Covid-19 Profiteers Got Rich Off Taxpayer Money During the Pandemic
Covid-19 Profiteers Got Rich Off Taxpayer Money During the Pandemic

Covid-19 Profiteers Got Rich Off Taxpayer Money During the Pandemic

It was a rare and tempting thing — the chance to make millions and be an American hero. Our government had failed. We needed masks, gloves, ventilators, and body bags. We didn’t have them. They said they could get them. Many lied, some stole, others got rich enough to be noticed.

This is the story of pandemic pirates. When the Trump administration finally responded to the Covid-19 virus, its solution was to award hundreds of millions of dollars, eventually billions, to anyone and everyone. So began a bonanza for government contractors, grifters, and cheats in our time of need. Over the course of two years, reporter J. David McSwane chased private jets and fake test tubes to uncover the story of those who got rich while we got sick. He found a broken system that allowed some to grasp at wealth and glory, while too many Americans died. 

Robert Stewart Jr. stroke with purpose through the exit of the private wing of Dulles International Airport, a glinting Legacy 450 Flexjet whirring ahead of us on the tarmac. He turned to offer a caveat.

“I’m talking with you against the advice of my attorney,” he said.

It was the morning of Saturday, April 26, 2020 — the year a plague upended our world and I fell into the absurd realm of those trying to profit from the despair. Stewart was sturdy, early thirties, filling out a tailored and shiny gray suit. On his lapel, he wore an American flag pendant emblazoned with the word, in all caps, “VETERAN.” I couldn’t see his face behind his mask, or through my fog-filled eyeglasses, but his tone registered as a blend of bravado and trepidation.

It felt like foreboding, as if embracing a dare to avoid a truth. I pictured him as a boy, winking from atop the high dive at his friends below, knowing the belly flop he’s about to perform will leave him red and stung, yet warm with the perverse validation of having done it. The inquiry that led me to be here was honest, though I can’t say altogether naive. I suppose I had dared him, in a way.

I had called just the day before to ask how he intended to fulfill the terms of a $34.5 million contract he’d inexplicably landed with the U.S. Department of Veterans Affairs, which operates the nation’s largest network of hospitals serving 9 million military veterans and their families. The deadline was nearing for him to produce 6 million N95 respirators, the medical-grade masks, which were in scarce supply but crucial to protecting healthcare workers toiling with a contagion about which we knew almost nothing. He said he was about to prove to me and the rest of the world that he was legitimate, and, in fact, he’d soon be boarding a private jet to Chicago to oversee delivery of the masks to a VA warehouse just outside the city.

The stakes were high. He was a brand-new, never-before-hired, out-of-left-field, yet suddenly bona fide federal contractor. The deal had been awarded without the usual competitive bidding, under emergency guidelines that lifted red tape meant to weed out fraud, patronage, and waste. The federal government was desperate, Americans were terrified, and Stewart offered a solution with just a few emails. If he delivered, more federal contracts were sure to come, and he and his company might see generational wealth and a steady stream of business. I expressed amazement, and some natural skepticism, and asked to tag along on the flight. Eager to prove himself, he agreed.

His was one of the biggest contracts the federal government had awarded in early 2020, when the Trump administration finally opened the financial spigot to address a politically inconvenient pandemic. Every state, local, and federal agency and hospital was locked in fierce competition to buy masks, driving up prices. Extreme demand, scarce supply, and an inept federal government were congealing into a colossal “shit show,” as one supply chain expert described it to me.

So there we were, strangers ascending the narrow stairs to a private jet, replete with leather captain’s chairs and free snacks and liquor shooters, on a quest to find masks and fortune and maybe even save the world. His attorney had a late night and didn’t check in with Stewart that morning to confirm he’d make the $22,000-a-day private jet that Stewart had booked for this caper. We were lifting off without him. That was fine by me. Lawyers have a way of slowing things down.

pandemic inc

Stewart was indeed a military veteran but, I’d later learn, not the decorated Marine he’d claimed to be on paperwork fed to the federal government. He exuded the trappings of a successful federal contractor — the suit, the easy use of arcane contract lingo, the private jet, the limited liability corporation in Falls Church, Virginia, with proximity to the Pentagon and its steady outflows of public money. He claimed that 6 million 3M N95s were loaded in a Los Angeles warehouse with his name on them. The shipment would be coming into the Chicago area that weekend, he said, and I’d be there to watch it all go down.

