Pandemic Profiteers Got Rich While America Got Sick

CHRISTIANE AMANPOUR: And our next guest explores the United States’ scramble to control the virus, that was back in early 2020. In his new book, “Pandemic, Inc.” David McSwane documents how corruption and incompetence in the United States riddled the nation’s initial COVID response. And he now joins us Hari Sreenivasan to discuss the pandemic profiteers.

HARI SREENIVASAN, CORRESPONDENT: Christiane, thanks. David McSwane, thanks so much for joining us. This book takes us through so many of basically the hucksters, the charlatans that profited from all different parts of the pandemic. And you start the book of with one, I think, that’s pretty compelling. Tell us a little bit about, you know, this private jet ride that you’re taking, one of the first reporting trips that you or any of your colleagues in your newsroom were doing during the pandemic. Who is this guy? How did he get such a huge contract? How did you stumble across him?

J. DAVID MCSWANE, AUTHOR, “PANDEMIC, INC.”: Right. Yes. These were the really scary months of the pandemic, April 2020, you know, hospitals are being overrun. We’re all locked down. My news organization said, we can’t go in the field. So, I’m looking at, you know, where the government money is going, the purchasing and contracting data and we’re just sort of running filters, you know, kind of nerdy stuff to figure out who we want to look at. And it really just seems like companies that had no footprint were getting really big deals for masks and gloves and things we really needed. And I honed on one, a Robert Stewart Jr. whose little company here in Fall Church, Virginia had scored a $34.5 million deal with the Veterans Administration, which oversees the largest hospital network in the country and they were — people inside, doctors and nurses were panicking. So, he had a pretty big role. And I couldn’t figure out how he got this deal. It didn’t look like there was anybody. We sort of had a hunch that that was happening. And I just decided to call him and ask him. And, you know, he was a little cagey about some things. But he said, you know, I’m the real deal. I’ve got 6 million N95 masks. I’m going to oversee their delivery. I’m hopping on a private jet tomorrow. You know, and my reporter brain sort of perked up and I was like, private jet? Would you mind if I tagged along? I think that would be an amazing story. And it would have been if he delivered. If he didn’t deliver, either way I thought America should know whose — who’ve we really had to sort of count on to get these supplies where they needed to be. And, you know, a few hours later, I’m on a private jet and so, began more than a year of just really wacky reporting that I take people through in the book.

SREENIVASAN: You know, this story has all of this different kind of turns. And each time you see that there are these structural and systemic failures that enable the grifters to come in and make the money that they do, one of the consistent themes that you keep talking about is basically that there was no bid to lots and lots of these contracts. I mean, the government was in such a rush to try to do something that they didn’t have any of the safety measures that they usually would have to try to vet people, even with a simple Google search.

MCSWANE: Sure. Yes. That was not super shocking. I mean, we were so ill- prepared and the Trump administration had downplayed this virus but — that by the time we had to catch up, I mean, China was literally buying masks out from under us and shipping them back from the United States at the time and we were doing almost nothing. So, by the time we had to do something, the national strategy became to give anyone and everyone who claim to have access to these things a deal. And that frustrated the response, sort of cascading down from the federal government because you have states and cities and hospitals and the federal government competing for the same supplies, driving up the price. And you know, it’s no shocker that in an emergency situation, you might see some red tape being cut, you know, a little bit less vetting, but there was no vetting. You know, just really obvious things missed. It was that dire, and our federal government, our emergency management apparatus was panic buying and wasting time and resources.

SREENIVASAN: Do we have any idea how much money that basically taxpayers paid for goods or services that the government did not receive?

MCSWANE: I don’t think we’ll ever truly have a handle on it. But for one, some federal agencies have really tried to save face in this and, you know, they may have ended up canceling a contract or they accept something that isn’t quite what they bought. And, you know, we saw FEMA try to do that and just sort of move on. So, it really was sort of this scatter shot approach we had to take of drilling down on each and every deal and every company and, you know, to do, you know, a systematic analysis of that may take quite a while. But we are seeing various federal agencies and states themselves, their inspector generals are taking a look and trying to figure out what happened, how did we get into this situation? But, I mean, it’s safe to say the federal government, just according to the database we stood up at ProPublica, they spend something 10 billion just on those supplies that, you know, I kind of focused on early on in the book with test tubes, gloves, masks, things like that. And there was a lot of grift in that program. And then, you look at each state, each city, it’s quite a lot. It was really a bonanza for fraudsters.

SREENIVASAN: You know, you talked about test tubes here and there is a fascinating back and forth that you have when you are kind of on the ground, trying to confront one of the people that runs one of these companies. Tell us about the test tube escapade there in Texas and what they were, because they weren’t test tubes.

