Skip to main content

'Pandemic, Inc.' author says financial predators made more than $1 billion off COVID

When the COVID crisis hit in 2020, the federal government needed far more N95 masks and other protective equipment than it had — so it began awarding contracts to companies promising to provide them, often at a steep mark-up. J. David McSwane, a ProPublica reporter and author of the new book Pandemic, Inc: Chasing the Capitalists and Thieves Who Got Rich While We Got Sick, says a shocking number of those companies had no experience in providing medical equipment.

52:30
This recent segment plays exclusively on
Why is this?
Due to the contractual nature of the Fresh Air Archive, segments must be at least 6 months old to be considered part of the archive. To listen to segments that aired within the last 6 months, please click the blue off-site button to visit the Fresh Air page on NPR.org.

Transcript

DAVE DAVIES, HOST:

This is FRESH AIR. I'm Dave Davies in today for Terry Gross. When the COVID crisis hit in 2020 and the federal government needed far more N95 masks and other protective equipment than it had, it began awarding contracts to companies promising to provide them, often at a steep markup. Our guest, ProPublica reporter David McSwane, says a shocking number of those companies had no experience in providing medical equipment. Indeed, when McSwane and other reporters started combing over the data, they found that two months into the pandemic, the federal government had already handed out more than a billion dollars to companies that had never before had a government contract. Many were run by people with a history of fraud allegations, all of them available in public records if anyone had bothered to check.

McSwane's new book is a colorful account of the many ways unscrupulous operators profited from the nation's health crisis and ways the government failed to protect the public from financial predators. The book also takes us inside the reporting process, as McSwane pores over records and has some contentious and sometimes funny encounters with his subjects. David McSwane has been an investigative reporter for the Dallas Morning News and the Austin American-Statesman and has won many awards. He's now a reporter in ProPublica's Washington office. His new book is "Pandemic, Inc.: Chasing The Capitalists And Thieves Who Got Rich While We Got Sick." Well, David McSwane, welcome to FRESH AIR.

DAVID MCSWANE: Thanks for having me.

DAVIES: Many of the colorful stories of profiteering here involve efforts by the government to buy personal protective equipment, especially N95 masks, which were very much in short supply because of decisions in previous years to reduce funding for the national stockpile. And it left the - you know, the government in a jam. You introduce us to a guy who the U.S. government had engaged to provide some of these masks. And when the book opens, you're about to get on a private plane with him. Tell us who he is, how this came about.

MCSWANE: Yeah, that was Robert Stewart Jr. He's a contractor I sort of stumbled upon, you know, in those early weeks trying to figure out, you know, where I'm going to fit into the coverage of, you know, probably the biggest news story of my lifetime. And I noticed he'd gotten a really sizable deal - $34.5 million dollars - with the Veterans Administration, which oversees the largest hospital network in the country. And he just had no footprint. I'd never seen - there was no evidence that he had previously had a, you know, federal contract. His company was pretty small, had a tiny office in Falls Church.

And at this point, you know, the Trump administration was sort of trying to catch up after sort of weeks of negligence, and we just saw money flying out the door. And I just had a suspicion that they hadn't actually vetted any of these contractors. And, you know, we'd seen some anecdotal evidence of that. And I decided just to call him and ask him what's going on. And he said, you know, I'm the real deal. I got a shipment of 6 million masks and I'm delivering them to the VA, and I'm going to be due in on a private jet tomorrow. And I said, well, that's really interesting. Would you mind if I tag along?

DAVIES: And (laughter) to his great regret, he let you come with him. I love the name of the - of his company, Federal Government Experts, right? Did he have any experience with procuring stuff for the government?

MCSWANE: Well, you know, he did. He worked at the Pentagon as a contracts officer for many years. So he knew how to navigate, and he knew the rules. But the company itself had no obvious expertise. The - you know, their website, which I found kind of amusing, had just large passages that were plagiarized from old business review articles. And, you know, they claimed to be sort of experts in everything, including blockchain technology for procurement solutions. And it all just seemed like - I couldn't discern what any of it meant. So the name was just kind of - you know, it was on the nose. And I had a feeling this is sort of a fledgling business that might have gotten in over its head.

DAVIES: OK. So Robert Stewart is telling you he's going to go to Chicago where he's going to get his 6 million masks and deliver them to a VA administration warehouse. You go to the airport, the - you know, the private terminal. And what happens?

MCSWANE: Well, yeah, we meet early morning, the last week of April, in the executive wing of Dulles Airport, which I had never been to. And he shows up, you know, really enthusiastic - nice suit, you know, and he's a pretty fit guy - and, you know, sort of walks in with confidence and says, all right, let's do this. By the way, I'm talking with you against the advice of my attorney, which I, of course, jotted down because I thought that was kind of funny. And, you know, at this point, I thought, well, I mean, he seems confident. Maybe he's got the masks. Maybe he's the real deal and he has nothing to lose. And either way, it's a story because we're in such a crisis. You know, we need these masks, and he's the top contractor for the VA right now. And if he delivers, that could save lives.

