I'm so trained I shouldn't do that. You know, I was the kid who was selling things in school and got in trouble at like age ten, you know? I have no problem with somebody making money delivering a service at a price. I do believe that that's part of the American dream. And to me that was also a tension in the book is, like, at what point do you become a vulture? And a lot of people, when I told him I was working on this book, I said, Oh, I'm writing about pandemic profiteers, people would say like, Oh, like-- like Jeff Bezos, and I was like, No, not really. I mean, that's a person-- I mean, you can talk about capitalism, we can get into that if you'd like, you know, and our current system, but he had a company that existed and became pretty damn useful for a lot of people. That's a different issue. So, I think the line is people who saw an opportunity to take advantage and, in doing so, filled their pockets and hurt people, price-gouged the federal government or delivered things that we couldn't use. And that wasted time when time meant American lives. So that for me is the difference.
Basu: So it sounds like it's not just the money that potentially gets, you know, that flies away, but also, I mean, it's time-- it's time that got wasted.
McSwane: Right, yeah, I mean, we talk about government waste all the time. You know, forget the money, that's not the true outrage here. I mean, we wasted time when time meant body bags. You know, this was critical. A lot of people have asked me, Can you put a dollar figure, a number, on the contractors who got away or price-gouged or whatever? And the answer is we can't. I mean, this was so huge, I couldn't approach it. And you can look at various federal programs and conclude we're talking billions of dollars. But the real outrage here is we had scarce time. We needed to get ahead of this. We needed to prepare. And instead, we were messing around with people who were either just clowns who made it up, or people who had ill intention and wanted to get rich to the detriment of their fellow Americans.
[MUSIC FADES IN]
Basu: David, really important work in this book. Thank you for your reporting and thanks for your time.
McSwane: Thank you so much for having me.
Basu, Narrating: “Pandemic, Inc.” by David McSwane is available now on Apple Books. You can find a link on our show notes page.
[MUSIC FADES OUT]