MCSWANE: You know, it wasn’t my preferred way of talking with this company but they had shut me out. You know, just analyzing the data from D.C. there’s, you know, a big team of us in our apartments trying to get a handle on this phenomenon. We’re seeing really early on it. And we saw one company that had been created on a Monday, I think. And then, six days later, they had a $10 million deal with FEMA, the Federal Emergency Management Agenda for COVID-19 test kits. And at the time, we are woefully behind on testing. It’s crippling our pandemic response because we can’t be proactive, we can’t ahead of the virus. So, this was a really big deal. And this company came out of nowhere, they had no medical experience whatsoever. These were for PCR tests, which required lab testing some science. So, we were skeptical. And we just sort of put it into a story. We didn’t have all of the answers. We saw that the owner had a history of fraud allegations against him. Anyway, we put the story out. And a state public health official calls me and says, hey, I’ve seen these test tubes. I got them last week and they’re completely unusable. These are not test tubes. They’re not hermetically sealed. I don’t think they’re sterile. They don’t fit standard lab equipment. I didn’t know what they were. I showed them to a colleague and he realized that they are mini soda bottle preforms, which are, you know, you blow up to create two-liter soda bottles at your local grocery store. So, I showed up and I tried to go through the front door. They shooed me away. I asked for a tour. They said, no way. So, I just kind of hung out and shot some video and watched. They finally opened the door and I could see that workers were using literal snow shovels to gather up these many soda bottles, to put them in the other bins. Some people were wearing masks and some weren’t. Air is whipping around. And when we reported back to FEMA what we had seen, they had distributed these to all 50 states and territories.

SREENIVASAN: So, these are supposed to be sterile test tubes and you’re telling me people were scooping them up with snow shovels?

MCSWANE: Yes. Right. And workers we talked to said it wasn’t even clean, let alone sterile. You know, they were alarmed by what they had seen. And, you know, we tell FEMA this and they had to tell states and territories, don’t — you can’t use those. So, it delayed, you know, testing all over.

SREENIVASAN: You know, I think more painful for me as I kept reading this was, yes, there is money lost, but I don’t even know how to begin calculating the lives lost because we didn’t have masks in place or respirators or ventilators or testing. I mean, so many parts of this chain were corrupted that where do you begin to figure out whether somebody could have been saved if this decision had been made differently?

MCSWANE: It is hard, you know. And finding that connective tissue to stitch together while this mask wasn’t delivered and this person suffered as a result of that, it really is impossible. It’s just too convoluted. So, I tried to take it all in, you know, the scope of it and share with readers that this was a magnificent failure. I mean, this was huge. And we may never really be able to pin a number to it in terms of the number of lives lost. But, like, during these months, time meant American lives. So, wasting any amount of time with a fraudster who doesn’t deliver and then, having to track down whether or not they had things to begin with was just not what we needed to be doing.

SREENIVASAN: What’s Peter Navarro’s role in all of this? I mean, he was a person very senior in the White House. He had the ear of the president at very crucial times during this pandemic. There are parts of him, you say, well, it’s almost heroic that he understands the threat early on and he’s trying to do this. And then in other parts, it’s almost villainous how he’s able to approve, you know, money for companies that shouldn’t have gotten that money.

MCSWANE: Inadvertently, Peter Navarro really set me off on this journey. He was the trade adviser for Donald Trump, highly influential, as you mentioned. And I noticed early on, you know, someone had written into a contract that was awarded for high-end respirators ordered by the White House, which you can’t have the White House and political appointees awarding government money for obvious reasons. And he did something remarkable. He just stepped in and started doing it, and started saying, you get a contract, you get a contract. And at the same time was in the middle of some deals with a U.S. mask manufacturer who could have delivered N95s, that fell apart over personalities. So, I saw him as a complicated character who, you know, a lot of people — even in the Trump White House sort of disregard him as an extremist. You know, he’s a China hawk. He’s a bit of an eccentric. But you see these memos he put out and he recognized early on the threat, and he wasn’t being listened to. So, he sorts of super charges this effort to buy things and there’s some good and some bad as a result of that. And, you know, it’s just amazing that we should have had a professional emergency manager in charge of these things. But the Trump administration had worked so hard to disregards expertise that here’s the guy now sort of silently steering the ship and, you know, the result was disaster. And, you know, despite his early warnings, he ends up becoming a little bit of a tragic character he becomes obsessed with hydroxychloroquine, which the Trump administration falsely claims was like sort of a cure-all. You know, so, I just — I viewed him as somebody was in the right place to do something great, he kind of gotten in his own way.

SREENIVASAN: I know you conducted dozens of interviews. Did Peter Navarro sit down for one or has there been a response if he didn’t sit down with you during the book afterwards?