DAVIES: Right. So you fly to Chicago, where initially, I think, he says, we - I've got 6 million masks. We're going to deliver them. Of course, you get there and there aren't 6 million masks there. What happens next?

MCSWANE: Yeah. So it was after I boarded the plane and we're literally lifting off, you know, and I say, hey, you know, I really am curious. You know, how did you manage to get masks when it seems no one's able to get them and in such a large quantity? And he says, well, you know, actually, I don't have them. Somebody bought them out from under me. I've been up all night making phone calls, trying to find a new shipment. And, you know, he's due to deliver the masks in the next day.

DAVIES: He's got a deadline - right? - under his contract.

MCSWANE: He's got a deadline. It's midnight that night. You know, you can extend these things. The VA's not going to say no to masks showing - you know, if they show up a little late. But he's really feeling the pressure. And, you know, he says, well, I had this big shipment and, you know, somebody took it out from under me. There's this just crazy, like, underworld of mask brokers who are, you know, vying for these things. And somebody outbid and came in and took my shipment. But I have a line on masks from another supplier, and I'm working with the attorney general of Alabama - which turned out to be the former attorney general of Alabama, after I looked into it.

So now he's got this rapid, you know, fast-paced quest that he's on while we're flying to Chicago. And I ask him, well, if you don't have the masks, why on earth are we flying to Chicago? Why am I here? And he says, well, you know, call it a faith thing. You know, and he pulls out a Bible and he's religious, and it's a devotional. He has notes in the margins and so forth. And, you know, he says, we're - you know, I'm operating on faith. We're going to get this done. We're going to get these masks. So at this point, I'm like, all right, well, let's see what happens.

DAVIES: So, you end up - you and he and his human resources person end up at this hotel, and then you spend this - hours in the lobby while he frantically makes phone calls and people bring in takeout food. And in the end, he kind of tells you what?

(LAUGHTER)

MCSWANE: Yeah. Well, so this is a giant conference hotel. It's the first I'd been out in the pandemic, actually. And, you know, it's huge, and we're the only human presence there but for the people at the counter. And he's just frantically making calls. He's got a couple cellphones. He's got his colleagues helping. A friend comes in who's a consultant. It seems like, you know, people are kind of looking at each other like, what are we doing here? And with each call, you know, I'd hear him or a colleague saying, you know, can you get 18 semi-trucks? You know, do you know somebody who's a freight forwarder? And it was just getting weirder and weirder. And he'd have conversations with the former attorney general of Alabama, Troy King, who's helping him source these masks. And, you know, it sort of devolves into finger-pointing and excuses. And this takes place over about 8 hours. And with each call, I just sort of began to suspect more and more that this was a performance just to save face 'cause he knows the story's coming out. And, you know, I'm in this kind of murky reporting no man's land where I'm like, I don't know - what is happening here? How do we write about this?

DAVIES: Right. If he gets the masks, it's a great story. But what happens is that he ends up telling you that there's this swamp of these phony-baloney brokers who claim they have things and will show you videos that aren't really what they seem to be. Did you think that he's a well-intentioned guy who was just a bit naive? Or was - I don't know. Was he BS'ing all along? Or what did you think?

MCSWANE: You know, I wasn't sure. I mean, my reporter sort of Spidey-senses, if you will, were telling me I'm not getting the whole truth; something's off here. You know, but I sort of approach my work, you know, investigative reporting, with, you know, the notion that, you know, you never attribute to malice that which can be explained by incompetence, right? So I was like, you know, is he just a victim of his own ambition? Is he just over his skis? Or was this whole thing made up? And as it goes on and on, you know, there were just little clues that things weren't right. You know, he's sharing with me these videos - you know, that they're called proof-of-life videos, which are, you know, a broker somewhere in the world, literally anywhere in the world, you know, takes a cellphone video of boxes labeled 3M or whatever and says, hey, I have this shipment. If you - you know, and they're talking on WhatsApp. If you wire money, I can get these to you now. Here's our price. And this is how these deals are done - you know, he's sort of walking me through this world that he's stumbled into, whatever his intentions.

So I just tried to keep an open mind and say, you know, keep sending me stuff. Like, yeah, I want to know more about this world you've stepped into. And that's when I sort of started to feel the tension that would become a big part of the story and, eventually, the book - was, you know, at what point is our sort of admiration of the American entrepreneur clashing with just straight-up profiteering? And which one is he? And he would refer over and over, you know, to the people in this world, these mask brokers and secret investors. He called them pirates - buccaneers and pirates, he would say.