But Stewart’s aura belied the fact that he clearly had no idea what he was doing. I couldn’t begrudge him this. Who among us truly knows what we’re doing? In a crisis, no less? We rise to our occasions. This is America. The land of opportunity. A magical place with magical thinkers. Pull up your bootstraps. Take chances. Fake it till you make it. That’s why I was there, after all, to see how the hell he managed to get his hands on something almost no one seemed able to get. If he pulled it off, it would be a great American story. If he failed, it would be the type of story I tend to write — an investigation.

The federal government and Congress had failed to shore up the national stockpile. What supplies were in the stockpile were already depleted. In New York, Governor Andrew Cuomo had decried on television the Wild West market that had emerged in the absence of federal preparation and response. He compared fighting against other states and cities for precious masks and ventilators to entering into a bidding war on eBay. In California, Governor Gavin Newsom circumvented the federal mess and signed a huge contract to buy direct from a Chinese company, a move that would earn him some criticism but maybe wasn’t altogether the worst idea. In Maryland, the governor was conducting a sort of clandestine mission to get supplies to keep them from being commandeered by the Federal Emergency Management Agency (FEMA). In Texas, well, they were being Texas.

The cable news networks had reported numerous anecdotes of healthcare workers improvising personal protective equipment, sewing their own masks and donning trash bags instead of medical-grade gowns. At the same time, federal law enforcement was beginning to nab price gougers who stocked up on supplies of hand sanitizer and Clorox wipes, or used car salesmen who tried to sell masks that didn’t exist to struggling hospitals and government agencies. Then came the counterfeit masks made in China and peddled onshore by homegrown profiteers, which made their way into hospitals and private medical offices. As the Trump administration made clear, our fates were left to the free market, where fear distorted our sense of reason and left us prey to the predators.

From this chaos rose alluring opportunities for those bold enough to chase the cash. It was a rare and tempting thing — the opportunity to make a killing and at the same time be rewarded with the satisfaction that your work could be credited with saving lives. Many mask brokers, schemers, counterfeiters, and fakes I’d talk to in the coming months would in some way describe themselves as such capitalist saviors. Stewart was one, and as a Black owner of a small veteran-owned firm — a double advantage when bidding on government contracts — he was in a damn fine spot to make something of the mess.

Still, Stewart was an odd recipient for such an important contract. He had been named a key arbiter of a simple device that was the best defense against a virus that killed with horrifying complexity. Yet he had zero experience sourcing medical supplies. None. He was not a mask distributor, nor an importer of record, nor a freight forwarder. He knew little about how to navigate the supply chain, which almost always leads back to China, where American manufacturers had outsourced to keep wages low, prices attractive, and profits high. When I encountered his deal in the federal purchasing data in mid-April, along with dozens of other peculiar deals we’d track down at ProPublica, I wondered what the contracts told us about the federal government’s plan to combat Covid-19. It smelled of panic. It seemed inconceivable in any other context, but I wondered: Was the plan to cast money out indiscriminately, like chum into the sea, and just see what bites?

These weren’t just any masks to which Stewart claimed to have access. They were the gold-standard N95 respirators manufactured by 3M, the vaunted American company that brought us Scotch tape and the Post-it note. Capable of filtering out 95 percent of particles, the N95mask, most associated with dusty DIY home repair jobs, had become an unexpected ticket to riches — if you could find a cache of them and sell to the highest bidder. Stewart saw early in this dark chapter of American history, as many other profiteers did, that these once-disposable face coverings had become indispensable. Total seller’s market.