MCSWANE: He wouldn’t sit down with me. And I really wanted to sit down with him. I had texted him. I left him messages. I had reported some things out there. So, he knew I was interested in him. You know, from what I can tell, he was working on his own book, and you know, he is one of those people who only takes friendly interviews with conservative press, I think.

SREENIVASAN: Your reporting and that of ProPublica didn’t really just stop in the acquisition of masks and ventilators. You also followed the money when it came to the PPP loans. And even there, we see sort of the structural inequities that your data surfaced of who was getting the loans, in what amounts, where, for what reason, and you saw so many scammers taking advantage of practically money falling from the sky.

MCSWANE: Yes. Really. I don’t think that’s hyperbolic to describe it that way. This — the Paycheck Protection Program was inherently flawed in the way that Congress created it and incentivized speed above anything else. So, you have lenders who were rushing money out the door. It’s supposed to go to your local small business, your salon owners, your Uber drivers, things like that. But we found in the first wave that it was established businesses, franchises, some large companies. And, you know, the money dries up, it didn’t quite go where it needed to go. So, you’re catching up to that. And, you know, at the same time, people who knew how to navigate it and had relationships with banks could lie on a couple of forms and have millions of dollars by the end of the week, and they bought yachts and Rolls-Royces, and I described one character who bought a large mansion outside of Orlando. And, you know, by the time federal law enforcement tries to catch up with him, he goes on the lam and he’s caught in Croatia and he tells a judge there, according to news reports, that what he was doing under the Trump administration was allowable, but he became scared when Joe Biden was elected that it would no longer be allowed. So, there was a general sense this this was OK. You know, it’s sort of a cultural phenomenon and you add this very easily gamed season and we’ll be catching up to people who defrauded the PPP loan program for many years.

SREENIVASAN: Where are we in terms of the prosecution of the crimes that have been committed by so many of the characters that you outline in the book? Because you have a nice narrative arch that actual takes us. Tell us tell us about what happened to the guy you rode on the private jet with and then, also, tell us, well, what about the guy that was, you know, shoveling non-test tube test tubes.

MCSWANE: The president in his State of the Union address announced a special prosecutor for pandemic fraud. I think a lot of that might be focused on the PPP loan program. But each of these has to be a case that’s made and run through the legal system, and that’s going to take a long time. We’ve already seen hundreds in the PPP loan program prosecuted. And in those two instances that are in the book, one was ultimately, you know, the Robert Stewart Jr. who invited me on the private jet, after I published that story, law enforcement digs in, federal prosecutors start looking at his finances and realized he’d been defrauding other programs too. And he’s eventually charged with three crimes and pleads. And he’s currently in prison and, you know, some of the central tension of the book is whether or not he set out to be what he called a buccaneer and a pirate or he just got over his skis and really fell for the — his own myth in pursuit of the American dream. And I’m not sure I know the answer to that yet. But a — but the owner of the company involving the test tubes, well, that company is being sued separately by the Federal Trade Commission for a different accusation. They were paid. They delivered something to FEMA. FEMA didn’t properly evaluate it, accepted it and distributed it. So, contract experts I talked to said, it’s really hard to make the case that – – you know, to make any case because they got a deal for a — you know, they got a contract for a product. They delivered that product. The federal government accepted the product. Case closed.

SREENIVASAN: So, when you look out at this landscape and especially the types of characters that you’ve met, I don’t know, how is the reporting about this just affected your view on justness, fairness, opportunism, capitalism?

MCSWANE: I think a lot of this — what is described in the book is really human nature. And when you look at it through the lens of who we are as Americans and where we are in this political moment, and I realize I had this opportunity, this duty, which at times was scary to travel the country when no one else was really out there reporting on these types of things and running into these characters, I really wanted to capture this place in time, and really viewed this as, you know, the book as an artifact of the pandemic but it’s really about us. And hopefully, it can help us ask — you know, ask and answer some questions that, you know, will better prepare us the next time, not just in terms of our government response, but how we treat one another and how we process information. In terms of justice, it’s not for me to say who deserves what, you know.

SREENIVASAN: Yes. How do you reform a system that at its core has to deal with human nature?

MCSWANE: Yes. That’s a good question. I mean, there are some very obvious tangible things we can do, and we see some of this, you know, in the president’s proposed budget. He’s proposed $88 billion into the health and human services enterprise that includes things like the stockpile, vaccine development, et cetera. I think if we make sure we are prepared and we take this seriously and we don’t let politics get in the way, we’ll be on much better footing and we won’t find ourselves reliant on mercenaries for our national well-being.

SREENIVASAN: David MsSwane from ProPublica, thanks so much for your time.

MCSWANE: Thanks for having me.