DAVIES: Well, in the end, he didn't get 6 million masks or any masks to deliver to the federal government. And despite his efforts, I mean, the fact is that the United States government committed - what is it? - $34 million to him, and he clearly had no real experience or expertise in this at all. And I guess that's a lot of the heart of the story, isn't it? I mean, how does the government end up shoveling so much money out the door to people who really don't know what they're doing, even if they're honest?

MCSWANE: Yeah, exactly. So it's not - you know, this is not the first time a contractor has overpromised or wasn't able to deliver, right? It happens all the time. But the point is, the federal government was so ill-prepared that all rules were thrown out the window, and our national strategy became, we're just going to hand out contracts to whomever; we're going to throw them all over the place, and we're going to see what comes back. And that had some pretty devastating effects because, you know, people like Robert Stewart Jr., who, you know, they want in on the bonanza, and he ends up sort of paving his own way to ruin. And at the same time, you've got states and cities and hospitals competing for these supplies. The brokers know that the federal government has decided to spend $6 a mask for this particular deal, and that just drives the prices up for everybody. And then you have people - you know, more and more people want in, more and more people saying they have things that they don't have. And you have these proof-of-life videos flying around and people wiring money to strangers.

And it was sort of - you know, he provided that entree, you know, my first sort of glimpse into this crazy world. And it really was a result of just sort of this cascading failure of the federal government to prepare and our inept national response.

DAVIES: You mentioned that when these brokers who purported to have access to masks would, you know, make their representations, they would use videos called proof of life. You want to explain what that is?

MCSWANE: What they are is cellphone video, often grainy cellphone video, of people showing what they call a lot of masks, you know, a shipment of masks on a pallet in a warehouse, and they just sort of span over the inventory. And, you know, the box might say 3M or whatever. And in some cases, they'll have somebody hold up a newspaper to show that, you know, the date is - that these are currently on hand or, you know, a piece of paper with someone's name on it to indicate that this person, you know, is buying this. And this is how these deals were done. So someone would send a proof of life, and there'd be a contract between the buyer and seller, and sometimes there's an escrow account involved, lawyers on either side. And, you know, these are negotiated through encrypted apps like WhatsApp. And a buyer would wire money.

And, you know, I'd heard stories - I haven't been able to confirm any of these - of buyers who wired money and then never got the masks. And, you know, it stands to reason - 'cause these videos don't tell you much. I mean, they're boxes. You have no idea where the stuff is. But everyone was grounded. We're all at home, and people are trying to, you know, make these deals from their living rooms. And proof-of-life videos were just floating around. And if you were a smart buyer, you'd pay a company to do due diligence, you know, and actually go check on the inventory for you. So it just - it was this wacky world, and the proof-of-life videos just really kind of summed it up for me.

DAVIES: So in the end, was Robert Stewart paid for the masks he promised to provide?

MCSWANE: Robert Stewart was not paid for the masks that he, you know, didn't provide. And that was the federal government's response - was, well, we can give out contracts all we want because we're not paying out unless it's delivered. He was, however, paid a lot of money through the Paycheck Protection Program, and he, as so many others did, you know, lied on forms in order to get, you know, hundreds of thousands of dollars.

DAVIES: We need to take a break here. Let me reintroduce you. We're speaking with David McSwane. He is a reporter in ProPublica's Washington office. His new book is "Pandemic, Inc.: Chasing The Capitalists And Thieves Who Got Rich While We Got Sick." We'll continue our conversation in just a moment. This is FRESH AIR.

(SOUNDBITE OF DAN AUERBACH SONG, "HEARTBROKEN, IN DISREPAIR")

DAVIES: This is FRESH AIR. And we're speaking with David McSwane, a reporter in ProPublica's Washington office. He has a new book about people and businesses that reaped big profits from the COVID-19 pandemic. It's called "Pandemic, Inc."

One of the people that you write about is Peter Navarro, who was an economic adviser for the Trump administration, who, in some respects, you know, was an early voice to take COVID seriously at the time that a lot of the government officials were not taking it seriously. And people give him some credit for that. What kind of role did he play in trying to find this personal protective equipment?

MCSWANE: You know, he got in early. You know, I was drawn to Navarro because he was one of the early voices within the Trump administration. But he's also just such a character, whether you like him or not. You know, he's eccentric. He's - you know, he's brusque. He's all these things. And he wants to hard charge this thing. He wants to get it done in what he calls, quote, "Trump time." So what he does is historically significant. He basically takes over federal purchasing to a degree. I mean, the federal government's huge, so he's not involved in everything.