N95s used to cost about $1 apiece. But Stewart had gotten the VA to agree to pay almost $6 apiece. At the time, that was about a 350 percent markup. Multiply that margin by a quantity of 6 million and you end up with a fat payday for a guy who’d never been awarded a federal contract, let alone one into the tens of millions. If it worked, he could buy his own private jet, and, I would soon find, he was considering it. This sort of margin was the very definition of price gouging, something that would swiftly result in criminal charges during a localized catastrophe, such as a hurricane. But the moment was too large, too chaotic to know for certain whether this was the result of one man’s avarice or out-of-control market conditions. We’d seen nothing like this — a national emergency that simultaneously threatened every community, every business, every American. Whether it was gouging or not, federal and state and local agencies signaled they would be willing to pay.

Once inside the tiny fuselage, Stewart sat on the starboard side facing the cockpit, and I sat on the port side facing him, careful to stay as far from his air as I could manage. I did not yet have a legitimate filtering respirator and had agreed to not hold ProPublica liable for risks I’d accepted with open eyes.

“This is about helping folks,” Stewart began to tell me. “About being able to say to my mom and dad, ‘Thank you, for all the work you did.’ Now we are about to help six million people — well, six million masks.”

As the jet rolled up to the runway, I asked him again.

How did you get your hands on 6 million N95 masks?

I did not expect his answer.

His story had changed entirely. He no longer had claim to the masks he said were waiting for him at the port of Los Angeles. He said they’d been sold out from under him the night before. Poof, gone, or so he claimed.

Why are we flying to the VA distribution center outside Chicago, then? I asked. Why didn’t he cancel the flight? “It was kind of a faith thing,” he said, shrugging as he clutched an old Bible as if it were a government contractor’s sacred talisman.

He said he didn’t know how, but he was going to deliver 6 million N95s and meet his deadline, Sunday at midnight. He’d been working the phones all night and had a promising lead on an investor who could secure the masks, for a fee. The deal involved “the attorney general of Alabama,” he said, and one way or another he was going to deliver. Faith had gotten him this far. Besides, look at the jet. Surely this was someone who meant business.

“It comes down to me and my credibility,” he said. “Why would anybody pay twenty-two thousand dollars to have a ghost box delivery? It doesn’t make any sense.”

He was right. It didn’t make sense. I gazed out the window as the metal wings grabbed the wind and ascended over my broken country. Our quilted patchwork of land and cities and roads and people floated by, and I thought of the devastation coming for it, of what it meant if this trip went bust. The projections were dire. Any chance of “flattening the curve” had all but diminished. Nature was coming for us with fatal intent. Nurses and doctors below were terrified as patients diagnosed with Covid-19, the disease caused by SARS CoV-2, came rolling in. We had not yet lost hundreds of thousands of lives, but it was clear we would. Within the VA hospital system, nurses and doctors were being rationed per shift just one surgical mask, those thin blue masks that offer far less protection than an N95. Nurses with whom I exchanged emails and texts were being gaslighted by their superiors, who dismissed legitimate news reports of this dire shortage as “fake news.” But the healthcare workers saw it firsthand, and each time they donned the subpar masks, they wondered if any help was on the way, if this might be their final shift. But help had been outsourced. To Stewart and others. Help was working on a wing and a prayer. And there I was, a passenger aboard a delusion, floating over a nightmare.

The journey that day with Stewart would get yet more weird and disheartening. And his story would launch me off on a wild chase to catalogue the opportunism, greed, and incompetence that frustrated the American response to Covid-19 at every turn. It would take me to California, Texas, Ohio, Colorado, Chicago, New York, Pennsylvania, and into secret warehouses, stakeouts at industrial strip malls, and, for a moment, into the cannabis industry. Some of the journey might have been funny, if the consequences were not so dire.

As for Stewart, I may never understand why he would do what he was about to do. Maybe it was arrogance. Maybe he sincerely believed he could pull it off. Maybe it was, as he said, an act of faith — a belief that will and a dash of providence might make him an overnight millionaire and a hero to America in its time of need. Such a feat deserves to be observed, to be retold.