But, you know, I found in the data, the purchasing data, looking at where these deals are going, that the White House had ordered FEMA to contract with the company. And you can't have a political office steering contracts for obvious reasons. And he just - he didn't care. He got right in the middle of it. And, you know, part of that was because the larger, you know, federal government wasn't responding quickly enough. And he wanted things done. So he sort of - you know, he was trying to get things moving. But who he is and how he did it turned a lot of people away. There's, you know, an example in the book of, you know, an American company run by a couple of guys, including a guy named Mike Bowen, had reached out to the federal government and said, hey; we have machines. We can make N95 masks. We just need - we need a contract that makes business sense for us. And we will get you masks. We can get it done.

DAVIES: And they did have experience in it. They had done this back in past epidemics.

MCSWANE: Yeah. Exactly. So this company, Prestige Ameritech, near Dallas, Texas, you know, had a relationship with some folks in the federal government, says, you know, we can get you masks. We got to start talking about pricing and, you know, contract or whatever. And they're offering a pretty good deal, about a dollar per mask, which is much better than the other deal that Robert Stewart Jr. had offered. And, you know, Navarro gets in the middle of this and, right away, just personalities clashing and ends up walking away from the deal.

And it comes out later that the federal government had a chance in January, 2020, to get ahead of this and start producing masks, and they walked away from it. And it was it was really just personalities. So Navarro was steering contracts in some directions, really trying to get things moving. He was sort of abandoning things that might have worked on the other hand. So it was just messy. And this is what happens when you have a political appointee deciding who gets deals rather than the way it's normally done, where you have bids and you have, you know, government workers, bureaucrats, who weight it to decide if somebody can deliver, to weed out fraud and to get the government the best deal.

DAVIES: Right. And as you point out at one point in the book that Navarro had no statutory authority to award a government contract, and yet he was doing it. Were any of them to people who had political connections or other characteristics that should raise questions?

MCSWANE: Yeah. If you had a line to Peter Navarro, you stood a pretty good chance of getting a big deal. And Congress has investigated some of these. And they didn't all come through. But he was interested very early on in beefing up America's supply of, basically, the ingredients you need to make basic drugs that might be in short supply, because we are reliant on other countries, including China, for, basically, the things that, you know, you mix together to create certain drugs. And he happened to know a CEO of a company that was interested in doing that and really pushed hard for them to get a contract. And, you know, was that a bad idea? Probably not. Maybe we should have been doing that. But he got right in the middle of it, picked a company that had a spotty record. And, you know, it ends up becoming the subject of a congressional inquiry.

DAVIES: Let me reintroduce you. We're going to take another break here. We're speaking with David McSwane. He is a reporter in ProPublica's Washington office. His new book is "Pandemic Inc.: Chasing The Capitalists And Thieves Who Got Rich While We Got Sick." We'll continue our conversation after this short break. I'm Dave Davies. And this is FRESH AIR.

(SOUNDBITE OF MICHEL CAMILO'S "THE SIDEWINDER")

DAVIES: This is FRESH AIR. I'm Dave Davies, in for Terry Gross. And we're speaking with ProPublica reporter David McSwane. His new book is about people and businesses that reaped big profits from the COVID-19 pandemic. Many took advantage of the government's haste in awarding contracts for medical supplies and providing payroll loans. And the administration's failure to probe the qualifications and business backgrounds of those they were dealing with. McSwane's book is "Pandemic, Inc.: Chasing The Capitalists And Thieves Who Got Rich While We Got Sick."

I want to talk about a company that got a contract. It's called Fillakit. You tell us in the book they had a $10 million contract with FEMA, the Federal Emergency Management Agency, to provide test tubes for COVID tests. And they're supposed to come with a liquid solution that will preserve samples that are taken from patients. The principal of this company was guy named Paul Wexler. As you went over data, you flagged this contract. What did you find out about Mr. Wexler and his - you know, his history?

MCSWANE: Yeah. So I stumbled upon the company just looking at the contracts data, and the name just sounded funny. And, you know, the first sort of stop is to figure out when was this company formed? And we realized it had been formed very recently. Its entire purpose was to make money from government contracts related to the pandemic. So I was a little skeptical and ended up talking to a co-worker of mine who had been looking at the company at the same time for smarter reasons. He had really boned up on, you know, the science of testing, what's needed and so forth. And because of the way the contract was written, it looked like these were the PCR tests, you know, the - where they take the nose swab, they preserve it in a medium, such as saline, and it goes to a laboratory and they actually look for the virus.

So these are - you know, these are fragile things that need to be done well. And they have to meet certain laboratory standards and certain sizes and so forth. So my colleague was skeptical for different reasons. And here we are, you know, sort of two things stand out. We look into the owner and - well, actually, the ownership was listed to somebody in St. Petersburg, Fla. The name escapes me. But when you look at the contact information for that company in business filings, it links to Paul Wexler, who was currently being sued by the FTC.

DAVIES: Federal Trade Commission. Right.

MCSWANE: Yeah, the Federal Trade Commission - you know, for alleged robocalling schemes and telemarketing and so forth. So, you know, he had allegations of fraud. I don't think he'd been convicted of anything. But that's out there. And that doesn't necessarily preclude you from getting a government contract. That's not really one of the criteria that they look at, nor do they really consider when the company was formed. And then you add to that the intense pressure to find supplies. We suspected that no one looked at this company. They took them on their word and said, we'll give you $10 million for test tubes because testing had been woefully lagging - right? - because, you know, we'd screwed up our first round of tests, you know, as a country. And we're trying to catch up, and it's crucial to the pandemic response. So all these things considered, we were very skeptical about this company.

DAVIES: You do an initial story, and then you get a call from a state public health official that says the test tubes that he's providing aren't really what they're supposed to be, right?

MCSWANE: Right. Yeah. So we put a story out there. It doesn't have all the answers. And, you know, state health official gives me a call and says, these are the most worthless things I've ever seen. This is going to set back testing in my state weeks. And he's very concerned. He says, you know, when I got them, they came just thrown into this bag. You know, these things are supposed to be, like, hermetically sealed individually. So right away, he knew something was up. And I didn't know what they were. He says, I shared them with a colleague and he knew right away. They're mini soda bottle preforms, little plastic, sort of - you know, they look like test tubes. You might see them in, like, a third grade, you know, faux science kit, but they're used to - with heat and pressure, you know, they're blown up to become two-liter soda bottles.

And he says, well, there's a lot of problems with this. Like, you know, they're brittle, A, and, B, they don't fit standard laboratory equipment. And the way that these are packaged, it doesn't look like they're sterile either. So these are completely useless. And, you know, we learned in talking to some other people that these are being sent to all 50 states and territories. These test tubes are going out far and wide.

DAVIES: By FEMA.

MCSWANE: By FEMA.

DAVIES: So FEMA pays this guy the money, he sends them these worthless things, and then they're sending them to states.

MCSWANE: That's right. Yeah. And this is when we're really trying to ramp up testing to get a handle on the virus.

DAVIES: So you ended up going to visit his warehouse, which is in the Houston area. Tell us about that.

MCSWANE: Yeah. So I arrived. I tried to go through the front door and ask some questions and was denied entry. And I sort of pulled around to the back and was watching this large warehouse door, just expecting some activity. A source had said that the CEO was in the building that day. So I'm just watching. And after a few minutes, someone peeks their head out, sort of looks left or right - it was almost cartoonish - and closes the door.

And then the large warehouse door rolls up. And I grabbed my notepad and my phone, you know, to shoot video as I'm taking notes. I found out later I'd shot it upside down. But I approach, and right away, I see, you know, Wexler sort of running the show here. There's a forklift, and workers are literally using snow shovels to get these little soda bottles out of bins and put them into smaller bins. And people are just squirting saline in it and, you know, screwing on the top and throwing them in a bag. There's a large fan whipping air around and whatever contaminants may be in it. And I just ask, you know, how are you sterilizing these, sir? Are these test tubes sterile? Are those soda bottles?

And, you know, he cursed at me and yelled and shut the door. And I decided to stick around for a few minutes because I wanted to get some confirmation. And, you know, he looks out and sees me there and just storms toward me like a bully after my lunch money. And I've got my phone and my pen and my notepad and I'm scrambling to put my N95 on as he approaches. And he gets in my face and starts screaming, what's your problem, man, you know, and the liberal media, he's yelling at me. And he says, you know, get out of my face. And I said, well, you're in my face, and my face was here first. And, you know, I had to tell him - I thought he was going to punch me. And I said, you know, whatever you do next is going to end up in the story. And, you know, long story short, he confirmed that there were soda bottles as he was yelling at me. And I had everything I needed. And, you know, I decided to call it a day and file my story later.

DAVIES: So clearly what he was providing was of no use in doing these tests. What do we know about what eventually happened with the material he provided and whether he was paid?

MCSWANE: So in the end, Fillakit LLC was paid more than $10 million for test tubes that, you know, we couldn't use in the coronavirus response. A contract expert we talked to said this is one of the more outrageous examples he'd seen. Because FEMA accepted them as, you know, what they ordered and paid him, it's pretty hard to make a case that he did anything wrong. Now, had FEMA taken even a cursory glance at these things or had somebody who's familiar with testing look at them, they could have denied them and, you know, possibly referred it for an investigation. But to my knowledge, there hasn't been anything like that.