I wish I could have told that story, but no, this story is something worse. What began as journalistic curiosity about supply shortages and a quest to find answers for Americans who were dying or trapped in nursing homes and apartments would morph into a nearly two-year examination of America’s underlying conditions. This is the story of the bad guys of the Covid-19 era. It is the story of us. In the eyes and actions of many men I would get to know from April 2020 and into the fall of 2021 — it was mostly men — I saw an ugliness that hides beneath our national mask. I saw greed masquerading as entrepreneurial spirit, selfishness as rugged individualism, opportunism as patriotism, recklessness as bravery. I saw hope, as well, and love, but someone else can write that book. In reviewing thousands of records tracing the Covid-19 era, I found confirmation of what many might have felt: Our obsession with unfettered capitalism hurt us every step of the way.

Long before the pandemic, the national stockpile had been financially hobbled by partisan brinksmanship — prudence supplanted with political expedience. What money was left to prepare for a national emergency — hoarding masks, ventilators, gloves, and more — had been tied up with profit-driven corporations. One company leveraged its monopoly on an anthrax treatment to exact ever-increasing prices on the federal government, depleting a budget that could have been used to buy N95 masks. Ventilators, machines that breathe for patients whose respiratory systems were decimated by the virus, had run out not for a lack of planning, but because of poor oversight of companies that place profit above all else. The small company the government hired to produce the machines had been purchased by a multinational conglomerate, which increased prices and delayed production.

The Trump administration took belated action in spring 2020 and issued the first of nearly $40 billion in contracts for everything from masks to buildings to pharmaceuticals and test kits. The earliest deals were awarded under emergency measures, without bidding. Various federal agencies would claim they vetted thousands of private contractors who emerged to reap the benefits of our devastation. But story after story would prove this was a lie. Records obtained through state public records laws, the federal Freedom of Information Act, and congressional inquiries would show contracts were handed out to anyone with an email address and the pocket change to register a company in their home state. Political connections got many companies to the front of the trough. In this deluge, Trump lieutenants steered contracts to allies and untested companies, wasting money, and, more important, time. Similar deals were cut at the state and local levels.

The supply shortage was not a foregone conclusion. It had been predicted for many years, under both Republican and Democratic administrations. The country was in deep trouble long before the case counts began to rise on the coasts in early 2020, yet there was a tiny window in which a few people tried to lock down supplies for hospitals before the profiteers could get them and hold us hostage. Subpar and counterfeit masks that claimed the same level of protection as an N95, but were in fact dangerous and ineffective, flooded into this vacuum. The federal government, flat-footed and making up rules on the fly, tried to catch up and catalogue which masks could be used in hospitals and which were garbage. This ad hoc regulation was slow and often ineffective. What barriers did exist were overcome by creative mask brokers who discovered they could repackage poor-performing masks and sell them to hospitals anyway, threatening healthcare workers the American people would at first praise, and later abandon.

Efforts to stop the spread of the virus by closing nonessential businesses were undermined by entrenched capitalist interests and division-stoking politicians and the fringes to which they are captive. In Texas and elsewhere, the sentiment that it was better to keep commerce going, even during the most terrifying months, even if it threatened American lives, was an acceptable trade-off. As with the mad hunt for supplies, the patchwork of states that favored opening their economies too soon versus those that chose science would cancel out any meaningful national response, allowing a pandemic that could have lasted for weeks and months to become an era of intense division and despair.

Our crimes — against morality, civility, and the law — played out in the ubiquity of the 24-hour partisan news cycles, on social media, and in small-time schemes perpetrated by our neighbors. Testing, already delayed by government bungling, was further set back as FEMA hired a company that had formed that very week to deliver testing supplies to all 50 states and territories. The company’s founder had a documented history of fraud allegations against him, and the company had no medical expertise or, truly, any expertise at all. Instead of delivering tubes, I would find the company conspired to deliver unusable, contaminated plastic mini soda bottles, thrown together with shovels in a nondescript warehouse. The company got away with more than $10 million. Americans got screwed. Forget the money. This scheme, and many others, wasted time when time was being measured in body bags.