So, you know, he was paid. Those test kits were completely useless. FEMA had to send out a warning to all 50 states and territories not to use them. Sources told me they were trying to come up with something to sort of save face, to use these things. And, you know, members of Congress ended up, you know, writing letters, you know, of outrage about it, but it looks like Fillakit - you know, they delivered a product. It was worthless, but the federal government paid for it. He is in the middle of yet another fraud allegation and lawsuit involving the Federal Trade Commission. But as far as I can tell, that's unrelated.

DAVIES: We are speaking with David McSwane. He's a reporter in ProPublica's Washington office. His new book is "Pandemic, Inc.: Chasing The Capitalists And Thieves Who Got Rich While We Got Sick." We'll be right back after this break. This is FRESH AIR.

(SOUNDBITE OF MUSIC)

DAVIES: This is FRESH AIR, and we're speaking with ProPublica reporter David McSwane. He has a new book about people in businesses that profited from the COVID-19 pandemic, many of them taking advantage of the government's haste in awarding contracts. It's called "Pandemic, Inc." I wanted to talk a bit about the Paycheck Protection Program, which was designed to help businesses stay alive during the pandemic and which offered loans administered through banks and the Small Business Administration, which were in large part forgivable, provided people could document certain things. There were some nasty cases of fraud in these. And you write about, you know, a lot of loans to companies that didn't exist - you know, farms that are - that have addresses that are not even in the country and not in rural areas. Do you have any idea of the scale of fraudulent loan applications?

MCSWANE: So, you know, we really don't yet. So as with almost every relief program that was - you know, that was created as a result of the pandemic, speed was prioritized above all else. Money was flying out the door with very little incentive to - you know, to vet people's claims. So really, we're playing catch-up. And this is true of the Paycheck Protection Program, unemployment benefits, which is another program that was really just sort of raided by fraudsters. But the Paycheck Protection Program had this sort of quirky trend that my colleagues at ProPublica first reported of just hundreds of fake farms that don't exist, you know, like orange groves in Minnesota and, you know, dairy farms in Florida and, like, you know, things that don't make sense. And, you know, one of my favorite examples is this company in Cornwall, N.Y., titled McDonald Not Burgers But Flowers. And (laughter) - you know, just sort of obviously fake companies. And my colleagues, you know, went through the business filings, traced all these things back and found these don't exist, but money was paying out, and it's unclear to whom. So federal prosecutors are going to be chasing this type of fraud for many years.

DAVIES: You know, in general, government spending is public information. You can, you know, find details on what the - who the government spent money to, for what purpose. What about the data on all of these government outlays and, you know, either securing, you know, medical supplies or the Paycheck Protection Program?

MCSWANE: Yeah. So the early contracts that were given under emergency guidelines, which we found to be really just wantonly awarded with almost no vetting or no apparent vetting - those were public. And they were updated very frequently, and we created a database, so we could see where the money was going for hiring contractors. But the Paycheck Protection Program, which is huge - something like $800 billion - the federal government wanted to keep the recipients of those loans a secret, which is just absurd and flies in the face of the Freedom of Information Act. And we knew that. And - you know, so we, along with some other news organizations, actually had to sue to get it. And lo and behold, once we did get it and started analyzing it, we found fraud all over the place, including, you know, these fake farms that had been paid that trace to no one.

DAVIES: There are interesting questions here about how government works and how it should work. I mean, I covered local government for a long time as a newspaper reporter. And I know that, like, competitive bidding rules, all of which were established because of past abuses, really slow things down. I mean, you typically have to - to get something, you have to develop specifications, and then you have to publish the specifications, and then you typically hold a meeting with potential bidders to explain things, and then you give people time to apply, and then you evaluate the bids. It all takes a long time. And, you know, the government was in a hurry to get things done, to, you know, secure medical equipment and to rescue the economy. And so they wanted to act quickly and give policymakers discretion. Do you think - is this kind of thing inevitable when you do that?

MCSWANE: Yeah. But, you know, I covered local government and state government as well, so - and have made hay of contracts, you know, throughout my career. And, you know, you've got to think of the government as just this giant cookie jar. Everyone's trying to get a piece of it. So when it was announced that there was going to be emergency spending, which means there is no vetting or no - not the traditional competitive bidding that you'd see, I knew right away, all right, this is going to be something 'cause this is huge, and there's so much money, and there's so many people trying to get it. So just instinctively, I knew there was going to be lots and lots of fraud. But, you know, we were in a jam. And I don't make the argument that, you know, there's no higher morality than federal acquisition regulation.

But I think the real question is, why did we allow ourselves to be in this position where we're essentially reliant - our national well-being depended on mercenaries, you know, these pirates, these people we had to hire to get things we didn't know we needed, didn't have? And the - you know, the answer to that is it didn't have to be this bad. Had we followed some of the recommendations laid out by various government organizations and even private industry to beef up the national - the strategic national stockpile to make sure we had these things, in those initial weeks at least, it wouldn't have been so chaotic, and we might have been able to put our money into smarter things. And one hopes that having sort of stitched together all of this madness, all of this waste, all this fraud, maybe we can rewrite the blueprint and make sure we're not in this position the next time we face a pandemic, which scientists say is inevitable.

DAVIES: Right. And I will note that in the book, you do walk through, actually, some of - exactly how the national stockpile got defunded over time, and that itself is an interesting tale. But if you look at the Paycheck Protection Program, which is, you know, not for buying supplies for this national stockpile but helping to keep people employed, I mean, the scale had to make it hard - 970,000 organizations got loans, 12 million loans in all according to the data. You know, it's interesting that in a lot of cases, companies that got contracts, there were things on the public record that would have raised red flags, like the company was incorporated a week before, or the principals have fraud allegations. I mean, could they have done basic checks, do you think, for this many transactions?

MCSWANE: You know, I can't help but empathize with the contract officers. I mean, these are people who are used to buying paper and chairs and paper clips, you know? And now - you know, and this happened at the state and city level, too - your purchasing managers are now arbiters of life-saving equipment, and in their own way, they're on the front lines. So - and this is an emergency, you know? So I understand the reflex to just say, you get a contract, you get a contract, you get a contract - because it was dire. People were dying, and we needed to address this. That said, I mean, there are basic due-diligence things that could have been done.

The federal government's argument has essentially been that, in most cases, they don't pay up front; they pay when the masks, test tubes or whatever are delivered. So they're saying, no harm, no foul. But that's kind of shortsighted because what you've really done is you've issued to Robert Stewart Jr. a contract worth $34.5 million that says, we are willing to pay $6 a mask. Well, you've just broadcast to the entire world that the going rate for an N95 now is $6, more than five times what they used to cost, and we're willing to pay it. And you've got the city of New York saying, we need masks, too, so we'll pay even more. So you're really driving up the price. So that's an issue. As far as the Paycheck Protection Program goes - my colleagues, you know, reported this - I mean, speed was placed above all else. And in fact, lenders, traditional banks and even, you know, financial tech companies, were really disincentivized to look into things too much. You know, these applications were, you know, pretty simple. And basically, the strategy has been, we're going to come back around and figure out who was lying and who wasn't.

I'm sure there are ways to ensure a lot of those loans don't get paid out. And to be fair, the Small Business Administration and lenders did weed some out. But, I mean, we're talking about just an unprecedented level of fraud that now we're sort of - law enforcement has to come back and make a case for each and every one. So it's really just - it's hard to - it's really hard to just grasp the scope of the fraud in something like that. So next time around, you know, maybe there are safeguards that can prevent some of that without slowing things down.

DAVIES: We need to take a break here. Let me reintroduce you. We're speaking with David McSwane. He is a reporter in ProPublica's Washington office. His new book is "Pandemic, Inc.: Chasing The Capitalists And Thieves Who Got Rich While We Got Sick." We'll continue our conversation in just a moment. This is FRESH AIR.

(SOUNDBITE OF JAY-Z AND BEYONCE SONG, "'03 BONNIE AND CLYDE")

DAVIES: This is FRESH AIR. And we're speaking with David McSwane, a reporter in ProPublica's Washington office. He has a new book about people and businesses that reaped big profits from the COVID-19 pandemic. It's called "Pandemic, Inc."

Before we let you go, you know, I want to just kind of come back to the problems associated with this - as you say, when money was just going out the door, both to buy medical supplies and then in the Paycheck Protection Program to supply loans to help people keep employed. You know, in any huge program - and this happens in the private sector, too - I mean, there's a certain amount of scamming and there's a certain amount of fraud and leakage. Nothing's perfect. And I guess the question is, with all of the hundreds of billions that went into these efforts, certainly there are examples we can point to that are really embarrassing in terms of people that ripped off the government. But can we say that overall, most of the money went to places it should and the worst miscreants may now be prosecuted?

MCSWANE: Yeah. I mean, it's sort of the question of, well, is the fraud and embarrassing nature of, you know, these mask brokers coming out of the woodwork just sort of the cost of doing business? We needed to deploy these resources so that people could feed their families, pay the rent and so that we could get supplies. I don't know if we could say that most of the money went to where it was. I think the answer is probably yes because we did get some supplies and companies did stay afloat and people did stay in their homes, but not everywhere. You know, it was imperfect and it was messy. Whether or not it was worth it - I think we have to say these were necessary programs. And I don't think we're ever really going to get a full handle on the amount of graft that occurred in these various programs.