To keep businesses afloat and ensure income for tens of millions of Americans, Congress passed the Paycheck Protection Program. The program would rush nearly $8 billion out the door, much of it into the hands of unsavory actors who used the windfall, not to support employees, but to buy themselves sports cars, jewelry, homes, and yachts. One man took taxpayers for more than $7 million and bought a mansion and a fleet of cars before absconding to Europe. When he was arrested, he said his actions were permissible under the Trump administration and that the transfer of power to President Joe Biden had prompted him to flee. Meanwhile, many businesses and employees that needed that relief waited months for help.

If there is a silver lining, it was the rapid development of vaccines. They were scientific miracles, yes, but also the result of massive investments of taxpayer money and government resources over decades. Their development bestowed obscene riches on a few wealthy people who had made prescient investments to benefit from such chaos. Meanwhile, taxpayers paid for much of their development, most of their production and deployment, and will continue to pay for booster shots and new shields against viral variants in perpetuity, all to the enrichment of shareholders and company executives.

For all their promise and salvation, the vaccines themselves were undermined by the preexisting and profitable machinery of misinformation. Those who had mastered the craft of profiting from medical quackery and lies sprang to action, spreading fear about vaccines while promoting disproven or dubious treatments they packaged and sold to the detriment of the American people.

Covid-19 would render in high definition the contrasts of an inequitable nation. At the same time families waited in miles-long lines for groceries at food banks, the pandemic economy created about 500 new billionaires. Overall, U.S. billionaires saw their wealth surge 62 percent, or $1.8 trillion. In contrast, the relief package Congress passed to keep poor and middle-income Americans from poverty totaled just a little more, about $2.2 trillion.

When the world shut down in early 2020, workers at meatpacking plants were deemed essential. Tyson Foods placed full-page ads in national and regional newspapers, proclaiming, “The food supply chain is breaking. We have a responsibility to feed our country. It is as essential as healthcare. This is a challenge that should not be ignored. Our plants must remain operational so that we can supply food to our families in America. This is a delicate balance because Tyson Foods places team member safety as our top priority.”

At the same time, according to court records, a Tyson plant manager in Waterloo, Iowa, organized a “cash buy-in, winner-take-all betting pool for supervisors and managers to wager how many employees would test positive for Covid-19.” Whoever won the kitty should spend it on therapy.

Across the country, hundreds of meatpacking plant workers, many of them low-paid immigrants and refugees, died from the virus and more than 50,000 were sickened. The plants kept churning out meat. The Occupational Safety and Health Administration, asleep at the wheel for much of the pandemic, softened rules that allowed the plants to underreport deaths, and the agency was slow to inspect facilities where workers died, if it did at all.

In countless ways, Covid-19 would bring the hypocrisy of our stated American ideals into focus. Unemployment skyrocketed, yet the stock market rallied for those wealthy enough to have skin in the game. Millions of Americans couldn’t pay the rent, but purchases of second homes spiked as the wealthy fled cities. The deep-seated fissures in our healthcare and education systems, and physical infrastructure itself, were laid bare as the virus took its outsized toll on poor people and communities of color.

For all we didn’t know about the virus, it sure knew a hell of a lot about us. Even as I sat in disbelief aboard that private plane in April 2020, the first of many on-the-ground reporting missions during the pandemic, I could not fathom just how bad it would become. Call it arrogance, ignorance, or American elitism — I won’t argue. But I hadn’t allowed myself to worry until that moment. Cynical as we investigative reporters can be, I still held a sort of blind faith that America, despite our current discourse, was just better prepared. Always. We’d be fine. We would come together, like in World War II.

But with each reporting trip, this faith would diminish. And as the cases and the death counts rose and plateaued and rose again, and the schemes and steady flow of profits continued to reveal themselves, I came nearer and nearer to answering the central question our children and history will ask of us: How did the most advanced, the wealthiest country in the world, with just 4 percent of the global population, at one point come to account for one in five Covid deaths and nearly a quarter of all cases worldwide?

It was the cost of doing business.

From PANDEMIC, INC. by J. David McSwane. Copyright © 2022 by J. David McSwane. Reprinted by permission of One Signal Publishers/Atria Books, a Division of Simon & Schuster, Inc.


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