DAVIES: You know, the Trump administration got a lot of criticism for its handling of the pandemic generally. Can you say whether the administration of any of these programs, which were approved by Congress - how many of these lapses were going to happen inevitably, given the government bureaucracy, and how much might be attributed to the mistakes or ineptitude or even corruption within the Trump administration?

MCSWANE: Yeah. So there's a couple things there that - so the Paycheck Protection Program was flawed by design, and I think you can blame Congress at large for some of that. And, you know - and they're trying to - you know, trying to rush money out so that people can feed their families and pay their rent. You know, so there's some deference deserved there. In terms of handing out contracts to anybody and everybody or even politically connected firms who had a line in with Peter Navarro, I think that rests at the feet of the Trump administration. And the fact that the administration didn't respond in early January quickly and forcefully enough placed them in such a panic situation that they were dealing with, you know, these mask brokers - just clowns. You know, just obvious problems with these things - when we should have been dealing with, early on, 3M, Cardinal Health through the Defense Production Act.

That's the criticism I think you'll hear, you know, looking back on history is, why didn't the president invoke the Defense Production Act earlier? That's the Korean War-era law that essentially says, you know, we have a national emergency. You need to fire up, you know, assembly lines and start making whatever it is we need. That would have placed us in different footing and probably mitigated some of that fraud. But I think, you know, this is human behavior. There was always going to be some level of this. You know, but certainly there are things we could have done to mitigate it and make sure our response was, you know, less costly and more effective.

DAVIES: Robert Stewart Jr., the guy with a private plane who, you know, said he was in a world of pirates, you know, peddling masks - do you want to tell us what became of him?

MCSWANE: I mean, it's safe to say he sort of paved the way to his own ruin. And one of the things that drew me to Robert Stewart Jr. was watching his sort of internal struggle of whether or not he was, you know, being a good American, delivering supplies we needed, or whether he was venturing into the sort of world of pirates, you know, that he said was so disgusting. And, you know, just watching him and his trajectory as a character, he really struck me as a good example of - you know, when you're reporting, you have to realize that no one is all good or all bad, and we can never truly understand someone's intentions. But at the end of the day, you know, he did what he did, and he's going to have to pay the price for it.

DAVIES: Well, David McSwane, thanks so much for speaking with us.

MCSWANE: Thank you so much for having me.

DAVIES: David McSwane is a reporter in ProPublica's Washington office. His new book is "Pandemic, Inc.: Chasing The Capitalists And Thieves Who Got Rich While We Got Sick."

On tomorrow's show, we speak with writer Delia Ephron. She previously joined us to talk about her memoir reflecting on the death of her sister, Nora Ephron, with whom Delia co-wrote the film "You've Got Mail." Delia's new memoir is about falling in love after her husband died and, soon after, learning she had the same disease that killed her sister. But Delia has survived with treatment. I hope you can join us.

FRESH AIR'S executive producer is Danny Miller. Our technical director and engineer is Audrey Bentham. Our interviews and reviews are produced and edited by Amy Salit, Phyllis Myers, Sam Briger, Lauren Krenzel, Heidi Saman, Therese Madden, Ann Marie Baldonado, Thea Chaloner, Seth Kelley and Joel Wolfram. Our digital media producer is Molly Seavy-Nesper. Roberta Shorrock directs the show. For Terry Gross, I'm Dave Davies.

(SOUNDBITE OF JESSICA WILLIAMS TRIO'S "LITTLE BIRD SONG") Transcript provided by NPR, Copyright NPR.

You May Also like

Did you know you can create a shareable playlist?

Advertisement

Recently on Fresh Air Available to Play on NPR

52:30

Did the Trump camp help far-right militia groups plan the Jan. 6 attack?

New York Times journalist Alan Feuer says some members of Trump's inner circle have close ties to the Proud Boys and the Oath Keepers, whose leaders have been charged with seditious conspiracy.

52:30

Real life or satire? Novelist Mat Johnson says it can be hard to tell the difference

Novelist Mat Johnson believes that America has its own unique "flavor" of apocalypse. "It's hard not seeing the possible end of things in a variety of different ways," he says. Johnson's new satirical novel, Invisible Things, serves up one of those apocalyptic flavors.

42:38

A novelist's time in the MMA cage informed his book on memory loss and identity

"Really, the heart of the story is about misplaced loyalty and what we can do with memory and how fluid and malleable memory can be when we ... use it to fit the narrative that we've created in our mind," says novelist John Vercher.

There are more than 22,000 Fresh Air segments.

Let us help you find exactly what you want to hear.
Just play me something
Your Queue

Would you like to make a playlist based on your queue?

Generate & Share View/Edit Your Queue